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Thread: Harley Davidson to open a plant in Thailand

  1. #1

    Harley Davidson to open a plant in Thailand

    Steelworkers, machinists upset with Harley-Davidson about plans for Thailand plant
    Rick Barrett
    May 23, 2017



    Harley-Davidson Inc.’s plans to operate a motorcycle assembly plant in Thailand are drawing strong criticism from labor unions, although Harley says the plant won’t result in any U.S. job losses.

    The Thailand plant is scheduled to open in late 2018, Harley said Tuesday, and it will assemble bikes from components produced at the company’s U.S. facilities.

    Milwaukee-based Harley has similar operations in India and Brazil, where complete motorcycles are assembled from kits.


    (Photo: Journal Sentinel files)

    Harley-Davidson Inc.’s plans to operate a motorcycle assembly plant in Thailand are drawing strong criticism from labor unions, although Harley says the plant won’t result in any U.S. job losses.

    The Thailand plant is scheduled to open in late 2018, Harley said Tuesday, and it will assemble bikes from components produced at the company’s U.S. facilities.

    Milwaukee-based Harley has similar operations in India and Brazil, where complete motorcycles are assembled from kits.

    In India, where big touring motorcycles and cars are saddled with a 100% import tariff, Harley's sales have grown by a brisk 30% in the past two years.

    That's largely because the company has been able to get around the tariff by assembling bikes there, something it's done in that country since 2011.

    The Thailand tariff on motorcycles assembled in the United States is about 60%, according to Harley.

    “By opening this plant, we expect our regional (Asian) operations to help reduce those costs,” said Harley spokeswoman Katie Whitmore.

    “There is no intent to reduce Harley-Davidson U.S. manufacturing due to this expansion,” Whitmore said.

    “We anticipate an increase in the number of additional U.S.-manufactured components that will be shipped to the Thailand facility,” she added.

    Asia is one of Harley’s fastest-growing markets.

    But the Thailand plant, and others like it, worry the United Steelworkers.

    “Harley-Davidson has been the crown jewel of American manufacturing. 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,” Steelworkers President Leo Gerard said in a statement.

    Harley-Davidson has said it intends to grow its international business 50% by 2027, and that international sales are pivotal to the company’s future.

    But the Steelworkers, which represents employees at the Harley engine operations in Menomonee Falls, says the company should abandon offshoring plans and, instead, expand operations in the U.S.

    “Offshoring production is the wrong path to prosperity. It puts in jeopardy the success that has propelled Harley over the years,” Gerard said.

    A similar statement came Tuesday from the International Association of Machinists and Aerospace Workers, which also represents employees in Harley's manufacturing plants.

    “Harley-Davidson is going overseas and taking American jobs with it. While other companies think about moving work home, Harley-Davidson is doing the opposite. Harley-Davidson is laying off U.S. workers monthly while continuing to hire temporary workers," said IAM President Robert Martinez Jr.

    He added: “What part of ‘Made in America’ does Harley-Davidson not understand?”

    In April, Harley-Davidson Inc. said it was cutting 118 jobs at its plant in York, Pa., as the company moves the production of all cruiser motorcycles to Kansas City.

    The layoffs, which will begin June 23, affect 110 hourly employees represented by the Association of Machinists and Aerospace Workers.

    The remainder are salaried employees and contractors.

    Harley said the employees were notified in November 2015 that it planned to consolidate the production of Softail cruiser motorcycles at its Kansas City plant starting with the 2018 model year.

    The move will create 118 positions in Kansas City, according to the company, and it doesn’t affect employment in Milwaukee.

    jsonline.com

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  2. #2
    Thailand Lifer sabang's Avatar
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    Crap bike for a crap country. Those who would buy such a thing manufactured in a dictatorship, deserve to ride and be seen in it. And thought of accordingly- I do hope they do them in Yellow.

  3. #3
    Harley-Davidson Is Hurt by Trade Laws It Once Championed
    Rich Duprey
    Jun 25, 2017

    1.jpg
    Image source: Harley-Davidson.

    There are a lot of good reasons for Harley-Davidson (NYSE: HOG) to open up an assembly plant in Thailand, and few, mostly jingoistic, ones against it, but the irony is that the quintessential American motorcycle maker is going abroad because it is being punished by the same sort of trade rules it once championed.

    Where once it lobbied for -- and obtained -- draconian tariffs on foreign rivals to limit their ability to compete in the marketplace, Harley-Davidson is being hurt by similarly restrictive trade laws in Asia. By opening up a new plant there, the big bike maker will be able to skirt the rules and compete more effectively.

    Trade for me but not for thee

    In 1983, President Ronald Reagan imposed for the first time ever strict trade rules that benefited a single company. Harley-Davidson had become the last man standing in the U.S. motorcycle market, but even as the sole American manufacturer left, it was struggling financially.

    Like today, the motorcycle market was in the midst of a downturn that affected all players, Harley as well as its vaunted Japanese competition. But Harley chose protectionism to beat its rivals and won from Reagan tariffs that soared as high as 49.4% in the first year with scheduled declines each year thereafter until their removal after five years. (Harley completed its turnaround early and had the tariffs scrapped ahead of schedule.)

    In Thailand, Harley-Davidson faces tariffs of 60% on its imported motorcycles (cars face rates of 80%) that put its bikes at a competitive disadvantage on retail pricing. By opening a facility there that assembles bikes from U.S.-made parts, it will be able to get around those restrictive tariffs just like it does in India, which imposes a 100% tariff on motorcycle imports. (Harley also has an assembly plant in Brazil it opened in 1999 to take advantage of the country's free trade zone.)

    That's why making this move into Thailand makes a lot of sense, both practically and financially. By being located there, Harley-Davidson will have access not only to the Thai market but also the markets of the 10 countries that comprise the Association of Southeast Asian Nations (ASEAN). Moreover, it puts Harley in the position of having its bikes closer to China, a huge, albeit weakening, market.

    According to industry analysts at MarkLines, the Asian motorcycle market remains largely robust, though there have been pockets of weakness, with China being one of those contracting. Sales fell 12% in 2016 to under 8 million units, continuing their decline from the year before. Conversely, India is strong, with sales growing nearly 10% last year and expected to gain almost 8% this year. Indonesia is expected to rebound in 2017 and Thailand is predicted to grow almost 3%. A Harley assembly plant in the region will be better able to target these markets.

    Trading freedom for security

    However, the United Steelworkers union has complained that the bike maker is shipping American jobs overseas, but as Harley notes, because the facility will be using American-made parts, it will actually keep U.S. jobs intact. Similarly, others pointed to the paradox of Harley opening a plant in a foreign market when it was lauded by President Donald Trump for keeping jobs in America.

    Along those same lines, the president's decision to pull out of the Trans-Pacific Partnership trade agreement was also criticized, because it would purportedly help companies avoid high tariffs like those imposed by Thailand. But such arguments ignore the fact that Thailand itself isn't a signatory to the pact, so there might have been no benefit regardless, though it would have avoided tariffs in other countries.

    Bilateral agreements are probably better as a matter of policy, which is what groups in Thailand are advocating, and by locating its plant in Thailand, Harley-Davidson will bypass the tariffs in other countries anyway.

    The Asia-Pacific market is Harley's third largest, and it sold almost 32,900 bikes there last year, or 12% of the total. Harley noted that it had its best-ever retail sales there in 2016, but in the first quarter it was the worst-performing region, with sales tumbling more than 9%. And when you exclude Japan, the results were even worse.

    If it wants to be able to compete and grow once more, Harley is almost required to build its bikes overseas. The greater irony, though, is that Harley-Davidson is being forced to construct this plant, and possibly earn the enmity of its unions, because of the same types of laws it once had imposed on its own competition.

    host.madison.com

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  4. #4
    The Asia-Pacific market is Harley's third largest, and it sold almost 32,900 bikes there last year, or 12% of the total. Harley noted that it had its best-ever retail sales there in 2016, but in the first quarter it was the worst-performing region, with sales tumbling more than 9%. And when you exclude Japan, the results were even worse.
    The drop in sales and rational for opening plant in Thailand are unrelated. Tarrifs are unchanged so either folks are buying fewer motorcycles of all brands or are buying other brands instead.

    Opening a plant in Thailand makes sense given the 60% tariff and will no doubt produce a big jump in sales in all ASEAN countries. However, US manfacturers would be better served if trade agreements removed tariffs. TPP did just that but the US unwisly decided to suspend it. Another stupid move by the Don.

    Albeit small, a few thousand manufacturing jobs have returned to the US. Reason has little to do with Trump. Increase labor costs in China and ither countries plus shipping cost increases make manufacting in US cost effective.
    Whenever you find yourself on the side of the majority, it is time to pause and reflect.

  5. #5
    Quote Originally Posted by Mid View Post
    Harley-Davidson Is Hurt by Trade Laws It Once Championed
    Rich Duprey
    Jun 25, 2017

    1.jpg
    Image source: Harley-Davidson.

    There are a lot of good reasons for Harley-Davidson (NYSE: HOG) to open up an assembly plant in Thailand, and few, mostly jingoistic, ones against it, but the irony is that the quintessential American motorcycle maker is going abroad because it is being punished by the same sort of trade rules it once championed.

    Where once it lobbied for -- and obtained -- draconian tariffs on foreign rivals to limit their ability to compete in the marketplace, Harley-Davidson is being hurt by similarly restrictive trade laws in Asia. By opening up a new plant there, the big bike maker will be able to skirt the rules and compete more effectively.

    Trade for me but not for thee

    In 1983, President Ronald Reagan imposed for the first time ever strict trade rules that benefited a single company. Harley-Davidson had become the last man standing in the U.S. motorcycle market, but even as the sole American manufacturer left, it was struggling financially.

    Like today, the motorcycle market was in the midst of a downturn that affected all players, Harley as well as its vaunted Japanese competition. But Harley chose protectionism to beat its rivals and won from Reagan tariffs that soared as high as 49.4% in the first year with scheduled declines each year thereafter until their removal after five years. (Harley completed its turnaround early and had the tariffs scrapped ahead of schedule.)

    In Thailand, Harley-Davidson faces tariffs of 60% on its imported motorcycles (cars face rates of 80%) that put its bikes at a competitive disadvantage on retail pricing. By opening a facility there that assembles bikes from U.S.-made parts, it will be able to get around those restrictive tariffs just like it does in India, which imposes a 100% tariff on motorcycle imports. (Harley also has an assembly plant in Brazil it opened in 1999 to take advantage of the country's free trade zone.)

    That's why making this move into Thailand makes a lot of sense, both practically and financially. By being located there, Harley-Davidson will have access not only to the Thai market but also the markets of the 10 countries that comprise the Association of Southeast Asian Nations (ASEAN). Moreover, it puts Harley in the position of having its bikes closer to China, a huge, albeit weakening, market.

    According to industry analysts at MarkLines, the Asian motorcycle market remains largely robust, though there have been pockets of weakness, with China being one of those contracting. Sales fell 12% in 2016 to under 8 million units, continuing their decline from the year before. Conversely, India is strong, with sales growing nearly 10% last year and expected to gain almost 8% this year. Indonesia is expected to rebound in 2017 and Thailand is predicted to grow almost 3%. A Harley assembly plant in the region will be better able to target these markets.

    Trading freedom for security

    However, the United Steelworkers union has complained that the bike maker is shipping American jobs overseas, but as Harley notes, because the facility will be using American-made parts, it will actually keep U.S. jobs intact. Similarly, others pointed to the paradox of Harley opening a plant in a foreign market when it was lauded by President Donald Trump for keeping jobs in America.

    Along those same lines, the president's decision to pull out of the Trans-Pacific Partnership trade agreement was also criticized, because it would purportedly help companies avoid high tariffs like those imposed by Thailand. But such arguments ignore the fact that Thailand itself isn't a signatory to the pact, so there might have been no benefit regardless, though it would have avoided tariffs in other countries.

    Bilateral agreements are probably better as a matter of policy, which is what groups in Thailand are advocating, and by locating its plant in Thailand, Harley-Davidson will bypass the tariffs in other countries anyway.

    The Asia-Pacific market is Harley's third largest, and it sold almost 32,900 bikes there last year, or 12% of the total. Harley noted that it had its best-ever retail sales there in 2016, but in the first quarter it was the worst-performing region, with sales tumbling more than 9%. And when you exclude Japan, the results were even worse.

    If it wants to be able to compete and grow once more, Harley is almost required to build its bikes overseas. The greater irony, though, is that Harley-Davidson is being forced to construct this plant, and possibly earn the enmity of its unions, because of the same types of laws it once had imposed on its own competition.

    host.madison.com

    Well, this is an interesting break down.
    Thanks.

  6. #6
    Thailand Lifer peterplonker's Avatar
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    Harley has ceased to be a form of transport, it's a fashion statement for aspirational or wanna be Thais, many years ago since it has been relevant, or even faintly useful, its image as a fashion item has served its time, it doesn't suit Thai roads or conditions, bin it, no loss.

  7. #7

    Harley to build motorcycles for Europe in Thailand

    Milwaukee-based Harley-Davidson Inc. plans to build the majority of its motorcycles destined for the European Union at its facility in Thailand, a decision intended to help the company avoid additional tariff costs. Retaliatory tariffs by the EU and China, along with those the Trump administration has put on Chinese goods cost Harley $23.7 million in 2018 and an estimated $100 million to $120 million this year, according to company executives. Those rising costs, along with additional spending for recalls, restructuring and raw materials, nearly wiped out all of the company’s fourth quarter profits.

    Harley had previously said it would move production of EU motorcycles out of the United States. The European Union last year increased tariffs on U.S. made motorcycles from 6 to 31 percent in response to President Donald Trump raising tariffs on European steel and aluminum. The increased motorcycle tariffs would add about $2,200 to the price of a bike and Harley said it could not afford to pass the cost on to consumers or dealers. Harley’s decision to move EU production overseas drew Trump’s ire last year with the president lashing out at the company on Twitter and in remarks at Foxconn’s groundbreaking in Mount Pleasant. Trump also said he was working with Harley’s competitors at one point.

    Despite the presidential attention, Harley pressed ahead with its plans but had not previously said where the bikes would be produced. In addition to the Thailand facility, Harley has plants in Brazil and India that build motorcycles to avoid tariffs in those markets. John Olin, chief financial officer of Harley-Davidson, said Tuesday on the company’s earnings call that the company plans to ship the majority of motorcycles for the EU, China and other southeast Asian markets from the Thai facility by the end of the year. The facility, announced in 2017 and completed in the third quarter of 2018, was originally intended to supply China and southeast Asia. Harley says it is investing $15 million this year to have the capacity to serve the EU as well.

    “Given the fact we’re now looking to supply additional markets from Thailand, we’re expanding the plant,” Olin said. Before the capacity to ship from Thailand is in place, Harley says it is expecting an addition $100 million to $120 million in tariff costs this year. In 2018, tariffs cost Harley an additional $23.7 million. The company’s tariff figures do not include increased raw material costs driven by tariffs on steel and aluminum. Raw material costs increased $17.7 million from 2017 to 2018. Also adding to Harley’s increased costs last year were two recalls the company recorded charges for in the fourth quarter. One charge was for $35 million for clutch issues on certain Touring and Softail models. The second was a $20 million charge for a previously unannounced recall on Harley’s Street models. Harley is recalling 43,908 model year 2016 to 2019 Street motorcycles because of an issue with brake calipers from a third-party supplier, according to Harley spokeswoman Pat Sweeney.

    Around 13,000 of those motorcycles were sold in the U.S. Sweeney said corrosion issues with the caliper can lead to increased brake drag. Motorcycles used where road salt is common or in coastal areas are particularly at risk. She added that Harley is not shipping any Street motorcycles until it has repair parts available. All of the extra costs added up for Harley-Davidson in the fourth quarter. The company reported net income of $495,000, down from $8.3 million last year. Motorcycle related revenue was down and gross profit margins declined from 30.6 percent in 2017 to 27.6 percent in 2018.

    Selling, administrative and engineering expenses were up more than $18 million from 2017 and the company also incurred restructuring expenses as it closes its Kansas City facility, moving work to York, Pennsylvania. For the year, motorcycle-related revenue was up slightly and net income improved by around $10 million to $531.5 million. Motorcycle shipments, however, were down 5.3 percent for the year and retail sales were down 6.1 percent. In the U.S. alone, retail sales were down 10.2 percent. While Harley has put a number of initiatives in place to drive increased demand for its motorcycles, the company is forecasting shipments of 217,000 to 222,000 motorcycles this year, a 3 to 5 percent drop. The midpoint of Harley’s guidance would put shipments below the 223,000 bikes the company shipped in 2009.

  8. #8
    Harley Davidson needs to open these plants in the U.S.A.
    A Deplorable Bitter Clinger
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