A Silly War With Harley-Davidson
Posted August 19, 2018 8:15 p.m. EDT
Not content to undermine a NATO ally and wipe hundreds of billions of dollars in value from global stock and currency markets, President Donald Trump followed up last week by punching a revered U.S. company in the gut. Motorcycle manufacturer Harley-Davidson, celebrating its 115th year in business, offended the president by having the temerity to move jobs to Europe. The company did so because tariffs that Trump imposed on imported steel and aluminum, combined with countervailing tariffs from the European Union, raised Harley’s export costs by some $2,200 per bike. Unable to pass that on to European consumers, Harley acted in the face of mounting losses. “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas,” Trump tweeted. “Great!”
No, it’s not.
In the United States, Harley has been trying to get younger. (Aren’t we all?) As aging boomers who form the core of the Harley cult ride off into the sunset — some on their motor trikes — Harley has been recruiting a younger and more diverse group of riders to replace them. This is a smart strategy, but the company has had mixed success so far. HOG, as Wall Street calls Harley, has in fact attracted younger riders, including women, but not quickly enough to replace the departing demographic and to expand sales. Unit shipments of Harleys will decline 4 percent this year, according to Morningstar.
Because of this shift, Harley has much more riding on foreign sales. To succeed at home, the company has to expand overseas — the goal is to sell 50 percent globally, up from about 38 percent today. Just a week before Trump’s recent Harley tweet, the company announced a revitalization program, called More Roads to Harley-Davidson, intended to bolster ridership by 2 million in the United States. This is a multiyear, multinational, more than $500 million effort to meet new riders on their own terms, with lower-power 250 cc to 500 cc bikes for Asia — compared with the 1,746 cc engine on a Fat Boy — and smaller, more interactive retail formats globally.
As part of that program, Harley will introduce the long-awaited, all-electric LiveWire in 2019, which will likely pave the way for other electric bike models for the global market. “We expect this plan will result in an engaged, expanded Harley-Davidson community with a more diverse rider base, along with industry-leading margins and cash flow,” said Harley’s chief executive, Matthew Levatich.
The very measured Levatich, a mechanical engineer by training, is nobody’s idea of a wild biker. He is an uneasy rider, desperately trying to avoid getting muddied in the Trump maelstrom. “We don’t take sides in politics,” he told employees in a memo. “Today, however, we find ourselves in the center of a heated political conversation about fair trade.” But Harley can hardly plead to be an innocent bystander. If you’re a big corporation, you are taking sides in politics. Levatich also did not turn down a White House photo op with Trump when things were going his way.
This year, Levatich announced that Harley was closing its Kansas City, Missouri, manufacturing plant, which has 800 or so union jobs. Half those jobs will migrate to a plant in York, Pennsylvania, but the workers left behind saw the consolidation as a function of another Trump policy — corporate tax giveaways. “These companies are taking tax breaks with one hand and handing out pink slips with the other,” Robert Martinez Jr., president of the International Association of Machinists and Aerospace Workers, told USA Today.
It’s a refrain repeated in places like Lordstown, Ohio, where GM is shuttering two production lines, putting some 7,000 people out of work. Yet some union members themselves are complicit in those ambushes. Trump’s promise to keep or restore jobs in the United States played well in blue-collar states such as Ohio and Wisconsin, which he won by fewer than 23,000 votes. Milwaukee is Harley’s home, and Wisconsin’s governor, Scott Walker, a Republican and an avowed Harley enthusiast, has tried to distance himself from Trump. But this is the same governor who aggressively undermined unions representing state workers, including teachers. And his party is the same one that has kneecapped organized labor in nearly every state with a Republican majority. If you are wondering why real wages have flatlined for two decades, the decline in union power is a place to start.
Now, by encouraging a consumer boycott, Trump threatens to put more of Harley’s highly skilled and proud U.S. employees out of work to punish the company for acting rationally in the face of his irrational trade policy.
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