President Donald Trump continued his criticism of Milwaukee-based Harley-Davidson Inc. on Tuesday, claiming his administration “is working with other Motor Cycle companies who want to move into the U.S.”
“Harley customers are not happy with their move – sales are down 7% in 2017. The U.S. is where the Action is!” Trump tweeted.
Now that Harley-Davidson is moving part of its operation out of the U.S., my Administration is working with other Motor Cycle companies who want to move into the U.S. Harley customers are not happy with their move – sales are down 7% in 2017. The U.S. is where the Action is!
— Donald J. Trump (@realDonaldTrump) July 3, 2018
Harley’s revenue from motorcycles and related products was down about 7 percent in 2017, but increased 2.7 percent in the first quarter this year, despite a 9.7 percent drop in shipments. The company has struggled in recent years with overall revenues falling from $6.23 billion in 2014 to $5.65 billion last year.
The decline has been the result of a number of factors including increased competition from a relaunched Indian brand and a weak dollar making it easier for foreign competitors. The company has also cited weakness in oil and gas dependent areas, declining ridership among baby boomers and cheaper used motorcycle prices as culprits.
Trump did not mention a specific manufacturer in his tweet. Harley’s major competitors include the likes of BMW, Honda, Yamaha and Indian. Minnesota-based Polaris Industries, which makes Indian Motorcycles, indicated it might follow Harley’s move to avoid the increased costs of new tariffs.
Assembly Majority Leader state Rep. Jim Steineke, R-Kaukauna, responded to Trump’s Harley criticism today on Twitter:
Important thing to me and all other Wisconsinites is that they keep producing the best motorcycles in the world right here in Wisconsin, even if they have some operations elsewhere. We’re still #openforbusiness in Wisconsin.
— Jim Steineke (@jimsteineke) July 3, 2018
The “move” Trump references is Harley’s decision to shift production of motorcycles destined for Europe to its international facilities in Thailand, India and Brazil. The decision came after the European Union increased tariffs on Harley’s motorcycles from 6 percent to 31 percent in response to Trump’s increased tariffs on steel and aluminum.
Harley determined the increased tariffs would cost an average of $2,200 per motorcycle or up to $100 million annually. The company felt it could not remain competitive by passing those costs on to dealers and consumers. In the short-term, Harley plans to absorb the additional costs, a potential 2 percentage point hit to its overall operating margin.
Moving production overseas will take place over the next nine to 18 months and will come with additional costs. International production, however, will allow the company to avoid the tariffs on the nearly 40,000 motorcycles it sells annually in Europe.
Harley announced the plans last week Monday, setting off a week of criticism from the president including tweets and a brief aside during his remarks at an event celebrating Foxconn’s groundbreaking in Wisconsin where he told the company “don’t get cute.” He also said during an interview on Fox Business that “everybody that ever bought a Harley-Davidson voted for Trump.”
Trump has also sought to connect the move to Harley’s decision to close its Kansas City plant, which was announced in January, saying the company is just using the tariffs as an excuse to move work overseas. Harley says work from the Kansas City plant is moving to York, Pennsylvania, although unions representing the Kansas City workers have suggested some of their jobs are going to a new plant Harley built in Thailand.
The plant in Thailand has been under construction for the last couple years and Harley says it provides an opportunity for the company to sell into Asian markets. Increasing international sales is a key part of Harley’s long-term strategy as more baby boomers in the U.S. exit the sport of motorcycling.
Trump has said 100 percent of Harleys should be made in the U.S., although the company has been building motorcycles in Brazil since the late 1990s. It also produced wheels in a facility in Australia, although the company is closing the plant in the same cost cutting plan that led to the closure of the Kansas City operation.
For its part, Harley has remained quiet as Trump has leveled his criticisms. A spokesman declined to comment on the latest tweet Tuesday, saying the company’s position is established in its securities filing announcing the plan.
The only other comments Harley has made came in the form of a tweet that included a quote from Matt Levatich, Harley’s president and chief executive officer. A quote circulating online and attributed to Levatich suggested he called Trump a “moron” who does not understand the economy. Levatich denied having said that and said “it’s shameful we live in a time when people create fake quotes.”
Trump’s focus on the company has not been good for Harley’s stock price. The company’s share price has declined $1.65 since the Friday before announcing its European plans to $42.56 as of early Tuesday afternoon. At one point the company’s stock was down nearly 9 percent.
