Harley building Thailand plant as union objects

Harley-Davidson headquarters
Harley-Davidson Inc.'s headquarters in Milwaukee.

Last updated on July 2nd, 2019 at 09:08 pm

Milwaukee-based Harley-Davidson Inc. is building an assembly facility in Thailand to provide better access to markets in southeast Asia and China, but the head of the United Steelworkers International says the company’s decision to do so is “a slap in the face to the American worker.”

Harley-Davidson headquarters
Harley-Davidson Inc.’s headquarters in Milwaukee.

Harley already has assembly facilities outside of the United States. Those facilities, in India and Brazil, feature complete knock down production where components are shipped in for final assembly.

Katie Whitmore, a Harley spokeswoman, said the Thailand facility would feature a similar arrangement by producing motorcycles “from components produced at and shipped from our U.S. facilities and our supply base.”

She said she could not disclose the size of the new facility. The Brazil facility is 108,000 square feet and the Indian facility is 68,000 square feet. Harley’s U.S. facilities range from 226,000 to 915,000 square feet.

Leo Gerard, United Steelworkers International president, issued a statement calling on the company to abandon plans for the new plant and expand operations in America instead. The USW represents Harley workers at plants in Wisconsin and Missouri. Gerard said the decision “puts in jeopardy one of the few remaining genuine U.S. brands.”

“Harley-Davidson has been the crown jewel of American manufacturing,” Gerard said. “It’s an iconic brand that represents true American spirit. Management’s decision to offshore production is a slap in the face to the American worker and to hundreds of thousands of Harley riders across the country.”

Gerard added Harley owners and prospective buyers “want to continue to enjoy machines made in America.”

“Offshoring production is the wrong path to prosperity,” Gerard said. “It puts in jeopardy the success that has propelled Harley over the years: It is a brand of excellence that enables riders to confidently know that they are joining a special community of enthusiasts.”

Whitmore said the company has no intent to reduce manufacturing in the U.S. because of the expansion and U.S. facilities will continue to supply the American and certain global markets.

“Our focus is on being close to the customer,” Whitmore said. “As we look to drive growth in more markets globally, this facility will allow us to be more responsive and competitive in the ASEAN region and China. Increased access and affordability for our customers in the region is key to growth for the company in total.”

Thailand imposes a 60 percent tariff on motorcycles and, just as the company does in India and Brazil, establishing an assembly facility helps Harley get around those costs.

During Harley’s annual meeting in April, chief executive officer Matt Levatich pointed out that many of the markets with the greatest potential for Harley also have extremely high duties and tariffs.

“What that means is we can’t be profitable being priced competitively, so to be profitable in some place like Indonesia, we have to be priced way above the alternatives for our customer. That limits our growth,” Levatich said.

Whitmore acknowledged motorcycles assembled in Thailand would be subject to lower import tariffs, but said it was just one of many considerations.

“This decision ultimately ties back to our long term strategy to build the next generation of Harley-Davidson riders globally,” she said, referencing the company’s plans to grow international sales to 50 percent of the total over the next 10 years. “There is incredible opportunity in international markets. Many of the largest two-wheel markets are in Asia, and we’re already seeing our brand appeal grow as these economies continue to develop. We have a great opportunity to capitalize on a young, growing population with a growing middle class. By building this plant, we will be closer to these consumers and can be more responsive and competitive in this very important region to overall company growth.”

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.