AP FACT CHECK: Trump's half-truths on Harley overseas plans
By STEVE KARNOWSKI
Jun. 26, 2018
MINNEAPOLIS (AP) — President Donald Trump asserts that Harley-Davidson is using retaliatory tariffs by the European Union as an "excuse" to move some of its production overseas. Trump argues that Harley was already pursuing plans to shift some operations abroad before it announced this week that it would make motorcycles for the EU market outside the U.S.
On Tuesday, the president tweeted incorrectly that Harley was shifting its operations in Missouri to Thailand. Still, Harley has said previously that a long-term goal is to expand its international business and that it faces excess capacity in the U.S., where sales of the iconic American brand have declined as its core market has aged.
Milwaukee-based Harley said Monday that EU tariffs on its American-made motorcycles jumped between 6 percent and 31 percent as a result of the escalating trade war, adding about $2,200 in cost to the average Harley sold in the EU. The company said it would absorb those costs instead of raising prices.
A look at how Trump's tweets on Harley compare with the facts:
TRUMP: "Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it....."
THE FACTS: Harley said no such thing. The company said in January that it would close its motorcycle plant in Kansas City, Missouri, in a cost-cutting move. It said it would shift those operations to its plant in York, Pennsylvania. The company also said it would close a wheel plant in Adelaide, Australia. Harley said it expected to eliminate 800 jobs in Kansas City, plus 90 in Australia, while adding 450 jobs in York by mid-2019. The company did not say it was moving any Kansas City operations to Thailand
In May 2017, the company did announce plans to build a plant in Thailand to make motorcycles for Asian markets. But that was months before it announced the closure of the Kansas City plant. Harley officials denied when they announced the Kansas City closure that it was because of the plant in Thailand, though union officials have made that allegation. The company has more recently cited Trump's decision to pull the U.S. out of the Trans-Pacific Partnership for building the Thai plant, which is expected to open later this year.
Harley's announcement Monday did not say where it will build the motorcycles that it will sell in European Union countries. Michael Pflughoeft, a spokesman, said in an email to The Associated Press only that it would be at the company's "existing international facilities." The company said it would provide more details during its next quarterly earnings announcement July 24.
The company already operates assembly plants in Manaus, Brazil, and Bawal, India, to make motorcycles for those local markets, where tariffs on imported bikes are steep. The India plant also makes certain models for other markets outside North America. Those plants receive many of their parts from Harley's plants in the U.S., primarily from Wisconsin.
Worldwide sales of new Harleys in the first quarter of this year were down 7.2 percent compared with the first quarter of 2017. And they fell 12 percent in the U.S. compared with a rise of 0.2 percent in international markets. Sales were up strongly in Europe and Latin America. The company sold nearly 40,000 new motorcycles in Europe last year and says its revenue from EU countries is second only to the U.S.
While Harley says it has a goal of creating 2 million new riders in the U.S. by 2027, it's also banking on boosting its international business to 50 percent of its annual sales volume, compared with 39 percent last year.
TRUMP: "....When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won't be able to sell back into U.S. without paying a big tax!"
THE FACTS: Pflughoeft said Harleys sold in the U.S. will continue to be made in the U.S.
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