Commercial dispute: Harley-Davidson shifts parts of production abroad

The motorcycle manufacturer responds to the EU customs duties that apply to Harley-Davidsons. The US must be left in part to be able to stay in business in Europe.

Commercial dispute: Harley-Davidson shifts parts of production abroad

The US motorcycle manufacturer Harley-Davidson wants to shift parts of its US production to locations abroad because of higher tariffs in Europe. The subject of motorcycles intended for European market, company informed in a mandatory communication to SEC. Price increases for traders or end-users are not planned, however. Where production is to be moved remains unclear. The company still has works in Brazil, India and Thailand outside of United States.

The EU has imposed tariffs of 2.8 billion euros on us products because US, for its part, has increased customs duties on imports of steel and aluminium. On Harley-Davidson machines, which cost up to 43,000 euros, an inch of 31 percent must now be paid, 25 percentage points more than before. US tariffs also burden company because y increase raw material costs. The additional cost per exported motorcycle figured Harley-Davidson to an average of around 2,200 US dollars (just under 1,900 euros).

The motorcycle manufacturer has been making a tough price fight and an ageing regular clientele for a long time. In first quarter, number of machines sold worldwide decreased by almost ten percent to 64,000, and profit fell by just under five percent to 175 million dollars.

The new duties also burden company. But, in any case, Harley-Davidson wants to prevent consumers from having to pay more in future. That would affect business, company shared. In short term, Harley-Davidson will take on much of additional costs that were estimated at 30 million to 45 million dollars for current year.

Committed to US

Harley-Davidson still feels obligated to production in U.S., it says in a letter to U.S. stock Exchange supervisor. Increasing international production share to reduce duty burden is not desirable for company, "but it is only sustainable option to make its motorcycles available to customers in EU" and to stay in business re.

Last year, Harley-Davidson sold almost 40,000 motorcycles in EU. According to company data, Europe is second most important sales market after USA.

On Friday, EU also imposed duties on whisky, jeans, rice and corn. Harley-Davidson is first US company to provide a detailed assessment of impact of current trade dispute. Many of affected us products come from regions where US president Donald Trump has a strong support. Harley-Davidson has its seat in central western state of Wisconsin, where Trump had won 2016 election surprisingly against Democrat Hillary Clinton.

Date Of Update: 26 June 2018, 12:02

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