Hit by Tariffs, Harley-Davidson Shifts Some Production Overseas

By Moreno, Ivan | The Charleston Gazette (Charleston, WV), June 26, 2018 | Go to article overview

Hit by Tariffs, Harley-Davidson Shifts Some Production Overseas


Moreno, Ivan, The Charleston Gazette (Charleston, WV)


MILWAUKEE - 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. …

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