Trump Versus Harley Day 3
Donald J. Trump @realDonaldTrump, June 27, 2018
Harley-Davidson should stay 100% in America, with the people that got you your success. I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!
President Trump’s feud with Harley-Davidson is sad to watch, but it reveals several challenges facing American businesses. I understand the issue, but I continue to believe Harley’s management made a grave error by blaming its announcement of factories outside the U.S. on the tariff tiff. This will be over before any motorcycles roll off any new assembly lines in Europe.
Growing Business Beyond America
For many, Harley-Davidson is as American as apple pie. The problem for the company is motorcycles, in general, have become less popular in American culture, and Millennials like fast slick bikes like the Ducati.
This trend is underscored by the fact American motorcycle registration peaked at 549,200 in 2006 and finished in 2017 at 288,800. Meanwhile, European motorcycle registration has been coming on strong, and Harley’s share of that expanding pie has been growing at an even faster pace.
That suggests, from a business point of view, management would consider the ability to manufacture closer to its fast-growing market. I think that’s the case with Harley, and why it’s closing its Kansas City plant while opening a plant in Thailand.
I’m not arguing against the business rationale of this decision. I am just saying it was made long before America got into a tariff tiff with Europe.
Moreover, those that are suggesting Harley made the move to Thailand because President Trump got out of the Trans-Pacific Trade pact should understand Harley has a lease on a 485,000 square foot manufacturing facility in Australia, which is a part of the Trans-Pacific Partnership (CP-TPP).
Corporate activism is taking on greater roles in American businesses, and it’s not a good thing, especially in this environment. There was a time when it was about making customers and potential customers feel euphoric.
Now, businesses are taking sides. In the case of Harley, I think it’s making it more difficult for the administration to fashion a victory in a contentious fight that would see U.S. exporters as huge winners for more open markets with fewer barriers, including tariffs.
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