Harley-Davidson to move some motorcycle production out of US after EU tariffs

Nathan Bomey | USA TODAY

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Harley-Davidson plans to shift a portion of its U.S. motorcycle manufacturing capacity to foreign markets after a trade spat between President Donald Trump and the European Union led to increased tariffs.

The Milwaukee-based motorcycle manufacturer said Monday in a public filing that the move is necessary to preserve its second-biggest sales market.

The company did not specify whether it would close any U.S. plants or lay off any workers. But when Harley recently mapped out plans to shift some production to a new factory in Thailand, the company announced it would close its plant in Kansas City, Missouri, and add some jobs at a facility in York, Pennsylvania.

"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing, which is valued by riders globally," the company said. "Increasing international production to alleviate the EU tariff burden is not the company’s preference but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe."

The European Union last week raised U.S. motorcycle tariffs from 6 percent to 31 percent after Trump earlier imposed tariffs on European steel and aluminum.

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The move will cost Harley an average of about $2,200 per bike shipped from the U.S. to the EU, according to the public filing.

Harley said it would absorb the costs instead of raising prices.

Raising prices "would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses," the company said.

Instead, absorbing the uptick will cost the company about $90 million to $100 million per year. Harley sells about 40,000 bikes annually in Europe.

The trade dispute came at an inopportune time for Harley, which is struggling to sell motorcycles to a generation of millennials that hasn't yet been as enthusiastic as previous generations.

"Harley-Davidson’s purpose is to fulfill dreams of personal freedom for customers who live in the European Union and across the world, and the company remains fully engaged with government officials in both the U.S. and the EU helping to find sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade," the company said.

The opportunities for Harley in Europe are significant, but so is the competition from European and Japanese motorcycle makers that aren’t subject to the same tariffs.

“It is hard to run a business when the rules keep changing,” industry analyst Craig Kennison with Robert W. Baird & Co. said.

More: Trump accuses Harley-Davidson of being 'first to wave the white flag' on trade

Contributing: Rick Barrett, Milwaukee Journal Sentinel

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.