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Discussion on: Harley-Davidson decision to has avoid developing production facilities outside the United States

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Angel Paudel

The question seems dated and doesn’t hold grounds in the current date as Harley-Davidson now already has its manufacturing factories in India and Brazil. The company also intends to have another one and the process for it has already started as they’re set to build another one in Thailand. Harley-Davidson once acquired in the year 2014 by Kawasaki Motor Company Ltd. - a Japanese company, the strategy changed with it as well.

Few months ago on June 25, 2018, the company announced that it’ll be shifting some of the manufacturing overseas. This is given the tax increase from the previous 6% to now be 31% while exporting to the EU market. This even stirred a reaction from the president of the USA, Donald Trump whose praise suddenly changed to anger in an instant (CBS Interactive Inc., 2018).

However, to answer the question they always avoided developing production facilities outside the United States as that would mean a lot of cost in the initial stage to set the factory up. Also, the required skill sets of the person, having them all get used to the new system and function in accordance would mean difficulties for the company. Also, there were concerns revolving around the quality of the products being compromised if it goes anywhere outside the states (Schembri, 2009). The whole focus of the company was on quality rather than just selling a product with lesser quality. Thus, even though most of the parts required are produced elsewhere, they assemble them all at US-based factory and market it while ensuring all the quality tests are successful. Another thing that held them back is their sales in the US overweighing the total sales of motorcycles elsewhere as their sales figure in the states totaled to 46,490 as of 2nd Quarter of 2018 while their international sales total was just 31,938 as of the same period (Harley-Davidson, 2018). Also, as the maximum sales were from the USA itself, moving it elsewhere meant that the import tax in the current home country would be higher which couldn’t be justified. This all trigged to the company not moving outside the USA until now when the sudden change in presidency and regulations around it made the company to think again.

References

Harley-Davidson Announces Second Quarter Results | Harley-Davidson USA. (2018). Retrieved from investor.harley-davidson.com/news-...

Harley-Davidson, blaming tariffs, will shift some manufacturing overseas. (2018). Retrieved from cbsnews.com/news/harley-davidson-m...

Schembri, S. (2009). Reframing brand experience: The experiential meaning of Harley-Davidson. Journal Of Business Research , 62 (12), 1299-1310.