Harley-Davidson’s plans to open a plant in Thailand have drawn fire from American labour leaders, although management says the move shouldn’t affect production in the US.
The disagreement is over a knock-down plant Harley-Davidson wants to open in Thailand, to avoid heavy import taxes. Harley-Davidson already has similar operations in India and Brazil — factories that assemble parts manufactured elsewhere, also known as knock-down kits, into complete bikes. It’s a common tactic to get around heavy import taxes, especially in Asia, as the motorcycles are considered to be manufactured in the country where the plant is based, even if the parts were made elsewhere.
In other words, at this point, the idea behind the Thai plant is not to build motorcycles for the US market.
Despite that, American labour leaders are unhappy with the move. The international president of the United Steelworkers (which represents some Harley-Davidson employees) issued a statement saying “Management’s 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 International Association of Machinists and Aerospace Workers, which also represents some Harley-Davidson employees, also decried the move as detrimental to American workers and jobs.
The crux of the argument is this: Harley-Davidson’s employees are saying the manufacturer should build motorcycles in the US and export them around the world, regardless of the taxation situation. Harley-Davidson’s management instead wants to sell more bikes by assembling them out-of-country, which makes it easier for buyers to afford the machines in other countries. Management says these plans won’t affect American production.
But it’s probably hard for workers in the US to relax, with news earlier in the spring that Harley-Davidson plans to lay off 110 workers at its plant in York, Pennsylvania, starting next month, as production of some models moves to Kansas City. While Harley-Davidson plans to create 118 jobs at its Kansas City plant, that’s little consolation to laid-off workers who may not be in a position to move.