Harley-Davidson chief executive Matt Levatich pointed to the 94 percent of motorcycles the company produced in the United States last year in attempting to address “misinformation” about its plans for overseas production.
“We are a brand that is about big ideas that unite people, and we don’t take sides in politics,” Levatich wrote in a memo to employees and dealers. “Today, however, we unfortunately find ourselves in the center of a heated political conversation about fair trade.”
Levatich made similar comments in a 2017 interview with BizTimes, describing the company’s brand and values as “fundamental human qualities that aren’t and shouldn’t be co-opted by a particular politician or party.”
National publications, including CNBC and Bloomberg, reported on the memo Tuesday and industry magazine American Iron posted a copy as well. A Harley spokesman declined to provide the memo, but did not question the accuracy of versions posted online. He did not immediately respond to an email seeking comment on why Harley chose to send the memo out after largely avoiding any comment on its overseas plans.
Harley announced in late June it would move production of motorcycles destined for Europe to overseas facilities to avoid retaliatory tariffs. Those tariffs came in response to President Donald Trump increasing tariffs on steel and aluminum coming into the U.S.
Ever since Harley announced the decision, the company has become a target for Trump’s tweets. Most recently, the president encouraged a boycott of the company’s products and that he would work with its competitors to bring production to the U.S.
Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better.
— Donald J. Trump (@realDonaldTrump) August 12, 2018
Harley has estimated moving production would cost upwards of $100 million annually and executives said on the most recent earnings call that it still had not determined exactly whether facilities in Brazil, Thailand or India would produce the European bikes.
But Harley’s plans have also become tied up in its ongoing restructuring efforts, including the closure of its Kansas City assembly plant. Harley says it is shifting work to York, Pennsylvania, but union leaders say some jobs are going to Thailand. Trump, for his part, has claimed the company always planned to move production out of the U.S. and said the tariffs were just an excuse.
“There continues to be misinformation circulated in conjunction with this issue, and I want to reiterate and share facts about Harley-Davidson that you can both be proud of and share with interested customers,” Levatich wrote.
He said the company would continue to produce motorcycles for the U.S. and most of the rest of the world at facilities in the U.S.
“In 2017, we sold motorcycles in 103 countries around the world, and 94 percent of them were produced at our U.S. plants,” Levatich wrote. “We compete on our merits around the world and are competitive with what the world has to offer when trade is on a level playing field.”
Harley dealers sold 242,788 motorcycles last year, suggesting around 228,000 were made in the U.S. Taking out the nearly 40,000 motorcycles sold in Europe would drop U.S. production to 75 to 80 percent of the total. Some models are already produced in India.
“Our goal is the same as the U.S. Administration: we want a level playing field when it comes to trade, and we are working with government officials to find the best solution for our company and our brand,” Levatich wrote.
Meanwhile, executives at Polaris Industries said on a recent earnings call that they would shift production of Indian Motorcycles for Europe to a facility in Poland regardless of the outcome of the trade dispute.
“We plan to do this anyway for the logistics savings and lead time reductions of local production, but the added benefit of avoiding retaliatory tariffs is welcome in this current environment,” said Scott Wine, Polaris chairman and chief executive officer.
In his memo, Levatich said Harley’s “clear preference” is to produce motorcycles in the U.S.
“It has been since 1903, and it remains so today,” Levatich wrote. “The only reason we have invested otherwise is so that our products have a fighting chance of being price competitive in markets that burden our products with high tariffs.”
