Monday, 23 July, 2018

Harley shifting production overseas to address European Union tariffs

Harley-Davidson to take big hit from EU tariffs Harley-Davidson To Move More Production Oversees Amid US-EU Trade Tensions
Jodi Jackson | 26 June, 2018, 16:16

That increase will add on average $2,200 to the cost of each motorcycle sold in the European Union, and would cost the company $90 million to $100 million a year, the filing said. Now, lawmakers are weighing in. Union officials have said those jobs are going to Thailand.

In response to the USA tariffs, the European Union began charging import duties of 25% on a range of U.S. products, including big motorcycles like Harley's. All three say they will be forced to close their plants unless they can get relief from the Trump administration's steel tariffs.

Harley-Davidson has been relying on Europe and other global markets to help offset declining sales in the U.S., where the baby boomers who have long bought the vehicles are aging and younger consumers are not taking to the motorcycles in a big way.

A spokeswoman for House Speaker Paul Ryan, a critic of Trump's trade policies, said Harley-Davidson's travails were "further proof of the harm from unilateral tariffs". The EU's trade chief said last week that it was "left with no other choice" after Mr. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU on June 1.

Mr Trump was particularly heartbroken over Harley-Davidson because he held it up as an example of a firm he could help by bringing down trade barriers.

Harley shares closed down almost 6 per cent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 per cent import duties the European Union began charging on June 22.

In January, the company announced the closure of a plant in Kansas City, Missouri as part of a consolidation plan after its motorcycle shipments fell to their lowest level in six years.

Harley's departure is particularly embarrassing for Trump since the president has repeatedly praised the company.

U.S. President Donald Trump accused motorcycle maker Harley-Davidson Inc on Tuesday of using trade tensions over tariffs as an excuse to move production for European customers overseas. Wisconsin is the home of Harley Davidson. Companies are now coming back to America.

And U.S. companies are starting to see some of the less desirable consequences. The company built its reputation and image by making motorcycles here, and if the company wants to continue to market itself as an iconic American brand both at home and overseas, it needs to focus on US production. Some motorcycles sold in Italy, Portugal and Spain are made in India. This will avoid the tariffs. In the U.S., Harley-Davidson sold 147,972 motorcycles previous year, according to company data.

Last week, the European Union imposed penalties on $3.2 billion worth of U.S. products, many of which are produced in areas that form the heart of U.S. President Donald Trump's political base, in response to steel and aluminum tariffs added by the White House. It is still unclear whether jobs in Milwaukee will be impacted.

Harley said ramping up production at overseas worldwide plants could take at least nine to 18 months.

Harley-Davidson will begin to shift the production of motorcycles headed for Europe from the U.S. to factories overseas as it faces spiralling costs from tariffs.

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