Sales are plummeting, owners are aging out, internet trolls are calling them woke, dealerships are pissed with executive mandates and increasing inventories, and their bikes just aren't as good as they once were
Harley's executives believed they had a way around the proposed counter-tariffs the European Union imposed on American goods, as well as reducing production costs. What did it do? It started building bikes in Thailand.There was just one problem with that plan. The EU knew the game Harley was playing, and it subsequently sued the company for essentially trying to pull a fast one. Well, that case has finally been resolved and, wouldn't you know it, Harley lost.
A great example of how tariffs make things worse for everyone.
ReplyDeleteIn 2018 Trump imposed tariffs on EU steel and aluminium. Overnight both materials became more expensive to american manufacturers and consumers. As a retaliatory move the EU imposed tariffs on American bikes (Harley Davidson). Overnight Harleys became several thousand dollars more expensive for European consumers and HD lost revenue and market share. As a measure to avoid the EU retaliatory tariffs HD moved production to Thailand. As a consequence jobs, tax revenue, etc were lost in America... We could continue going but I think that is enough.
The tariffs that Trump imposed on EU steel and aluminium have resulted in no new steel/aluminium mills built in America, no new jobs created. Have made both products more expensive for American consumers and have only shifted EU imports to other lower quality and/or higher price producers. At the same time HD hast lost money, American jobs have been lost and European consumers can't or have to pay more to enjoy an HD bike. Tariffs are a true lose-lose situation for everyone. You know how trade wars start but you don't know how they end and who/which industries will be impacted (the chicken tax was imposed 60 years ago and we are still overpaying for trucks to this day)
Ok, different topics, the Chicken Tax is simply unbelievably historic.
Deletenothing you said is wrong
but, having said all that, what would be going on IF trump hadn't imposed a tariff on EU steel and aluminum?
Why did he do it, what was the motivation, who profited?
Since I think we'll agree some group paid a lobbyist to make that happen, then that group made a LOT of money from EU metals getting more expensive.
Probably ALCOA, US Steel, etc.
How those tariifs on EU metals could possibly result in no new mills in America, when American has no raw aluminum, and hasn't made a steel mill since WW2 (my guess) is something I'd like to learn.
Regardless, I suppose you have a reason for believing that there are no other factors in the lack of no new mills being built. Other than the cost of new construction doubling in the past 20 years, the lack of growth in the aluminum market, and other environmental impact problems of pollution from new mills, and I am guessing there are more.
Nothing in this world is simple.
Also, that's not the reason HD lost money, tarriffs on EU metals. HD management is to 1/2 blame for that corporation falling apart. Seriously, that wasn't a long term sustainable movement/fad where new generations wanted the same 40 thousand dollar big Harley, nor can the upcoming generations be expected to afford the 40k Harley, and who would even expect them to want them? The desire to buy something en masse, such as muscle cars, hot rods, etc is a generational thing.
Young people can not be expected to want what their grandparents wanted, or to desire what their grandparents desired.
Young people don't want tractors, farms, orchards, etc. And they don't write in cursive.
Just examples of how it's a generational thing. Young people have enough problems just affording a rental one bedroom.
So, Harley was already on a downward turn, the world economy continues to move in mysterious ways, and American jobs will continue to fall from middle income to minumum wage, but investors and the rich will continue to get richer.
I think this is a good example of bad management who make 6 or 7 figure salaries to make a very successful company profitable. That's way so many companies lay off employees, prevent unions, and other cost cutting measures. Not to make a better product, but to make a more profitable quarterly earnings statement, I think you'll agree, to attract more investors, and sell stock at higher prices.
There's a corporate buzzword or phrase for that ... fiduciary duty
I agree with most of what you stated. HD's troubles are related to many factors, not just EU tariffs. Tariffs certainly didn't help and pushed production outside of the US. Tariffs cost the US jobs and revenue. . Every HD bike built in Thailand is a bike that the US didn't export, salaries that were not paid in the US, etc, etc, etc.
DeleteWith tariffs the story is always the same. The cost of the tariff is distributed across all the public (we all pay a few $ more) and the benefit is concentrated in a few people/companies. Steel tariffs make washing machines, cars, canned foods, etc a few cents or dollars more expensive for all of us. At the end of the year those incremental cost accumulate and we find out that we all paid hundreds or thousands of extra dollars.
Who benefits from tariffs? Steel manufacturers not in EU benefit (American or not).
"How those tariffs on EU metals could possibly result in no new mills in America, when American has no raw aluminum, and hasn't made a steel mill since WW2 (my guess) is something I'd like to learn."
More often than not tariffs will not't force production to move to the US. Let's pretend I'm President of Jesse-land (great place to live). If I told you: You can't buy beer from the store/brand you have been buying all these years, you would not start brewing beer at home. You would find a different store/brand and buy from them. You buy from your current supplier because they have a price/availability/convenience combination that you value. If you are forced to buy from a new supplier/brand then you will have to pay more, travel further or have a brand of beer that you don't like as much... In any case the cost of beer for you went up (in dollars, time or quality). Who benefited? The guy that didn't have your business before but has it now.
With steel and aluminium it is the same story. American companies that can't buy German steel will find steel somewhere else in the world that is not impacted by tariffs (not necessarily in the US). Any extra cost will be passed on to the consumer (you and me).
If I, as Jesse-land president wanted to force beer production to move into the country, I would have to impose tariffs/ban ALL beer not brewed in your house. Think for a second about the cost/implications of such a move. You would have to spend $ to get the necessary equipment to brew beer. You would have to go some time without beer until the beer you brew yourself is ready. Your "new" beer will presumably not be as good as the beer brewed by people that have been doing it for years, etc, etc, etc. You as the beer consumer will end with more expensive, more time consuming and worse tasting beer. All these are extra "costs" that you will have to pay with $ and time because I as president banned all beer imports.
Why did Trump impose tariffs on EU and Canadian steel/aluminum? The reason why tariffs are imposed doesn't matter. The consequence of tariffs is what matters.
The tariff we know as the Chicken tax was imposed in 1964 as a retaliatory move to counter tariffs on US chicken imposed by Germany. In other words, the US didn't start that trade war, the Germans started it. For the last 50 years we all overpaid for trucks while the big 3 benefited. US consumers have no access to countless low cost trucks while the average truck in the US is pushing $50K-$60K.
Side note to trade deficits: The fact that the US has a trade deficit with XYZ country is not necessarily a bad thing. I've had a trade deficit with my barber for decades and my economy is doing great. I buy from my barber monthly and he never has purchased anything from me and yet I do very well...