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Harley-Davidson CEO Matt Levatich struck back against "misinformation" about the motorcycle company's plans to move some production overseas in response to President Donald Trump's tariffs in a memo to employees and dealers.
The iconic American brand has been in a political firestorm since it announced in June it would move European production out of the U.S. because of retaliatory tariffs from the European Union. Trump has threatened to tax Harley-Davidson "like never before," and on Sunday praised owners who plan to boycott the company.
"There continues to be misinformation circulated in conjunction with this issue, and I want to reiterate and share facts about Harley-Davidson that you can both be proud of and share with interested customers," Levatich said in a memo sent to Harley employees and dealers on Tuesday.
Without mentioning Trump by name, he reiterated the company's preference to manufacture its bikes in the U.S. as well as its explanation for the shift overseas — high tariffs in some countries make its motorcycles unaffordable in those markets.
While its bikes were once taxed at 6 percent in Europe, the new tariffs raised that to 31 percent. Harley-Davidson was already under pressure because of the Trump administration's tariff that levied a 25 percent tax on steel and aluminum imports.
Harley estimated the tariffs will cost between $90 million and $100 million annually. Levatich said the company can't bear these costs "indefinitely," so it made the decision to build some of its bikes overseas to avoid the tariffs and give the company better access to customers abroad.
"We don't take sides in politics," he said. "Today, however, we unfortunately find ourselves in the center of a heated political conversation about fair trade.
"It is not our intention or our desire to be in this political spotlight, and the entirety of our effort and focus is to minimize any impact on this great brand, company, the business of our dealers and, critically, the passion and loyalty of our riders who we do everything for," he said.
Here's the full memo:
We want a level-playing field when it comes to trade, and we are working with government officials to find the best solution for our company and our brand Harley-Davidson has been an iconic brand since 1903, and we are proud to be a company that unites people passionately and authentically under the ideals of freedom, strength and independence.
We are a brand that is about big ideas that unite people, and we don't take sides in politics. Today, however, we unfortunately find ourselves in the center of a heated political conversation about fair trade.
It is not our intention or our desire to be in this political spotlight, and the entirety of our effort and focus is to minimize any impact on this great brand, company, the business of our dealers and, critically, the passion and loyalty of our riders who we do everything for. Our goal is the same as the U.S. Administration: we want a level-playing field when it comes to trade, and we are working with government officials to find the best solution for our company and our brand.
As we said in our 8K filing in June when the EU enacted retaliatory tariffs on our motorcycles, Harley-Davidson would cover the cost of these tariffs; a cost we estimated to be $90-100M on an annualized basis. We made this decision to preserve rider access to our products, protect the viability of our dealers and maintain our market position in this very important market. We also laid out a 9-18 month plan to mitigate the cost to the company because with the ambitious plan we have for our future, we cannot carry these costs indefinitely.
There continues to be misinformation circulated in conjunction with this issue, and I want to reiterate and share facts about Harley-Davidson that you can both be proud of and share with interested customers.
· Our riders will always come first, along with our dealers who serve and support them. · Motorcycles for the U.S. market, and most of the rest of the world, will continue to be made in the United States.
· It is our clear preference to manufacture in the United States; it has been since 1903, and it remains so today. The only reason we have invested otherwise is so that our products have a fighting chance of being price competitive in markets that burden our products with high tariffs.
· In 2017, we sold motorcycles in 103 countries around the world, and 94 percent of them were produced at our U.S. plants. We compete on our merits around the world and are competitive with what the world has to offer when trade is on a level playing field.
We announced our More Roads to Harley-Davidson plan on July 30. This plan is designed to inspire ridership and evolve and sustain Harley-Davidson for another 115 years and beyond – something all of us care deeply about. We are already executing on that plan, which includes building two million new riders in the U.S. We are focused on the future while we continue to work diligently on many fronts, including with our government partners to get these trade disputes resolved. We remain optimistic and prepared to adapt in the best interest of our customers, dealers, employees, suppliers and, of course, our great brand.
I want to thank the hard-working women and men of Harley-Davidson both at the company or in our dealerships who continue, each day, to inspire our current riders to ride more and welcome new riders who will carry the torch for our sport and brand in the future.