Harley-Davidson officials spoke a lot about their response to
European Union tariffs on American-made motorcycles in a
quarterly earnings call Tuesday.
But they did not answer the biggest question for employees, many
customers, and possibly President Trump: Will American
manufacturing jobs be lost as production of bikes for the
European market moves overseas?
And, if so, what plant will lose them?
Company executives said Tuesday that's something that is still
"We are looking at all of our options there," said John Olin,
chief financial officer. "We've got three international
faciilties, and we're looking at the best opportunity to supply
the EU (European Union countries) out of those facilities....
"When we have the plan we'll provide it to you."
Harley had previously said that it will move its production for
European markets off-shore in order to avoid a jump in tariffs
imposed by the European Union on American-made motorcycles from
6 percent to 31 percent.
The EU tariffs, imposed last month, were in response to the
Trump Administration's decision earlier this year to impose new
U.S. tariffs on imported aluminum and steel.
Harley has said the combined effects of the trade battles has
added about $2,200 in cost per finished bike, at a time when the
company is keying on international sales to offset declining
motorcycle ridership in America.
The company's motorcycles sales in Europe were up 4.8 percent
through the first half of 2018, Harley reported Tuesday, while
domestic sales were down 8.7 percent.
That's after a drop of 8.5 percent in U.S. sales for 2017.
Company officials have committed to absorbing the higher cost of
raw materials and the European tariffs - which Olin estimated at
$45 million to $55 million for 2018 - through reduced profits
But the long-term strategy still calls for moving the European
production - about 16 percent of Harley's total sales, and all
made in the U.S. at present - off-shore to avoid the tariffs.
That broader strategy, of course, comes as the firm's York plant
is in the enviable position of growing.
Harley announced in January that it would be closing a
motorcycle assembly plant in Kansas City, Mo. by the fall of
2019, and shifting much of that plant's work to York.
That could be seen here this spring in the company's
announcement that it had 125 to 150 production openings in York.
Current employment there stands at 1,047.
"Great work continues on our manufacturing optimization, and we
expect our expansion in York, Pa. and the transition from Kansas
City to be complete in 2019," Chief Executive Officer Matt
Levatich said in Tuesday's call.
But the European shift, once finalized, has to impact somewhere.
"We never contemplated moving our European volume out of the
United States," Olin said Tuesday.
"Consequently we're analyzing the capacity options that we
have... and we are working on the overall plans, and when we
have them we'll provide more information."
That includes, Olin said working with political partners.
"We are working with the administration, we are working with all
governments we can to do the best we can to get these tariffs
removed," Olin said.
Harley's other U.S. production facilities are in Milwaukee, its
corporate home, and Tomahawk, Wisc.
Its international plants are in Brazil, India and, as of this
fall, Thailand, too.
Harley's announcements, of course, drew fire this spring from
President Trump who criticized the company in a string of tweets
earlier this year for its plan to move production in response to
Trump's position is American companies should be willing to
endure some short-term pain for long-term gains as he tried to
reorder international trading patterns in a way that will help
the U.S. economy in the long run.
But Levatich, the CEO, said that blowback from the White House
does not seem to be reaching into the ranks of Harley riders.
"We see no discernible shift in the sales patterns and no
discernible (shift in) favorability to the brand," Levatich said.
"We'll continue to make sure we monitor it and we'll do the
right things to emphasize what Harley-Davidson stands for, and
why, and correct errors in interpretation that seem to pop up
from time to time...
"But we're on it, and paying very close attention to it."
This much is certain, Levatich added.
"We will continue to build Harley-Davidson motorcycles for our
U.S. riders in the United States, as we have for our entire 115-
Lying sacks of shit!
4 years ago