Harley-Davidson to Shift Production Overseas to Offset EU Tariffs

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Harley-Davidson
Inc.

HOG -2.28%

plans to maneuver manufacturing abroad for bikes it sells in Europe, in mild of tariffs imposed by the European Union that went into impact on Friday.

The corporate mentioned in a securities submitting Monday that it expects the ramping up of manufacturing abroad to take at the very least 9 to 18 months.

“Rising worldwide manufacturing to alleviate the EU tariff burden isn’t the corporate’s choice, however represents the one sustainable choice to make its bikes accessible to prospects within the EU and keep a viable enterprise in Europe,” Harley-Davidson mentioned within the submitting.

EU officers have mentioned the EU’S tariffs are a response to the U.S. tariffs on metal and aluminum.

The corporate’s announcement exhibits how nations’ responses to President

Donald Trump’s

tariffs stand to have an effect on firms that do enterprise overseas. Final week, luxurious German automobile producer Daimler AG warned that tariffs from China positioned on autos manufactured within the U.S. would damage income and revenue from its Alabama manufacturing unit that makes SUVs.

Harley-Davidson mentioned bikes it exports to the European Union from the U.S. will value it $2,200 extra on common, however mentioned it doesn’t need to enhance wholesale costs or producer’s instructed retail costs.

“The super value enhance, if handed on to its sellers and retail prospects, would have a direct and lasting detrimental influence to its enterprise within the area, lowering buyer entry to Harley-Davidson merchandise and negatively impacting the sustainability of its sellers’ companies,” the corporate mentioned in its submitting.

Harley-Davidson mentioned it expects prices associated to the tariffs to come back out to about $30 million to $45 million for the remainder of 2018 and about $90 million to $100 million yearly. The bike maker mentioned EU tariffs on the bikes rose to 31% from 6%.

Almost 40,000 individuals purchased the corporate’s bikes in Europe in 2017, Harley-Davidson mentioned. Europe is the corporate’s second-largest income, behind the U.S.

Whereas a lot of the firm’s bikes are made within the U.S., Harley-Davidson additionally has services in India, Brazil and Australia.

Shares of Harley-Davidson fell 2.7% premarket.

Write to Allison Prang at allison.prang@wsj.com



Supply hyperlink – https://www.wsj.com/articles/harley-davidson-to-shift-production-overseas-to-offset-eu-tariffs-1529927301?mod=pls_whats_news_us_business_f

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