Harley-Davidson to open Thai plant
Iconic motorcycle builder Harley-Davidson, held up by US President Donald Trump as a pillar of American manufacturing, is building a new plant in Thailand.
The move serves as an example of the economic realities that are pushing US companies to lay off workers at home and set up new factories overseas. Unions representing its workers accuse the company of cutting US jobs to hire lower-paid foreign workers. Yet global trade barriers and proximity to a growing base of new customers also play roles, complexities inherent in Trump’s ambition to overhaul trade policy.
Motorcycles made in the new factory — plans for which had not been previously disclosed — will be sold in Asia, not the US, which its domestic plants will continue to serve, Harley-Davidson said.
“This is absolutely not about taking jobs out of the US,” said Marc McAllister, a managing director of international sales at Harley-Davidson based in Singapore. “This is about growing our business in Asia.”
Harley-Davidson said steep trade barriers in a high-growth market, not a desire to cut US jobs, drove the move. Southeast Asia offers rapid development and increasingly affluent spenders, but many countries in the region levy high tariffs on imported goods that make its motorcycles prohibitively expensive, the company says.
“Building bikes in the US and exporting them does not give us the same benefits as local production because of tariff barriers,” said Mr McAllister, a 22-year veteran of the company.
Harley-Davidson has long cast its eyes abroad amid sluggish growth at home. It hopes to make half its sales international over the next decade, compared with about one-third last year and less than one-quarter 10 years ago. Its international sales last year grew 2.3% while US sales fell 3.9%.
Despite Harley-Davidson’s all-American reputation, the Thai plant will not be its first abroad — or even in Asia. The company opened a similar plant in Bawal, India, in 2011 to help it get around that country’s 100% tariff on imported motorcycles.
It also assembles motorcycles at a plant in Brazil and has a wheel factory in Australia. The Thailand plant will assemble motorcycles for Asia that were previously imported from India or the US.
Harley-Davidson’s made-in-Thailand motorcycles will avoid the country’s tariff of up to 60% on imported bikes. They will also get a huge break on tariffs when exported to Asean thanks to a trade deal.
The Thai plant is meant to serve a vast market in mainland China. Asean is pursuing an enlarged free trade area with Beijing.
Mr McAllister said the Thai plant would lower transport and shipping time to the Chinese market to five to seven days, down from 45 to 60 days shipped from the US.
The new Thai plant is moving into an area already populated with foreign names in Rayong province, near the manufacturing operations of Ford, Ducati, General Motors and Suzuki.
The plant will initially employ about 100 people assembling motorcycles, mainly from imported kits, when it opens late next year.
The Wisconsin-based motorcycle maker established the local arm, Harley-Davidson Thailand, on May 2015 with registered capital of 196 million baht. In early 2016, it opened Harley-Davidson University AsiaPacific on Rama III Road in Bangkok.
The facility serves as a training centre for the company’s 232 Asia-Pacific outlets, costing 47 million baht excluding land. The 1,512-square-metre centre was awarded Board of Investment privileges including an eight-year corporate income tax waiver and import duty exemption for motorcycles and related parts.
There were 400 Harley-Davidson motorcycles registered in Thailand in 2016, down from 469 units in 2015, 578 units in 2014, and the peak of 1,005 in 2013.
As of 2016, there were 10,878 Harley-Davidson motorcycles registered in Thailand.
Anne Marie Chua, media coordinator for Harley-Davidson Asia Pacific based in Singapore, told the Bangkok Post she needed to consult with her headquarters on the report and promised a reply today.