Harley-Davidson: Trump backs boycott if it moves production overseas

Reuters/Carlos
Barria
President Donald Trump meets
with supporters from a group called “Bikers for Trump” at the
Trump National Golf Club in Bedminster, New
Jersey.

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Shares of Harley-Davidson
are down 1.93% Monday after President Donald Trump backed a
boycott of the motorcycle maker if it were to shift production
overseas. 

“Many @harleydavidson owners plan to boycott
the company if manufacturing moves overseas,” Trump tweeted on
Sunday, a day after hosting members of Bikers for Trump at his
golf club in New Jersey. “Great! Most other companies are coming
in our direction, including Harley competitors. A really bad
move! U.S. will soon have a level playing field, or
better.”

In June,
Harley said it would be implement a plan to “shift production
of motorcycles for EU destinations from the US to international
facilities” as potential tariffs implemented by the European
Union would have an annual impact of $90 million to
$100 million going forward, adding about $2,200 to the cost of
each motorcycle. 

“Harley-Davidson believes the tremendous cost increase, if passed
onto its dealers and retail customers, would have an immediate
and lasting detrimental impact to its business in the region,
reducing customer access to Harley-Davidson products and
negatively impacting the sustainability of its dealers’
businesses,” the company said at the time.

The company previously announced a plan to
move some production to Thailand. 

Monday’s slide adds to the difficult 2018 for Harley
shares, which have plunged 25% from their January highs, as the
company has had to grapple with negative demographic trends in
addition to the trade spat.

The motorcycle maker’s
second-quarter earnings showed shipments fell 11.3% versus a
year ago — even before the impact of any potential EU
tariffs. 
The company has been trying to solve
its problem of a
demographic headwind which has become apparent over the
past several years. 

As Baby Boomers look to unload their bikes, millennials
have preferred to buy used Harleys and cheaper models made by the
competition. 

“So long as the base of ridership declines (in the United
States), it will be an uphill battle for (Harley-Davidson),

Bernstein analyst David Beckel
 said in
August of last year, according to Reuters. 
“I
have a projection of total motorcycle ridership for the country
declining for at least the next five years.”

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