Harley-Davidson to move some production out of US to avoid EU tariffs
Updated
Harley-Davidson says it will begin to shift the production of motorcycles headed for Europe from the US to factories overseas as it faces spiralling costs from European Union tariffs.
Key points:
- Harley said the tariffs meant a bike would cost an extra $2,200 per average motorcycle to export to the EU
- The company said shifting production overseas could take nine to 18 months
- It anticipates the cost of tariffs for the rest of the year will be around $30 million to $45 million
The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice.
The EU tariffs on $US3.4 billion ($4.6 billion) worth of US products are retaliation for duties the Trump administration is imposing on European steel and aluminium.
Harley forecast the EU's retaliatory tariffs would cost the company $US90 million ($121 million) to $US100 million ($135 million) a year.
Mr Trump vowed to make the iconic motorcycle maker great again when he took office last year, meeting company executives at the White House and thanking them "for building things in America".
Photo:
Donald Trump met with Harley-Davidson's chief last year in February. (Reuters: Carlos Barria)
But since then the company has been counting the costs of his trade policy.
Harley has warned consistently against tariffs, saying they would negatively impact sales.
Harley-Davidson sold almost 40,000 motorcycles in the European Union last year, generating revenue second only to the US sales, according to the Milwaukee-based company.
The maker of the iconic American motorcycle said in a regulatory filing on Monday that EU tariffs on its motorcycles exported from the US jumped between 6 per cent and 31 per cent, which translates into an additional, incremental cost of about $US2,200 ($3,000) per average motorcycle exported from the US to the EU.
"Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally," the company said in prepared remarks.
"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.
"Europe is a critical market for Harley-Davidson."
Harley-Davidson will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe, it said.
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 $US30 million ($40 million) to $US45 million ($61 million).
Harley-Davidson said that shifting targeted production from the US to international facilities could take up to 18 months to be completed.
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.
US motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.
Asked about the Harley decision, Wisconsin Governor Scott Walker addressed the issue of tariffs in general but not specifically the situation faced by the company.
"The ultimate goal, if we could get there, is no tariffs or if anything few tariffs on anything," said Mr Walker, a Republican.
"That's what I'm going to push for, ways that we can get to a level playing field then we don't have this tit for tat on any number of products out there."
AP/Reuters
Topics: donald-trump, international-aid-and-trade, trade, world-politics, united-states, european-union
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