Harley-Davidson To Move Some Production Outside US Over EU Tariffs

President Trump last year praised iconic US motorcycle maker Harley Davidson for its U.S. manufacturing presence and blamed global tariffs for making it “very hard” for the company to do business overseas. Well, in an ironic twist he was right, because on Monday Harley-Davidson announced that it will move the production of motorcycles bound for European countries out of the United States, citing rising costs from European Union tariffs on their products.

The decision comes at a time when Harley's European sales are at their highest relative percentage of total sales since 2011, while domestic sales have been slumping, dragging the stock price of HOG lower.

In an 8K filing on Monday, HOG said that the EU tariffs on motorcycles exported from the U.S. rose from 6% to 31%, which "will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU." That’s expected to add up to a burden of $90 million to $100 million annually, which Harley-Davidson will absorb rather than pass extra costs on to customers due to "an immediate and lasting detrimental impact to its business in the region."

As a result, motorcycles bound for European countries will now be produced in overseas factories. Harley also said that it’s planning to increase production in international plants over the next 18 months.

In the filing, Harley apologetically explains that "increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe."

And while HOG says it remains committed to making motorcycles in the U.S., it has no other choice in a market where it sold almost 40,000 bikes last year. Besides its U.S. plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to Bloomberg.

Earlier in the month, the EU announced earlier that it would impose retaliatory tariffs on a range of U.S. goods in July, including motorcycles. The measures came in response to Trump’s steep tariffs on imported aluminum and steel from the EU and other key U.S. allies, including Canada and Mexico.

The text of the 8K is below:

The European Union has enacted tariffs on various U.S.-manufactured products, including Harley-Davidson motorcycles. These tariffs, which became effective June 22, 2018, were imposed in response to the tariffs the U.S. imposed on steel and aluminum exported from the EU to the U.S.
 
Consequently, EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6% to 31%. Harley-Davidson expects these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU.
 
Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses. Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs. In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45 million. On a full-year basis, the company estimates the aggregate annual impact due to the EU tariffs to be approximately $90 to $100 million.
 
To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden. Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete.
 
Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally. Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson. In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the U.S.
 
Harley-Davidson’s purpose is to fulfill dreams of personal freedom for customers who live in the European Union and across the world, and the company remains fully engaged with government officials in both the U.S. and the EU helping to find sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade.

 

Comments

gmrpeabody anarchitect Mon, 06/25/2018 - 08:25 Permalink

And I'll be moving my Retired Fart Motorcycle order over to BMW from Harley. At the first sign of resistance, Harley shits American workers and off shores the plant. Not very forward thinking...

I propose to the Donald that we NOT impose any tariffs on BMW Motorcycles as a way of thanking HD for their contribution to the fight to salvage what's left of American manufacturing.

 

In reply to by anarchitect

directaction Yellow_Snow Mon, 06/25/2018 - 09:16 Permalink

Harley production is falling and won't get back up because the only demographic group that still buys those overpriced 750-pound wobbly pieces of trash is over 65, pensioned, retired, dying out doddering dotards, and thankfully getting fewer of them each year.

These loud-mouthed old coots are falling down all the time, too, and most of these Harley-riding dementia cases can't get up by themselves either.

Long term, Harley's days are numbered.   

In reply to by Yellow_Snow

rejected directaction Mon, 06/25/2018 - 09:38 Permalink

"These old coots are falling down all the time, too, and most can't get up either."

Live in Florida,,, Lot's of Harleys. My son has 2. He just dropped one,,, he's 38 and couldn't pick it up. To be honest even in my younger days I couldn't pick up a 840 lb motorcycle dressed out.

As for price,,, HD's are less than many Honda's in their class.

Harley has manufactured overseas for many years.

They have plants in Brazil, India, Australia, Thailand.

They are no different than other traitorous American manufacturers. They mistreat employees. Have different pay for people doing the same job and their already closing the plant in Wisconsin.

I do not own Harley for those reasons. 

https://www.harley-davidson.com/us/en/about-us/careers/locations.html

In reply to by directaction

Parrotile directaction Mon, 06/25/2018 - 16:50 Permalink

Harley-Davidson typify "American" values - loud, glitzy, not very efficient and certainly not very reliable (which is why many US fleet users now fly the Japanese flag, and have done so for some time).

Down Under, these bikes have an indelible association with our underworld / "Street Gang Biker" mentality. Those of us who need a safe, and reliable machine tend to buy Japanese (Honda).

In reply to by directaction

Parrotile cbxer55 Mon, 06/25/2018 - 21:05 Permalink

ST1100: Getting on a bit now (25 years old) but still very reliable (it's a Honda - what do you expect!) I'll eventually have to upgrade to the 1300 (which is slower (marginally) and less fuel efficient (again, marginally, and as always dependent on riding style)).

A colleague drives a Bergman 650 - that's a pretty swish super scooter, and I was originally VERY tempted, however the transmission problems (and high replacement costs) are offputting (especially since I am a very high-annual-mileage rider). If they can extend "expected lifespan" beyond 17,000 miles (my annual mileage) then I'll have a second look.

In reply to by cbxer55

Jeffersonian Liberal fazsha2 Mon, 06/25/2018 - 09:13 Permalink

Grow up? As if his comment is immature. Here are a few facts and insights for you to think on:

1. HD is only in business because they begged Pres. Reagan to put an import tariff on larger motorcycles (because they were going out of business because they made such crap products throughout the 70's and were being crushed by high-quality, reliable Japanese MCs).

2. Pres. Reagan put the tariff in place and saved HD...because they were the last American MC manufacturer (and that is how HD pitched the beg for a tariff to Pres. Reagan).

3. The tariff,a temporary one, worked and saved HD.

4. HD, for the next two decades, marketed its mediocre and unreliable MCs (I know, I had one) as Made in America, by Americans, for Americans, all that marketing BS.

5. HD increasingly outsourced many parts of their "Made in America" to places like...Japan!

6. Now Pres. Trump is threatening tariffs (we'll see if he actually goes through with all of his threats) in order to force our 'trading partners' to play a bit more fairly.

7. HD's response (and their thanks to the American taxpayer who paid that tariff that Pres. Reagan put in place)? Eff You, America. We'll go make our Made in America, by Americans, for Americans MCs in another country.

HD is being hypocritical and greedy and they are cutting of their nose to spite their face. The only thing that HD has going for it is its image, certainly not the reliability of their MCs or the quality of their rides. People ride them because they like the image. If they pull out and move those jobs to another country so that they can then say, "Made in Yugoslavia, by Yugoslavians, for Europeans" they'll just put themselves right out of business, where they should have been at the end of the 70s.

No, they don't 'owe us anything.'

But they shouldn't be quite so stupid, greedy, and unappreciative in proving that point.

In reply to by fazsha2

CashMcCall Jeffersonian Liberal Mon, 06/25/2018 - 10:58 Permalink

Another off topic post. Trump laid tariffs on Steel and Aluminum. It has never worked to protect an industry. And the Trump Cancer is now spreading. Car and vehicle makers continue to move offshore. Trump's a dope.

Harley was making unreliable motorcycles. Is that worth protecting? Honda had come out with the Goldwing that was reliable and ran like a sewing machine. Harly was stalling on the side of the road. So HD begged Reagan to protect them. HD still lost market share the whole time and instead diversified into the RV business. Four years later Harley asked that the Tariff be dismantled. Why? Because they had moved facilities overseas. 

Enough of these Gov. Bailouts and protection for the weak. 

In reply to by Jeffersonian Liberal

Benito_Camela Jeffersonian Liberal Mon, 06/25/2018 - 11:22 Permalink

God you people are either children or morons, I can't figure out which.

 

OF COURSE they're going to do WHATEVER IT TAKES to increase the amount paid to shareholders. Only in a fascist state are CORPORATIONS interested in whatever POLITICAL position the government (or even a percentage of the people) takes. Your right wing free trade bullshit has come home to roost so many times, yet in every case you move the goal posts to blame the "OTHER" side whenever you're getting fucked. In this case you retards are saying "Harley shouldn't be hypocrites and be more pro-AMERICA!!!" but in every other situation you're saying "The government shouldn't be able to tell a company what they can or can't do!!!"

 

Bunch of fucking children around here. And by the way, to all the down-voters - Go fuck yourselves. 

In reply to by Jeffersonian Liberal

Boxed Merlot fazsha2 Mon, 06/25/2018 - 09:15 Permalink

...HD does not owe anyone a living....

Exactly. What the president has made available for all to see is even an "All American" iconic product like Harley has been making foreign products for years. I still laugh at the thought of buying a "Bavarian" automobile made in Alabama.

They're just like any other multi-national at this point, wanting their cake and eating it too.

HD has profited at their "deceit", (foreign manufacturing operations) for a long time, (not that there's anything wrong with that.)

jmo.

In reply to by fazsha2

CashMcCall gmrpeabody Mon, 06/25/2018 - 10:39 Permalink

Marxist Motorcycle Club Charter member. Get this through your thick head. Businesses are not an extension of the welfare office. I am not sacrificing anything for anybody. That is the old Marxist Socialist mantra that everyone must sacrifice for the good of the State or the Good of the Labor Unions. I am not interested in paying the bar tab of any unioner. They have destroyed virtually all US manufacturing businesses over time. A Union is a ZERO Hedge against business. Capitalism gives these companies the ability now to move. Evey manufacturer in Merica should pack up and leave the MERICAN socialist wasteland to the blowhard orange Caesar. 

In reply to by gmrpeabody

Blankenstein Juggernaut x2 Mon, 06/25/2018 - 14:19 Permalink

Trump's addition to new houses prices, if you are even correct about that, is minimal compared to the government interference in the mortgage market.

 The FHA, the world's largest subprime lender, along with Fannie Mae and Freddie Mac, with their weak lending standards and taxpayer backing, have increased house prices again to unaffordable levels.  Even the USDA and VA have gotten in on the action, and they have even lower standards than the previously mentioned.  

If this government backing wasn't present, lenders would have tighter lending standards as there would be more risk without these .gov guarantees. The loan amounts issued would, therefore be smaller, and the housing prices would fall accordingly.  

 

 

 

 

 

 

In reply to by Juggernaut x2

RedBaron616 Justin Case Mon, 06/25/2018 - 11:10 Permalink

Consumers were the losers when all the manufacturing jobs were allowed to leave the USA without so much as a tariff.

The Chinese have much more to lose than we do.

The current "imported is cheap, so don't rock the boat" mentality will send us straight to the poorhouse. If you think America can stay great and produce almost nothing, think again.

In reply to by Justin Case

Thordoom anarchitect Mon, 06/25/2018 - 12:24 Permalink

I get what Trump wants and its a brave move but it is too late,too stupid  and you can't have an Empire and world currency with no trade deficit. Eurasia is the new power. The sooner US will adapt to it the better.US could still dominate with high tech but when Trump pulled that stupid stant on Chinese with banning the chip product even that is about to go to waste because immediately The other side pored billions to secure their producer from the destiny ZTE.

MAGAs do not get it. They are blindly following without questioning anything that Trumps does.The transition could have been smooth for US to stop being and Empire of lies that doesn't care about their people and become The republic again but Trump made that transition to be smooth virtually impossible. India and Pakistan are now part of the SCO  and you can bet with Putin as a mediator Pakistan India and China will iron out their problems.That is absolute death to the Empire and Trump dream that he keep US the most powerful economy and Army on earth.

In reply to by anarchitect

DosZap beemasters Mon, 06/25/2018 - 13:39 Permalink

Well when we charge them 2% and they charge us 10+, I would say is that what you would consider FAIR TRADE?.

He doing this to get everyone on a closer level of par.It's his way of Dealing,it's always worked so far for him, and us.

We'll see.........personally I am sick and tired of paying for the WORLDS issues at MY/YOUR expense.

In reply to by beemasters