July 9, 2018
Will Harley Regret Manufacturing Move?
If we’re making a list of quintessential American brands, there’s no doubt Harley Davidson motorcycles would be on it. The bike manufacturer has always promoted its products as uniquely American made and connected to a very American ethos. Even when some reviewers extolled other brands, customers bought Harleys to be part of that story.
A recent shift announced by the company could create some consumer PR issues with that perception. In the wake of the announcement of a new round of European tariffs, some American companies are opting to move manufacturing overseas in order to avoid paying the new taxes on their goods.
While many companies might be able to make this shift under the radar of the national press, there are a few, like Harley, that cannot. The brand is simply too connected to an America-first ideals, especially after being held up by President Trump during his successful presidential run as an example of a great American manufacturer.
Harley Davidson told investors that, if the company doesn’t make the move, they could lose up to $100 million a year just on motorcycles sold in Europe. In a statement attached to a regulatory filing, the company admitted they would rather not make this choice: “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option…”
That business decision might work for Harley investors, but consumers are another story. Already, many are decrying what they see as a betrayal of the support the company got from the President. And, because great many long standing Harley customers are strong Trump supporters, this could end up being more than bluster.
So, that’s the foundation of this pending PR problem: you have a brand that believes it must make a certain financial decision, but that decision may be seen as an insult to the brand’s most loyal customers. To help stave off some of that blowback, Harley has argued that this decision helps the company not have to raise prices of its bikes, either in the States or in Europe, in order to cover the shortfall caused by the threatened tariffs.
At the moment, other than some irritation on social media and some challenging statements from the President, there hasn’t been too much fallout for Harley… yet. What might tip that balance is if the company ends up having to cut jobs to keep from losing even more money due to these trade tariffs. If the company ships jobs overseas, then cuts U.S. jobs – which they haven’t said will be necessary – that could be an even more serious issue.
Regardless, for many disgruntled customers, some of the shine has dimmed on Harley Davidson’s all-American chrome. What they choose to do about that will depend on how Harley manages this delicate PR position.