Harley Davidson is considered an American Icon and has been producing under the label of made in the USA since 1903 in Milwaukee Wisconsin. This has been their unique feature and a means of differentiation with their rivals. It is presented as a premium bike and the experience compared to none. With starting its production facilitates outside the United States will be counterproductive to their strategy which they have worked so hard to build as a brand throughout the world. "Unwavering brand stewardship remained our guide during 2017 as we laid the important groundwork for an exciting future for Harley-Davidson (Harley Davidson, 2018).” With the change in their production facilities they may not be able to charge a premium price to the customers and will have to change their strategy as Enfield has done in the past years. One of the main reasons for outsourcing is to reduce cost. But Harley Davidson is not concerned with low cost as there market their product as a high end value proposition.
Even with their brand consciousness and strategy of delivering excellence, the recent tariff in steel by President Donald Trump has set aside their strategy to look towards overseas production as a viable means for sustainability. With such external factors that were aimed at retaining business in the country and increasing the job rates, Harley Davidson however has to face tariff from the EU from 6% to 31% which add an extra cost on average of $2,200 per motorcycle (KESSLER, 2018).
With the EU accounting for 16% of their sales in 2017 and with the demand in the US slowing down, Harley Davidson has been forced to build their manufacturing abroad as well. It has recently opened up a manufacturing in Thailand to cater to the South Asian market. "Harley-Davidson argues that steep trade barriers in a high-growth market, not a desire to cut American jobs, drove the move. Southeast Asia offers rapid development and increasingly affluent spenders, but many countries in the region levy high tariffs on imported goods that make its motorcycles prohibitively expensive, the company says (Gough, 2017).” In addition Harley Davidson has opened up manufacturing in Australia, Brazil and India as well. The manufactured bikes will however be sold in the region and will not be sold in the USA as their will be huge tax tariff on imported goods.
These are the reasons why Harley Davidson has strategized to prefer production domestic environment but has been forced by external factors to be flexible and start operations abroad.
References
Gough, N. (2017, May 23). Even Harley-Davidson Can’t Resist the Tug of Overseas Factories. The New Yorkk Times .
Harley Davidson is considered an American Icon and has been producing under the label of made in the USA since 1903 in Milwaukee Wisconsin. This has been their unique feature and a means of differentiation with their rivals. It is presented as a premium bike and the experience compared to none. With starting its production facilitates outside the United States will be counterproductive to their strategy which they have worked so hard to build as a brand throughout the world. "Unwavering brand stewardship remained our guide during 2017 as we laid the important groundwork for an exciting future for Harley-Davidson (Harley Davidson, 2018).” With the change in their production facilities they may not be able to charge a premium price to the customers and will have to change their strategy as Enfield has done in the past years. One of the main reasons for outsourcing is to reduce cost. But Harley Davidson is not concerned with low cost as there market their product as a high end value proposition.
Even with their brand consciousness and strategy of delivering excellence, the recent tariff in steel by President Donald Trump has set aside their strategy to look towards overseas production as a viable means for sustainability. With such external factors that were aimed at retaining business in the country and increasing the job rates, Harley Davidson however has to face tariff from the EU from 6% to 31% which add an extra cost on average of $2,200 per motorcycle (KESSLER, 2018).
With the EU accounting for 16% of their sales in 2017 and with the demand in the US slowing down, Harley Davidson has been forced to build their manufacturing abroad as well. It has recently opened up a manufacturing in Thailand to cater to the South Asian market. "Harley-Davidson argues that steep trade barriers in a high-growth market, not a desire to cut American jobs, drove the move. Southeast Asia offers rapid development and increasingly affluent spenders, but many countries in the region levy high tariffs on imported goods that make its motorcycles prohibitively expensive, the company says (Gough, 2017).” In addition Harley Davidson has opened up manufacturing in Australia, Brazil and India as well. The manufactured bikes will however be sold in the region and will not be sold in the USA as their will be huge tax tariff on imported goods.
These are the reasons why Harley Davidson has strategized to prefer production domestic environment but has been forced by external factors to be flexible and start operations abroad.
References
Gough, N. (2017, May 23). Even Harley-Davidson Can’t Resist the Tug of Overseas Factories. The New Yorkk Times .
Harley Davidson. (2018, March 29). Harley-Davidson USAINVESTOR RELATIONS. Retrieved from Harley Davidson: investor.harley-davidson.com/news-...
KESSLER, C. (2018, June 26). Why Harley-Davidson Is Moving Production Overseas. FORTUNE .