6 Possible Reasons Why a Trump Presidency Could Be Good for Harley-Davidson
President-elect Trump has vowed to "Make America Great Again!" Here are a few thoughts and a bit of speculation on how achieving greatness could have a positive effect on Harley-Davidson.
1. Cross-Border Tariffs
The U.S. automotive industry has recently come under fire by President-elect Trump for their practices of producing vehicles in foreign countries (i.e. Mexico) and importing them into the US virtually tax-free for domestic sales. Having denounced the North American Free Trade Agreement (NAFTA) and making threats of a 35% tax hike on manufacturers who choose to export their vehicles to the U.S., American automakers should think twice before outsourcing jobs and production to other countries. How will this impact Harley-Davidson? While HD does have two production facilities outside of the US (Brazil & India) for foreign markets sales, over 60 percent of their motorcycles are produced at their York, Pennsylvania plant. With additional facilities in Kansas City, MO, Tomahawk, WI, and Menomonee, WI, Harley-Davidson should have no need to restructure any part of their production processes to avoid potential tax penalties as other manufacturers would. Mr. Trump is interested in investing back into the economy protecting American jobs, so H-D can continue building a quality American-made product and keep numerous American jobs alive.
2. Trade with China
There has been tons of speculation about how a Trump presidency could affect US-China trade relations with some going as far as saying there will be an impending trade war. Many believe this could have a huge impact on vehicle production as China is the largest market in the world at over 25% in 2016. With many American manufacturers vying for a portion of the Chinese vehicle market, any disputes could disrupt trade and minimize production. That said, China's motorcycle market is a difficult one for manufacturers to break into as there are significant restrictions and laws in place that are not well-suited for larger displacement bikes such as Harleys. Sources report that less than 1 percent of Harley's motorcycle sales are in the Chinese market, so any dispute should have little impact on H-D. With President-elect Trump wanting to invest back into the US economy, a few hundred motorcycle sales lost in China can be overcome tenfold with domestic sales, thus marking an uptick for the Milwaukee brand.
3. Fossil Fuel Frenzy
There is a definite correlation between oil & gasoline and the sale of motorcycles. Prior to 2014, gasoline prices were at their highest and individuals opted to purchase a motorcycle for their means of transportation to offset higher fuel consumption typical of cars. Harley’s sales figures have dropped for the past couple of years amid plummeting oil prices, huge oil industry layoffs, and the current administration’s investments in alternate forms of energy. The Trump administration will seek to roll back many of the global warming principles and invest in shale, oil, clean coal, and natural gas reserves. In turn, this should spur on the gas/oil industry and resurrect jobs, especially in the hard-hit oil patch states. With folks coming back to work and the industry making gains, experts suggest Harley can sell more bikes and increase company profitability.
4. Healing Healthcare
A topic that has taken center stage during Trump’s presidential campaign has been the Affordable Care Act (AKA Obamacare). The new health care laws set in place over the past few years have had a significant impact on businesses with skyrocketing insurance premiums and stringent compliance regulations. Much like other businesses, Harley-Davidson has had to alter their benefits package to cope with the additional costs. Many of the increased costs associated with Obamacare have been transferred to the employees, with many workers reporting that their insurance deductibles are higher than ever and their benefits package is the worst it has ever been. Additionally, employee’s hours are often cut to limit them to part-time work and new hires are no longer receiving pensions as they once did. Part of Trump’s 100-day plan is to repeal Obamacare and hopefully replace it with a plan that can improve health insurance and allow businesses to return many of the benefits that employees once had. With annual motorcycle production estimates to exceed 250,000 units, Harley can attract and retain quality employees to help the company meet their goals by once again offering a competitive benefits package.
5. Investing in Infastructure
Trump’s vision is to refocus government spending towards rebuilding America’s aging infrastructure. Many agree that investing in transportation, modern electrical grids, clean water, telecommunications, and security is key in restoring the economy. This will create numerous jobs in manufacturing and construction and is estimated to increase wages for workers and decrease costs of goods and services for American consumers. This plays right into Harley-Davidson's hand as their core demographic is blue-collar working class Americans. As folks return to work and make a steady wage, they are more likely to spend their extra money leisure activities. With transportation being one of the top 5 things people spend their money on, chances are some may buy themselves a shiny new Harley. Regardless, more people back to work would not only be good for Harley-Davidson but for the country in general.
6. Rider Support
While many of these points are pure speculation by talking heads and political insiders, it is safe to say that Harley enthusiasts tend to have conservative views and a significant number of Harley owners have shown support for President-elect Trump. One example is the group ‘Bikers for Trump’ that claims to have over 200,000 members all rooting for a successful Trump administration. In fact, Bikers for Trump was in attendance at the Republican National Convention, and 5,000 members plan to be at the inauguration to not only show support for Mr. Trump but to aid security with any rowdy groups who intend to disrupt the event. Needless to say, if Harley owners are riding in the name of Trump, they will need motorcycle parts, bike maintenance, and perhaps even a new H-D, all of which will benefit Harley-Davidson sales.
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