Harley-Davidson’s decision to build plant in Thailand raises eyebrows

Harley said the Thai plant will not result in American job losses, arguing instead it will enable them to grow their business using American-built parts.

Harley-Davidson, the iconic motorcycle brand hailed by President Donald Trump for keeping jobs in America, is building a plant in Thailand, the company confirmed on May 25, as it seeks new buyers in Asia, and lower tariffs.

The factory – only the third Harley has built outside the United States – highlights the irresistible draw of overseas plants for US manufacturers, particularly as the Trump administration castigates regional free-trade agreements.

“We are expanding our presence in the Asia-Pacific market by building an assembly facility in the Rayong Province in Thailand,” said Harley-Davidson spokeswoman Katie Whitmore.

She declined to say how much the plant was worth but said it would be up and running in late 2018.

The move comes after American bike brands were dealt a blow by Trump’s decision to pull out of the 12-country Trans Pacific Partnership (TPP) trade deal, which would have abolished tariffs on their products across 40% of the worlds economy.

Trump argued TPP would hurt American industries and lead to job losses.

During his election campaign he frequently held up Wisconsin-based Harley as an example of an American manufacturer that kept jobs and production inside US borders and was harmed by such free-trade agreements.

But even Harley has found it hard to resist the lure of overseas assembly lines – both to be geographically closer to emerging markets and circumvent high tariffs that favour local competitors.

It already has assembly plants in Brazil and India that put together bike kits made from parts from its US factories. The Thai plant will do the same.

Whitmore said high tariffs were only part of the reason Harley decided to build a plant in Thailand but she added: “Our growth is currently limited due to uncompetitive retail prices.”

Thailand currently slaps around a 60% import tariff on foreign motorbikes.

A plant in Thailand will also allow Harley to take advantage of tax breaks when exporting to nearby neighbours under trade agreements struck by the 10-member Association of Southeast Asian Nations (ASEAN).

It also reduces import distances to China, which is fast emerging as a major market for foreign bike brands.

Harleys decision to open the Thai plant sparked an angry backlash among US union workers.

“Managements decision to offshore production is a slap in the face to the American worker and to hundreds of thousands of Harley riders across the country,” the United Steelworkers union said.

Harley has insisted the Thai plant will not result in American job losses, arguing instead it will enable them to grow their business using American-built parts.

“There is no intent to reduce Harley-Davidson US manufacturing due to this expansion,” Whitmore said.

“Harley-Davidson US manufacturing will continue to supply the US and certain other global markets,” she added.