Harley-Davidson to Close Kansas City Plant Citing Trump Tax Cuts

Harley-Davidson executives rode into the White House compound nearly one year ago to meet with Donald Trump, who promised a bright future ahead for the motorcycle maker. From that embarrassing speech:


So it’s great to have Harley-Davidson. What a great, great group of people and what a fantastic job you do. And thank you for all of the votes you gave me in Wisconsin. Some people thought that was an upset; I thought we were going to win it. From the beginning, we thought we were going to win it.

Harley-Davidson is a true American icon, one of the greats. Your motorcycles have carried American servicemembers in the war—in the wars. They take care of our police officers. And I see it so often—whenever I go—whenever there’s a motorcycle group, oftentimes it’s a Harley.  And the sound of that Harley is a little different, I have to tell you. It’s really good.

So thank you, Harley-Davidson, for building things in America. And I think you’re going to even expand—I know your business is now doing very well and there’s a lot of spirit right now in the country that you weren’t having so much in the last number of months that you have right now. You see what’s happening.

Donald Trump predicted Harley-Davidson would expand because the spirits of the nation have been lifted with his triumph over President Obama’s booming legacy economy. Unfortunately for 800 Harley-Davidson employees in the Kansas City area, the Trump con is up and Harley-Davidson is closing the Kansas City assembly plant. From USA Today:

The Milwaukee-based company said its net income fell 82% in its fiscal fourth quarter to $8.3 million, compared with a year earlier. Earnings per share were 5 cents, down from 27 cents a year earlier. Revenue was $1.23 billion, up from $1.11 billion.

The earnings drop came in part because of a charge associated with President Trump's tax cut and a $29.4 million charge for a voluntary product recall.

Harley-Davidson worldwide retail motorcycle sales fell 6.7% in 2017 compared to 2016. The company's U.S. sales fell 8.5% and international sales were down 3.9%

Reuters initially reported on the charge:

NET INCOME AND EPS IN QUARTER ADVERSELY IMPACTED BY A $53.1 MILLION INCOME TAX CHARGE RELATED TO ENACTMENT OF 2017 TAX CUTS AND JOBS ACT

Thanks to community member boran2 for pointing out that Harley is simultaneously planning to build an assembly plant in Thailand.

The Kansas City plant closing will cost Harley as much as $200 million through 2019, then result in annual cash savings of $65 million to $75 million after 2020. Levatich declined to say how much production capacity will be reduced. At the same time, the company is building a factory in Thailand that will assemble bikes using components shipped from the U.S.

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