Har­ley, stung by tar­iffs, shifts some pro­duc­tion over­seas

South Florida Times - - BUSINESS - By As­so­ci­ated Press Scott Walker


MIL­WAU­KEE (AP) - Pro­duc­tion of Har­ley-David­son mo­tor­cy­cles sold in Europe will move from U.S. fac­to­ries to fa­cil­i­ties over­seas, the Mil­wau­kee-based com­pany an­nounced Mon­day, a con­se­quence of the re­tal­ia­tory tar­iffs the EU is im­pos­ing on Amer­i­can ex­ports in an es­ca­lat­ing trade war with the Trump ad­min­is­tra­tion.

Pres­i­dent Don­ald Trump has used the iconic Amer­i­can mo­tor­cy­cle maker as an ex­am­ple of a U.S. busi­ness harmed by trade bar­ri­ers in other coun­tries, but Har­ley had warned that tar­iffs could neg­a­tively im­pact its sales.

The Euro­pean Union on Fri­day be­gan rolling out tar­iffs on Amer­i­can im­ports in­clud­ing bour­bon, peanut but­ter and or­ange juice .The EU tar­iffs on $3.4 bil­lion worth of U.S. prod­ucts are re­tal­i­a­tion for du­ties the Trump ad­min­is­tra­tion is im­pos­ing on Euro­pean steel and alu­minum.

The com­pany said in a reg­u­la­tory fil­ing Mon­day that EU tar­iffs on its mo­tor­cy­cles ex­ported from the U.S. jumped be­tween 6 per­cent and 31 per­cent, adding about $2,200 per av­er­age mo­tor­cy­cle ex­ported from the U.S. to the EU.

The im­pact on U.S. work­ers be­cause of Har­ley-David­son's de­ci­sion was not im­me­di­ately clear. Har­ley-David­son de­clined in­ter­view re­quests Mon­day but said in pre­pared re­marks that the com­pany “main­tains a strong com­mit­ment to U.S.-based man­u­fac­tur­ing which is val­ued by rid­ers glob­ally.''

Har­ley-David­son Inc. sold al­most 40,000 mo­tor­cy­cles in the EU last year, its sec­ond-largest mar­ket af­ter the United States, ac­cord­ing to the com­pany. The EU sales make up al­most 16.4 per­cent of Har­ley-David­son's world­wide sales. In the U.S., Har­ley-David­son sold 147,972 mo­tor­cy­cles last year, ac­cord­ing to com­pany data.

“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,'' the com­pany said in its pre­pared re­marks.

Har­ley-David­son said it will not raise its prices to avert “an im­me­di­ate and last­ing detri­men­tal im­pact'' on sales in Europe. It will in­stead ab­sorb a sig­nif­i­cant amount of the cost in the near term. It an­tic­i­pates the cost for the rest of the year to be ap­prox­i­mately $30 mil­lion to $45 mil­lion.

Shift­ing the pro­duc­tion over­seas could take up to 18 months, the mo­tor­cy­cle maker said.

The com­pany is al­ready strug­gling with fall­ing sales. In Jan­uary, it said it would con­sol­i­date its Kansas City, Mis­souri, plant into its York, Penn­syl­va­nia, fa­cil­ity. U.S. mo­tor­cy­cle sales peaked at more than 1.1 mil­lion in 2005 but then plum­meted dur­ing the re­ces­sion. It wasn't im­me­di­ately known whether any other fa­cil­i­ties would be con­sol­i­dated.

“Har­ley-David­son's an­nounce­ment to­day is the lat­est slap in the face to the loyal, highly-skilled work­force that made Har­ley an iconic Amer­i­can brand,'' Robert Mar­tinez Jr., pres­i­dent of the In­ter­na­tional As­so­ci­a­tion of Ma­chin­ists and Aerospace Work­ers, said in a state­ment. The union rep- re­sents Har­ley-David­son work­ers in Mil­wau­kee, and the Kansas City and York plants.

“Will Har­ley use any ex­cuse to ship jobs over­seas?'' Mar­tinez added. “Does Har­ley even un­der­stand what ` Made in Amer­ica' means?''

The Trump ad­min­is­tra­tion has started fights with trad­ing part­ners around the world, im­pos­ing tar­iffs on im­ported steel and alu­minum, pro­vok­ing re­tal­i­a­tion from close U.S. al­lies in­clud­ing the Euro­pean Union, Canada, Mex­ico and Turkey. And it has an­nounced tar­iffs on $50 bil­lion in Chi­nese goods _ a tar­iff list that could swell to $450 bil­lion if Bei­jing re­fuses to back down and coun­ter­punches with re­tal­ia­tory moves.

“More firms will fol­low Har­ley's lead and move pro­duc­tion over­seas,'' says Mary Lovely, a Syra­cuse Univer­sity econ­o­mist who stud­ies trade.“Can't blame them. Many com­pa­nies are be­ing put in very dif­fi­cult po­si­tions.''

Lovely said Har­ley and other com­pa­nies face re­tal­ia­tory tar­iffs in Europe and else­where if they try to ex­port prod­ucts.Trump's tar­iffs also raise costs on im­ported parts they need to man­u­fac­ture in the United States.

Wis­con­sin's elected lead­ers said the de­ci­sion pointed to the need to ex­pand mar­kets.

“This is fur­ther proof of the harm from uni­lat­eral tar­iffs,'' said Ash­Lee Strong, a spokes­woman for House Speaker Paul Ryan, a Wis­con­sin Re­pub­li­can. “The best way to help Amer­i­can work­ers, con­sumers, and man­u­fac­tur­ers is to open new mar­kets for them, not to raise bar­ri­ers to our own mar­ket.''

Gov. Scott Walker echoed those com­ments, say­ing in­creas­ing mar­kets for Wis­con­sin and Amer­i­can-made goods will re­duce the trade im­bal­ance and needs for tar­iffs.

“The ul­ti­mate goal, if we could get there, is no tar­iffs or if any­thing few tar­iffs on any­thing,'' said Walker, a Re- pub­li­can. “That's what I'm go­ing to push for, ways that we can get to a level play­ing field then we don't have this tit for tat on any num­ber of prod­ucts out there.''

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