Saturday, 22 September, 2018

Harley-Davidson will not raise prices to cover tariff costs

Harley-Davidson is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs Harley-Davidson is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs
Lindsey Cook | 26 June, 2018, 15:32

Harley-Davidson Inc. announced it is shifting production of some of its motorcycles to Europe because of President Donald Trump's escalating trade war, which critics warn could hamstring the humming us economy and cost jobs.

Each motorcycle will cost an average of US$2,200 extra after the European Union raised its tariff on imported USA bikes to 31 percent from 6 percent on June 22, the Milwaukee-based manufacturer said Monday in a regulatory filing.

Walker says that's what he will push for in the wake of news that Harley-Davidson is shifting production of motorcycles headed for Europe from the U.S.to factories overseas due to increasing tariffs.

Harley-Davidson sold nearly 40,000 motorcycles in the European Union a year ago, generating revenue second only to the United States sales, according to the Milwaukee-based company.

Harley-Davidson said in a statement: 'Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally.

Shares at Harley Davidson are down 2.40% in early morning trading.

Trump on Monday expressed disappointment at Harley-Davidson's plan.

Harley tied its higher costs to a sequence started by Trump, who praised the company as a model American manufacturer during a February 2017 meeting at the White House. The group will examine technology policy, government assistance to businesses and other issues in order to guarantee support for worldwide trade.

The president, in his first comments on the matter, said in a tweet that he was 'surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag'.

Mr Trump vowed to make the iconic motorcycle maker great again when he took office previous year.

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The United States says it is imposing the tariffs on steel and metal worldwide in order to protect America's metal industries.

Harley shares have lost about 6 per cent since early March when the trade skirmish between the United States and the European Union started, and are down over 15 per cent since the end of 2017.

The company said earlier in the day that it stands to lose as much as $100 million a year if it does not shift more of its manufacturing overseas. Seemingly, this has left Harley-Davidson little option but to shift production elsewhere. In the U.S., Harley-Davidson sold 147,972 motorcycles a year ago, according to company data. Harley pounced on news released Friday regarding European Union tariffs on Harley motorcycles and the company will be implementing plans to offshore more production. The manufacturer says it will move more production outside the USA to avoid tariffs.

"We are now assessing the potential impact on our USA facilities", Harley-Davidson spokesperson Michael Pflughoeft told Bloomberg.

In the wake of the sluggish United States sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.

Harley Davidson, based in Milwaukee, is now planning to move the production of some of its motorcycles overseas.

European Commission Vice President Jyrki Katainen said unilateral action by Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy. (16 percent of its global sales), it's moving production of its European Union fleet outside the US, citing the new tariffs as its reasoning. It also announced a future plant in Thailand.

The company did not comment on how many jobs would be shifted away from the US, but said that it would take between nine and 18 months to move production away from Wisconsin.

Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets.

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