Harley-Davidson Moving More Production Overseas!

[Greenbeforeblue]

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[gman2304]

The old saying move west young man...... maybe HD is moving its future to targeting customers 7,000 miles west of Milwaukee.....

Harley Davidson built a manufacturing plant in India in 2009……it closed in 2020.

 

[srfdude]

I noticed this when I bought my Mustang that was USA made, and then my mom bought her Fusion that was made in the Ford Hermosillo plant in Mexico. The build quality on the Fusion was significantly higher with less stupid issues.

I have to agree. My Maverick's build is quite good; no rattles or squeeks (yet?) The Hermosillo plant is know for quality.

 

[Jetronic]

We’ve been doing the “globalization thing” for long enough now that we know where it leads, and it’s not a good place for Americans.

Time to try something different. And the more crying and doomsday predictions by the globalist experts I see, the more convinced I am it is the correct way to bring back manufacturing here and make the middle class prosperous again.

I think it could be the correct way, if they started with putting tarrifs on finished products, not resources. Once the finished products are made in the US again, you can start taxing resources from oversees. Going the other way makes everything more expensive, and likely won't increase domestic production. Another possible issue is that the tarriffs could be gone in 4 years. Nobody will setup an expensive factory that might be losing money in 4 years, before you get your investment back.

 

[Jetronic]

True, probably won't work because people want cheap goods and stimulus checks to pay for them, not well paying factory jobs. But there is no one left to pay for their UBI. Everyone is broke. Same reason for declining car sales. Same for declining home sales.

Harley Davidson may have caused some of their own problems, but there as much a victim of the same forces, no one can afford a $25K motorcycle anymore.

Here's my math.

motorcycles are mostly steel and aluminun. So import tarrifs increase the cost to make them a lot. It doesn't matter if you buy domestic steel or not, the domestic producers will price hike.

Then you try to sell part of the production out of country and get hit with retaliatory tarrifs. Together the cycles are around 50% more expensive.

Now move production to Thailand. I'm sure there's a savings there already but forget about that for now. You get your steel and aluminum for the same cost as before, and pay tarrif to bring them to the uk. They might still be cheaper than locally made (same cost at worst), and you can sell for the same cost as before to customers outside the US.

 

[GON]

Here's my math.

motorcycles are mostly steel and aluminun. So import tarrifs increase the cost to make them a lot. It doesn't matter if you buy domestic steel or not, the domestic producers will price hike.

Then you try to sell part of the production out of country and get hit with retaliatory tarrifs. Together the cycles are around 50% more expensive.

Now move production to Thailand. I'm sure there's a savings there already but forget about that for now. You get your steel and aluminum for the same cost as before, and pay tarrif to bring them to the uk. They might still be cheaper than locally made (same cost at worst), and you can sell for the same cost as before to customers outside the US.

Don't have an idea on raw material tariffs into Thailand, but Thailand has massive tariffs on imported products from Legis, to Jack Daniels, to Australian wines, to motor vehicles.

It is reported BMW opened a motor vehicle factory in Thailand in part to negate tariffs from importation of their vehicles into Thailand.

 

[Jetronic]

Don't have an idea on raw material tariffs into Thailand, but Thailand has massive tariffs on imported products from Legis, to Jack Daniels, to Australian wines, to motor vehicles.

It is reported BMW opened a motor vehicle factory in Thailand in part to negate tariffs from importation of their vehicles into Thailand.

ok, but they be going out. And partly staying in Thailand I imagine.

 

[KrisZ]

ok, but they be going out. And partly staying in Thailand I imagine.

Right, in summary: “it’s fine if they do it, it will be a disaster if we do it”.
Just come out and say it, you want your cheap goods and don’t care how you get it.

 

[SC Maintenance]

Here's my math.

motorcycles are mostly steel and aluminun. So import tarrifs increase the cost to make them a lot. It doesn't matter if you buy domestic steel or not, the domestic producers will price hike.

Then you try to sell part of the production out of country and get hit with retaliatory tarrifs. Together the cycles are around 50% more expensive.

Now move production to Thailand. I'm sure there's a savings there already but forget about that for now. You get your steel and aluminum for the same cost as before, and pay tarrif to bring them to the uk. They might still be cheaper than locally made (same cost at worst), and you can sell for the same cost as before to customers outside the US.

The raw materials cost is rounding error to the final price. All the value is in turning aluminum and steel into a motorcycle.

Not what there likely using, but Hot Rolled Steel is currently about $750 / ton, and Aluminum is $2500 per ton, just to put perspective into a $20K motorcyle. We also have lots of capacity in the US. There building two new aluminum rolling mills as we speak - greenfield - first in 40 years in the USA.

 

[Jetronic]

The raw materials cost is rounding error to the final price. All the value is in turning aluminum and steel into a motorcycle.

Not what there likely using, but Hot Rolled Steel is currently about $750 / ton, and Aluminum is $2500 per ton, just to put perspective into a $20K motorcyle. We also have lots of capacity in the US. There building two new aluminum rolling mills as we speak - greenfield - first in 40 years in the USA.

I know but with every step in the production everyone wants to make a profit in line with the investment cost. Whatever the final cost of the steel parts is, it will go up 25% if the raw material go up 25%.

 

[Jetronic]

Right, in summary: “it’s fine if they do it, it will be a disaster if we do it”.
Just come out and say it, you want your cheap goods and don’t care how you get it.

I want VAT to drop, it's 20% for me. I'm not in the market for new stuff really, just groceries.

 

[SC Maintenance]

I want VAT to drop, it's 20% for me. I'm not in the market for new stuff really, just groceries.

20% must mean UK?

How are things in the UK these days? I think UK manufacturing took quite a hit from the globalization experiment also?

 

[Jetronic]

20% must mean UK?

How are things in the UK these days? I think UK manufacturing took quite a hit from the globalization experiment also?

No not the UK. It's actually 6% for food but we need more than that to live.

 

[Ranger83]

Are the Street 500 and 750 still in production?

 

[PWMDMD]

The primary job of management at most publicly traded corporations is to maximize shareholder value. I don't necessarily agree with it, I'm more of a stakeholder governance kind of guy, but it is what it is. Someone sat down and calculated cost savings of making the move vs losing people like OP and rightly or wrongly concluded it was worth it.

 

[KrisZ]

The primary job of management at most publicly traded corporations is to maximize shareholder value. I don't necessarily agree with it, I'm more of a stakeholder governance kind of guy, but it is what it is. Someone sat down and calculated cost savings of making the move vs losing people like OP and rightly or wrongly concluded it was worth it.

Well that’s what they all say. In reality though, a lot of the decisions are made in terms of meeting the next quarter numbers and getting that juicy bonus. Make lots of noise about the “accomplishments” and move on to another sucker that will hire you as a CEO. Rinse and repeat.

 

[alarmguy]

I know but with every step in the production everyone wants to make a profit in line with the investment cost. Whatever the final cost of the steel parts is, it will go up 25% if the raw material go up 25%.

Actually, if you think about it, it will go up 25% plus the profit margin will add even more onto the price of the motorcycle

A manufacturer calculates the cost of making the product and then adds their profit margin.

 

[wings&wheels]

Well that’s what they all say. In reality though, a lot of the decisions are made in terms of meeting the next quarter numbers and getting that juicy bonus. Make lots of noise about the “accomplishments” and move on to another sucker that will hire you as a CEO. Rinse and repeat.

Given that public company leadership's, including BoD, compensation typically includes a major equity component that vests over time, execs' horizon is more than just a quarter and bonuses are usually based on annual performance vs. targets. Not saying that businesses haven't become too focused on short term results, but major decisions such as this are planned for the long term impact.

 

[KrisZ]

Given that public company leadership's, including BoD, compensation typically includes a major equity component that vests over time, execs' horizon is more than just a quarter and bonuses are usually based on annual performance vs. targets. Not saying that businesses haven't become too focused on short term results, but major decisions such as this are planned for the long term impact.

Yeah, tell that to bud light, Target, Jaguar, just to name a few.

 

[JeffKeryk]

Actually, if you think about it, it will go up 25% plus the profit margin will add even more onto the price of the motorcycle

A manufacturer calculates the cost of making the product and then adds their profit margin.

And the bazillion $$ question is, what price will the market bear?
Since tariffs will affect many products, will that beautiful Harley purchase be in the budget?