Harley-Davidson’s apparent decision to move a larger portion of its production to Thailand has sparked considerable controversy. According to the Milwaukee Journal Sentinel, Harley-Davidson will move production of its Revolution Max-powered motorcycles to its existing manufacturing facility in Thailand. As a result, the Pan America Adventure Bike and the company’s Sport Series models (consisting of the Sportster, Nightster and Nightster Special) will not be manufactured in the United States.

This move comes despite previous assurances from CEO Jochen Zeitz that motorcycles sold in the U.S. would always be made here. As one might imagine, this move has drawn criticism, particularly from the International Association of Machinists and Aerospace Workers, which supports the production of motorcycles at Harley’s plants in Wisconsin and Pennsylvania.

Declaration of the Union

In a statement by the 600,000-member International Association of Machinists and Aerospace Workers (IAM), international president Brian Bryant expressed the union’s anger at Harley-Davidson’s decision.

“Harley-Davidson’s recent announcement to move our work and jobs to Thailand is a slap in the face to American workers and a betrayal of the company’s legacy as an American icon. In 2019, nearly 600 IAM members lost their jobs at Harley-Davidson and Syncreon in Kansas City when the company has closed its facilityand claimed that its plant in Thailand would only serve the Asian and European markets.”

“Harley-Davidson has reneged on that promise and plans to manufacture these motorcycles overseas and ship them back to the United States for American consumers.

“When Americans think of motorcycles, they think of Harley-Davidson – a brand that has long symbolized the spirit and strength of our country. That this self-proclaimed American icon is now moving our jobs to Asia is a disgrace. This decision undermines the hard work and dedication of IAM members in York, Pennsylvania and Menomonee Falls, Wisconsin who are the backbone of Harley-Davidson’s success.”

“The IAM will use all the tools at its disposal to fight this outrageous move. Harley-Davidson must rethink everything and develop a solution that keeps production of the Sport Series and Pan America motorcycles where they belong – in the United States.”

The Milwaukee Journal Sentinel also reports that MoCo has announced that it will continue to produce its best-selling and often more expensive motorcycles, such as its touring bikes, trikes and Softail models, in the U.S. However, not long ago, this was said about all Harley-Davidson motorcycles. With the news that production of the Pan America and Sport models is moving to Thailand, is it possible that other models will soon be produced outside the U.S.?

Harley-Davidson: No impact on employment

For its part, Harley-Davidson says that the move to produce Pan America and Sport series motorcycles in Thailand will have no impact on employment at its US plants, saying:

“This has no impact on employment at U.S. locations.” – Harley-Davidson according to the Milwaukee Journal Sentinel

If Harley’s claim is true, why/how might Harley-Davidson’s workforce not be affected? Perhaps there is a clue in Harley’s recent success in getting an $89,000,000 grant from the Department of Energy to “help” them manufacture electric motorcycles, i.e. LiveWire motorcycles. Harley has been supporting the LiveWire brand for years, and moving the Revolution Max powered machines to Thailand could make room for additional manufacturing of LiveWire branded motorcycles in the US. If that is the case, there may be no change in the number of jobs, but the question is whether it would change the workers and the skills of the workers required to manufacture the motorcycles.

Smart business move?

At first glance The changes planned by Harley-Davidson could be a “smart” business move. Or is it? LiveWire sales have been and continue to be dismal. Since Harley launched its first electric motorcycle in 2019, By 2024, the electric motorcycle manufacturer will have sold just over 2,000 units.

Despite now having three models available, Harley-Davidson’s LiveWire brand is still struggling to meet its sales projections. After telling investors in early 2022 that LiveWire would sell 7,236 motorcycles in 2023, 15,736 in 2024, 53,341 units in 2025 and 100,961 units in 2026, the LiveWire group has never achieved sales that matched its projections. For its 2024 projections, the company said it expects to sell between 1,000 and 1,500 electric motorcycles. However, in the first half of this year, LiveWire only delivered about 275. That means it will need to nearly triple its current sales in the second half of the year to reach the lowest number of sales forecast for 2024.

Why does MoCo believe LiveWire needs more production capacity when it only plans to sell between 1,000 and 1,500 LiveWire electric motorcycles in all of 2024? If no one is buying their electric motorcycles, there is no need to produce them. Even if LiveWire motorcycle sales quadruple, Harley-Davidson/LiveWire will only produce between 4,000 and 6,000 motorcycles next year. That seems like much less production capacity than is needed to produce Harley’s Revolution Max-powered motorcycles.

Overcapacity

So what will the employees produce with their excess capacity? It is possible that Harley-Davidson is also considering increasing production of its best-selling and most expensive machines. If that is the case, wouldn’t that contradict the reduction in production numbers planned and implemented by CEO Jochen Zietz?

Harley-Davidson Chairman and CEO Jochen Zeitz. Photo: Harley-Davidson

So far, Zeitz has used this strategy successfully to help Harley-Davidson raise the prices of its bikes, making them more “desirable.” If that desirability is very high, it might now make financial sense to ramp up production of these models to increase sales and profits. It’s much better to sell more expensive and profitable bikes than to sell a few Revolution Max-powered bikes that don’t generate nearly as much sales or profit.

Temporary transition?

Harley-Davidson also says that the shipment of Revolution Max-powered machines to Thailand is only temporary. That’s interesting. How long is “temporary”? Hmm…

“As part of our strategy to optimize overall production, Harley-Davidson will temporarily relocate production of its non-core Revolution Max-powered models (Pan America, Sportster S, Nightster) for the 2025 model year to its existing manufacturing facility in Thailand.” – Harley-Davidson according to the Milwaukee Journal Sentinel

Retooling a factory and retraining workers to make a different product is costly. When a production line begins making new products, production is often reduced until workers gain more confidence in their processes. As is often the case, quality is reduced, at least initially, until the workforce can produce products at the speed the company wants. All of these concerns seem to indicate that Harley-Davidson has no intention of moving Revolution Max-powered machines to Thailand for even a single year, as Harley’s statement might suggest. It’s a safe bet that this production will not immediately return to the U.S. in 2026. Could the temporary shift to Thailand mean that production of these models could be moved to another country after Thailand? Only Jochen Zeitz and his executives know for sure.

Does Harley-Davidson “respect” Pan Am and sport bikes?

Is Harley-Davidson treating its “non-core Revolution Max powered models” and their riders like the company’s “red-headed” stepchildren? It is clear from the company’s statements that Harley believes it must prioritize its core models of touring bikes, trikes and softails. These models generate more sales and profits than the motorcycles that are being moved to Thailand for production.

As of August 15, 2024, Harley-Davidson’s investor relations website showcases the company’s commitment to profit and its “core” motorcycles. Image: Harley-Davidson

By moving its Revolution Max engines overseas, is Harley suggesting that its long-term commitment to those models is less than its core machines? How will the brand’s loyal U.S. riders perceive the iconic American motorcycle company producing bikes in Thailand only to ship them to the U.S. to be sold here? Would there be a backlash from U.S. riders that could ultimately hurt sales of those machines? And if sales of those models decline, will that have given MoCo more ammunition to suggest that those models are no longer profitable and reduce or cease production? And if that happens, would they build more of their more profitable core motorcycles instead?

These are strange times…