Thai Harleys ‘thanks to President Trump’

Harley-Davidson 115th anniversary 110th 105th President

Harley-Davidson is shutting its Kansas City plant and will this year start building bikes in Thailand because President Donald Trump has abandoned the Trans-Pacific Partnership, says boss Matt Levatich.

The extraordinary statement comes as Matt addressed media and shareholders over its first-quarter results.

Harley’s global sales were down 7.2% in the quarter, including a 19.9% drop in Australia, but operating income was up 20.8%, thanks partly to “manufacturing optimisation”.

Harley-Davidson Retail Motorcycle Sales

Vehicles

1st Quarter

2018

2017

Change

U.S.

29,309

33,316

(12.0)%

EMEA

10,862

10,167

6.8%

Asia Pacific

6,329

6,863

(7.8)%

Latin America

2,506

2,342

7.0%

Canada

2,080

2,361

(11.9)%

International Total

21,777

21,733

0.2%

Worldwide Total

51,086

55,049

(7.2)%

Financial Services Segment Results

$ in thousands

1st Quarter

2018

2017

Change

Revenue

$178,174

$173,221

2.9%

Operating Income

$63,579

$52,636

20.8%

By “manufacturing optimisation”, Matt means shutting down the Kansas City plant which makes Softail, Sportster and Street models and consolidating operations at their York, Pennsylvania, factory which assembles Touring, CVO and Trike models and makes parts such as frames, fuel tanks, and fenders.

Harley-Davidson Kansas City factory waiving tariff president
Kansas City HD factory to close

Meanwhile, Indian Motorcycle reported growth in sales and market share during the first quarter of 2018 with motorcycle sales up 9.3% to $US131.6 million.

President shoulders some blame

Matt says the closure of the Kansas City plant and “Plan B” to build a plant in Thailand was due in part to Trump’s TPP decision.

However, Harley had bought the Thai land for the plant several years before Trump even became President.

Harley-Davidson boss Matt Levatich millennials president
Matt Levatich

It’s an extraordinary statement given Harley courted Trump early in his presidency.

Matt says they will start making motorcycles at the new manufacturing facility in Thailand later this year.

He says the move will help deal with “unbelievable trade and tariff barriers” in “critical” Southeast Asian markets and allow the Milwaukee-based company to be competitive on price.

“We were very optimistic about what the TPP would enable for Harley-Davidson,” he says.

“It took seven years for it to come to fruition. We could see the writing on the wall, and we got busy with Plan B.”

Harley also has assembly and manufacturing plants in India and Brazil.

4 Comments

  1. A Thai Harley is a Harley you have when you’re not having a Harley, a Clayton’s machine.

    This will harm the brand irrevocably. Shame really, they’re a beautiful piece of work.

  2. HD has discontinued 2 out 3 models of the bikes that were built in Kansas. The very popular Dyna series and the V-Rods. The Sportster assembly line has been moved to another plant.

    To put it bluntly, Matt Lavatich is lying.

  3. I somehow missed the part where this is President Trump’s fault. The TPP was a bizantine farce that would have killed jobs all over the manufacturing sector, as well as allowing even more companies to avoid taxes and tarriffs, all the while flooding American consumers with cheaply made ( read garbage) goods.
    I find it interesting that Harley had already bought the land years ago, yet wants to make out like Trump’s decision was the reason for the shut down and move. No, I don’t think so. Harley Davidson already had plans for this. And they can’t keep costs down to save their plant here, so sure, blame Trump instead of themselves.

    1. Absolutely! Outright dishonesty from Harley Davidson, given that they already had the land in their pocket. Many of these cheap-labour Asian countries put up tariffs against western manufactured goods while expecting to export to the west tariff-free; India is one, Thailand another. Both put between 60 and 100% tariffs against imported motorcycles. The problem for manufacturers like Harley and Triumph is that these are emerging markets with huge potential, in contrast (in Harley’s case) to declining western markets, so they need to be in on the ground over there. That is understandable, but let’s not start blaming Trump. And in any case, if those countries are hitting up American exports with high tariffs, why should America not do the same in return? Either you have free trade or you do not. This also seems to be an excuse by Harley to follow the Triumph example and shift production to low-wage countries while selling in their home markets at premium prices, thereby increasing their profits at the expense of American manufacturing workers. How will that fit the brand’s American icon mythology I wonder?

Leave a Reply

Your email address will not be published. Required fields are marked *

 

This site uses Akismet to reduce spam. Learn how your comment data is processed.