Harley cites tariffs in move
The motorcycle maker, in response to retaliatory EU duties, will shift some production out of the U.S.
Not long ago, President Trump pointed to Harley-Davidson Inc. as an example of what was going to go right for manufacturing in America. Now, Harley seems to encapsulate a lot of what’s going wrong.
Citing tariffs tied to escalating tension between Trump and the European Union, the motorcycle maker will further retrench its U.S. operations. Bikes destined for the EU were made less viable by levies that will boost costs for the company by about $100 million a year.
“Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” Trump tweeted Monday. The president said he has “fought hard” for the company and said it ultimately won’t have to pay the tariffs, urging it to “be patient!”
Already, Harley had announced plans to close a factory in Missouri and build one in Thailand after Trump pulled the United States out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries that would have lowered barriers to key markets. Now Harley joins American companies such as Levi Strauss & Co. and Germany’s Daimler in get- ting caught in the middle of Trump’s trade skirmishes with major trading partners.
“A company that is as connected to America, and Americana, as Harley is, probably going to be laying off U.S. workers in favor of foreign workers and going to be losing money as a result of this,” James Hardiman, an equity analyst with Wedbush Securities, said of the trade battle between the United States and the EU. “There’s a lot of irony here, to put it mildly.”
Harley shares on Monday fell 6%, their biggest drop in almost five months, to close at $41.57. The stock is down 18% this year.
The EU’s retaliation to Trump’s steel and aluminum levies will cost about $2,200 per motorcycle shipped to Harley’s secondbiggest market in the world, the company estimated in a filing Monday. So Harley is shifting production of bikes for European riders to unspecified overseas plants.
The move conflicts with the Trump administration’s touting of the U.S. economy’s strength. “The results of President Trump’s tax cuts can be seen in our Nation’s business environment, as American companies start investing once again,” the White House said in a post that the president’s @POTUS account to 23.5 million followers.
Although Trump has repeatedly claimed that the United States can easily win trade wars, victims are starting to pile up at home and abroad. Daimler, the maker of Mercedes-Benz luxury vehicles, warned last week that escalating tension between the United States and China will impair earnings from its Alabama sport utility vehicle plant and lower profit this year.
Harley plans to eat much of the cost increase tied to the EU’s tariffs because trying to pass it along to dealers or customers would make an “immediate and lasting detrimental impact” on its business, it said in the filing.
The EU levies are only the latest blowback Harley has faced from Trump’s trade policies. A year after Trump pulled the United States out of the Trans-Pacific Partnership in January 2017, Harley announced it would close its factory in Kansas City and consolidate production in York, Pa., eliminating about 260 jobs.
Trump hosted Chief Executive Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle maker as “a true American icon” and “one of the greats.”
“Thank you, Harley-Davidson, for building things in America,” Trump said at the time. “I think you’re going to even expand. I know your business is now doing very well and there’s a lot of spirit right now in the country that you weren’t having so much in the last number of months that you have right now.”
Harley has been dealing with woes independent of Trump’s policies. Levatich has struggled to attract younger buyers in the company’s core home market: U.S. retail sales plunged 12% in the first quarter, the 13th decline in the last 14 quarters. Overseas sales also have been stalling.
The International Assn. of Machinists and Aerospace Workers, which represents workers at the company’s facilities in Wisconsin, Missouri and Pennsylvania, expressed skepticism that the production shift was needed.
“This latest move is in keeping with Harley’s past decisions to open plants outside of North America,” President Robert Martinez Jr. said in an email. He called the plan the “latest slap in the face to the loyal, highly skilled work force” that builds the company’s bikes.
In his tweet, Trump appeared to echo the union’s sentiment, writing that the EU’s taxes were “just a Harley excuse.”