Who would have thought? Harley Davidson, an American icon, is going to build motorcycles outside of America! Why is Harley Davidson moving production facilities out of the USA? As the Trump trade war between the USA and everyone else ramps up Harley Davidson is looking at Europe where they sell about 40,000 bikes a year. This is second only to their sales in the USA. Harley would be an obvious target for tariffs by the EU. It is an iconic American brand and it started in a state, Wisconsin, that voted for Donald Trump. Harley Davidson is looking to remain competitive in Europe. But, how big of a change is this for the company?
Harley Davidson Production Facilities
The company was founded in Milwaukee, Wisconsin in 1903 and its corporate offices remain on the original manufacturing site. But Harley Davidson has many manufacturing facilities according to the Harley Davidson Website.
- USA, Missouri, Kansas City – Vehicle and Powertrain Operations.
- USA, Pennsylvania, York – Vehicle Operations.
- USA, Wisconsin, Menomonee Falls – Powertrain Operations.
- USA, Wisconsin, Tomahawk – Tomahawk Operations
- Australia, Adelaide – New Castalloy
- Brazil, Manaus –Harley-Davidson do Brasil Ltda Assembly Plant
- India, Bawal – Harley-Davidson India Bawal Assembly Plant
- Thailand, Rayong – Thailand Sales Office and Assembly Plant
How Does a Trade War Hurt Harley Davidson?
An interesting article in the Manchester Guardian writes that the trade war is a threat to Harley Davidson.
Harley-Davidson is not having a great year. In January, the legendary bike company, struggling to reverse a four-year slide in sales, had to close its Kansas City factory. Now Donald Trump – who seems as if he’d like to be a Harley man – has added to its woes.
This week’s announcement of steel tariffs on US imports could add $30m to the company’s costs, according to Wedbush Securities, an investment firm. Worse still, European leaders are threatening retaliation, and several symbols of Americana – including Kentucky whiskey, Levi’s and Harley-Davidson motorcycles – are on their list.
The point is that steel and aluminum tariffs raise the cost to Harley of making a bike. Now they will be directly in the crosshairs of the Europeans who will slap tariffs on well-known American brands. And the company was already struggling to remain profitable. Why Harley Davidson is moving production out of the USA is to remain viable as a company. In May of 2014 Harley Davidson stock sold for $71 a share. Today it trades at $44.
What Is the Broader Picture?
Stocks are down across the board as the likelihood of a trade war increases. CNBC notes that the Dow falls 400 points as Trump announces plans to bar Chinese investment in US tech companies. The concern is Chinese retaliation.
Shares of chipmakers Intel, Micron Technology and Nvidia all fell at least 3 percent. Boeing, Caterpillar and General Motors – all companies with significant exposure to China – also fell by 2.2 percent, 2.1 percent and 0.8 percent, respectively. Boeing, Caterpillar and GM were also on track to post large monthly losses.
The pain has just begun to be felt.