Forum Index            

Cookies Consent Information
SelectSmart.com®
Before you decide
Over 20,000 selectors

Join to post comments.
Share

Is your name welcomed below? Then you can post here. Otherwise, click "Log In" to post!

Welcome! » Log In » Create A New Profile

How raising import tariffs saved Harley-Davidson

Posted by PowerToThePeople 
How raising import tariffs saved Harley-Davidson
July 20, 2009 09:58PM
From [74.125.155.132] :

On September 1, 1982, Harley-Davidson Motor Company and Harley-Davidson York, Inc., filed a petition for “relief,” or protection, with the U.S. International Trade Commission (ITC). The filing, a request under Section 201 of the U.S. Trade Act of 1974, was a request for escape clause relief from the damaging imports of heavyweight motorcycles into the United States. Harley-Davidson Motor Company, and more specifically its traditional large engine motorcycle, the hog, was facing dwindling domestic market share. This was a last desperate act for survival.

Import Penetration

Throughout most of the first half of the twentieth century, there were more than 150 different manufacturers of motorcycles in the United States. By 1978, however, there were only three, and only one, Harley-Davidson, was U.S.–owned. The other two U.S. manufacturers were Japanese-owned, Kawasaki and Honda America.

By the early 1980s, Harley-Davidson was in trouble. Imports held a 60 percent share of the total heavyweight motorcycle market by 1980, and they continued to grow. Harley’s difficulties worsened as its products suffered increasing quality problems, with labor and management facing off against one another instead of against the competition. By the end of 1982, in a total domestic market that had seen no growth in three years, import market share rose to 69 percent. [...]

The Harley Law

What has become known as the “Harley Law” was the resulting finding of the ITC that imports were a contributing cause of injury to the domestic heavyweight motorcycle industry. The ITC recommended to then–President Ronald Reagan that import duties be increased for a period of five years. Duties were to be raised to 45 percent the first year (1983), with the duty declining steadily over each following year until reaching 10 percent in the fifth and final year of protection (1988).

***

The Cato Institute published an article in 1982 critical of the motorcycle tariff called Taking America for a Ride: The Politics of Motorcycle Tariffs ( [www.cato.org] ).

In the artcle, Cato warned:

According to the economic analysis and estimation that have been done on the Harley-Davidson case, the new tariff will unambiguously prove to be a setback for the American economy. ITC specialists predict that the tariff hike will raise prices 10 percent the first year. Other officials believe that the price increase might be as high as 17 percent. In 1982, retail prices on heavyweight motorcycles ranged from $1,000 to $5,000. Stockpiles of unsold bikes accumulated during 1982 because motorcycle-industry anticipations had been overoptimistic for what turned out to be a recessionary period. Some say these bikes make up a year and a half of inventory. As they are sold off, they will gradually be replaced by bikes affected by the new tariff, and prices will begin to rise more dramatically. The ITC estimated an increase of 12.5 percent for the second year. [...]

The Japanese were angry over the tariff hike. "We consider it unfortunate that the American side decided to take this kind of drastic measure," said the counselor for public affairs at the Japanese Embassy in Washington. The Japanese threatened to file charges of unfair trade against the United States under the Geneva-based General Agreement on Tariffs and Trade (GATT)... While the Japanese motorcycle companies are doing their best to counteract the effects of the tariff--and, thereby, to lessen the support it will give to Harley--it is still clear that in an economic sense, the new tariff is a step backwards on both the domestic and international levels. [...]

The Reagan administration was fully aware of the economic losses that the tariff increase would cause. It was generally recognized that the economic losses from the new tariff would outweigh the economic gains.

A matter that further obscures the motivations for the action is that even with the tariff hike there is a good chance that Harley-Davidson will fold, and this fact also was known to the officials. As Paula Stern, one of the three ITC commissioners, put it, "No amount of import relief will rectify the poor financial performance of the petitioner in this case . . . . since the causes of Harley's problems lie elsewhere." Stern feels that the shrinking market in motorcycles is the ultimate cause of Harley-Davidson's problems, as this problem led to the inventory buildup--the imminent threat to Harley-Davidson. Industry consultant Gordon Jennings said in his prehearing statement before the ITC hearing, "I do not believe they [Harley-Davidson] will be improved by any action aimed at restricting the importation or sale of Japanese motorcycles" [...]

Once again, President Reagan chose to sacrifice free trade and economic prosperity to short-term political goals.

***

But the pro-free trade/anti-tariff Cato Institute was wrong. None of their fears panned out.

From the first article:

Harley’s measures were indeed effective in returning the company to profitability and competitiveness. In 1987, a year ahead of schedule, Harley requested that the tariff rate quotas be removed from imported motorcycles. In 2001, Harley-Davidson was named company of the year by Forbes. Despite the global recession, sales grew to $3.3 billion, a 15 percent increase over the previous year. Share value increased by a staggering 40 percent.

For the record, Harley today comprises half of the US motorcycle market and a third of the global motorcycle market. ( [www.wikinvest.com]) )

It's unclear how much of HD's comeback can be attributed to the tariff, but something that is undeniable is that it gave HD some badly needed breathing room at a time when HD was on the verge of bankruptcy and Japanese makers were simultaneously starting to flood the American market with larger Harley-type models like Honda's Goldwing series.

***

"When they say there’s not enough money, they mean there’s not enough money for YOU." - Jill Stein, Green Party presidential nominee.
HHH
Re: How raising import tariffs saved Harley-Davidson
July 20, 2009 10:17PM
You're talking about a short-term, temporary tariff here. Is that really what you're advocating?

____________________________________________
What kind of genius loses a billion dollars in a year?
Re: How raising import tariffs saved Harley-Davidson
July 20, 2009 10:19PM
For the record,

Harley-Davidson Slashes 1.000 Jobs
July 17, 2009
HHH
Re: How raising import tariffs saved Harley-Davidson
July 20, 2009 10:20PM
Darn tariffs (or lack thereof)!

____________________________________________
What kind of genius loses a billion dollars in a year?
Anonymous User
Re: How raising import tariffs saved Harley-Davidson
July 20, 2009 10:26PM
As a kid, we lived within a half mile of the Davidson family historic home. In the sixties, one of our class field trips was a tour of the Harley-Davidson factory in Milwaukee. I wasn't impressed. In those days it was rather filthy, medieval-like factory. So I usually notice when there is news about H-D. I just heard this a few days ago:

SAN FRANCISCO (MarketWatch) -- Harley-Davidson Inc. on Thursday reported a 91% plunge in second-quarter profit and announced another 1,000 job cuts as fewer motorcycle shipments and charges related to its financial services division slammed results.
[www.marketwatch.com]
Re: How raising import tariffs saved Harley-Davidson
July 20, 2009 10:51PM
Don't you mean 1,000 Fact Checker?

You're talking about a short-term, temporary tariff here. Is that really what you're advocating? - HHH

All tariffs are theoretically temporary, HHH. I'm advocating implementing tariffs where needed and structuring them accordingly, which could vary greatly depending on the situation.

That's bad news about the HD layoff, but unfortunately that's par for an increasing number of American manufacturers. It's only going to get worse, guys.

HD would probably have died 27 years ago if not for the tariff that was implemented.
Re: How raising import tariffs saved Harley-Davidson
July 21, 2009 12:00AM
Heh... seriously, though? When it comes to numbers, non-English-speaking countries use a comma where we use a point and a point where we use a comma.
HHH
Re: How raising import tariffs saved Harley-Davidson
July 21, 2009 12:02AM
Yeah, Factchecker, ONE WHOLE JOB! Geez, that's terrible, isn't it?

____________________________________________
What kind of genius loses a billion dollars in a year?
Re: How raising import tariffs saved Harley-Davidson
July 21, 2009 12:21AM
Oh I don't think anything is going to save HD this time around. Not even tariffs.

It'll just be yet another thing that we used to make here in the U.S.

Re: How raising import tariffs saved Harley-Davidson
July 21, 2009 04:41AM
Harley-Davidson... well known for their motorcycles... not so well known for their eyeglass frames. Seriously, maybe they could get a buyer for their eyeglasses division.
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 06:37PM
One of the things that saved Harley was they realized the marketing potential of the name and started putting it on everything... t-shirts, keychains, blankets, toys...
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 08:40PM
I think you can even buy Harley-Davidson coffee.
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 08:48PM
A friend of mine designed the little pig character they often use for plush toys wearing Harley gear - the one with the big teeth coming up from his lower jaw.

They stiffed him on the payment.
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 09:15PM
Stiffed him... I haven't heard that expression in a long time. I wonder about its origin. A cleaner version of "f^cked"?
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 09:37PM
Probably. Stiffed... screwed... stuck him with the bill...

Guess when you think about it they're all slang for getting fvcked.
Sam
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 10:34PM
I wonder how "getting fukked" came to mean something so horrible...
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 10:44PM
Well it is something horrible when it's not invited.
Re: How raising import tariffs saved Harley-Davidson
October 11, 2012 11:12PM
"Raped" has it's own monetary connotations too.

IE: "The technician raped me on the repairs."
HHH
Re: How raising import tariffs saved Harley-Davidson
October 12, 2012 01:34AM
Or the dealer "made love to me" on that car he sold me.

____________________________________________
What kind of genius loses a billion dollars in a year?
Re: How raising import tariffs saved Harley-Davidson
October 12, 2012 01:47AM
That was probably a one time thing just for you, HHH.
Sorry, only registered users may post in this forum.

Click here to login


This forum powered by Phorum

The best cities to meet opposite sex singles

Your 24 easiest weight loss diet options

Y'all should use this tool to identify any dialect.

Your best college value isn't where you'd guess

Secret to taking quality photos is this camera

Running shoes that won't cripple you or your wallet

16 dog breeds that won't kill your toddler

High earning jobs for low energy people

Which of over 100 cars & trucks is best for you?

Cookies Consent Policy & Privacy Statement. All Rights Reserved. SelectSmart® is a registered trademark. | Contact SelectSmart.com | Advertise on SelectSmart.com | This site is for sale!