STOP Fretting over Harley. It is All Going to Be Okay in the End

If you haven’t been living under a rock for the past few weeks, Harley-Davidson Motor Company announced restructuring US plants and opening a new plant overseas. Before we get started, let me just say that losing your job for things that are out of your control sucks. It is an unfortunate part of the business world as companies chase the dollar. This article is not about the emotional side of Harley-Davison’s decision, but merely the business side:

Harley Davidson announced recently that they will be closing their Kansas City plant, moving to it their plant in York, Pennsylvania, and opening a plant in Thailand. Their desire to open a plant in Thailand was partly in response to the retaliation tariffs from the EU, who is Harley-Davidson’s second biggest market, after President Trump announced a 25% tariff increase on steel and 10% increase on aluminum coming from Canada, Mexico, and the EU.

Bikes bound for Europe will now be built outside of the US, which has created the outrage from various news sites and the President himself.

President Trump’s Twitter rant consisted of calling it outrage and that “Harley-Davidsons should never be made outside of the US”. Also adding that Harley-Davidson “waved the flag” of surrender over the ongoing trade wars, and that they never would have had to pay the tariffs. He then responded with almost a plea for Harley executive to “be patient” that it will all work itself out very quickly.

This was foreshadowed by economic experts before the trade war that a broad tariff would hurt other industries such as the motorcycle and automaker industry. Well they were right.

Canada has already said they will add 10% and 25% tariffs to US goods up to 12.5 billion dollars and the EU said they will add 25% tariffs to goods such as motorcycles coming from the US. Before the trade war, EU tariffs were 6%, now they are 31%. USA Today reported that this would result in $2,200 added to each motorcycle bound for Europe which could add up 100 million in extra operating cost for Harley-Davidson.

Per The Wall Street Journal, Harley-Davidson responded to the President’s tweets, saying “We’d rather not make investments to address these regulatory hurdles and take the profit hit, but we are doing so to protect European riders and our dealers,” Harley’s vice president for U.S. sales, Dave Cotteleer, wrote in a memo to dealers that was reviewed by The Wall Street Journal. “We believe it is important to protect them, and this is a point perhaps missed by some people who want to believe a simple headline because it’s easier to do so.”

Harley also made note that the plant opening Thailand is part of their future plans of world domination, particular Asia, which is the fastest growing motorcycle market. Harley already has plants in Brazil, Australia, Thailand, and India. The later being the biggest market of them all.

So, what does this mean for you the US customer?

Honestly, not much. The Harley-Davidsons you purchase will still be built in the US. 

What Harley-Davidson is doing is not much different from other companies. Just look at any of the big three automakers who have plants around the world. Doing so allows them to cost in those markets. Actually, according to Cars.com, the most American made car is the Jeep Cherokee, who is owned by a European company, followed by the Honda Odyssey second. Car manufacturers have been sourcing parts from cheaper parts of the work for years.

What Harley-Davidson is trying to do is nothing new. By not passing on the increased tariffs to their customer, they are actually helping their customers. Would you want to pay $15,000 thousand for a Sportster after fees, TTL, and tariffs? No, I wouldn’t either. I know this is hard to see, right now because this is coupled with the plant closing in Kansas City. Though they are connected, one is not necessarily an adverse effect from the other.

Closing and reconsolidating is part of everyday life in the business world. When business is good, they race to open as many storefronts and manufacturing plants as they can. Then when things die down, as they have over the last few years, companies have to reconsolidate. I know saying it sucks is an understatement for those effected, but Harley is not the first to do so. Microsoft did this several years back, and Starbucks is doing it now.

Harley-Davidson is the most beloved American motorcycle company, with ambitious goals of world domination and introducing 100's of new motorcycles over the next decade, including an electric motorcycle next year. They are the only American motorcycle company to withstand the test of time. With others going out of business, they thrived. They have done so through growing their brand on a global stage. If they want to continue bringing us badass motorcycles that are the embodiment of freedom, then they are going to have to continue diversifying their business market, and cut operating cost.

Harley-Davidson is only reacting to the trade war created by our President. Yes, in some industries they were being overtaxed, but in others they were not. President Trump does not swing a delicate hammer, he is not the most diplomatic person out there, but he is a business man. These trade wars will eventually work themselves out, but till then companies will have to react to the consequences, and Harley-Davidson will not be the last. So, in our President’s words “be patient” because your Harley-Davidson is still American made.