Harley-Davidson took its tax cut, closed a factory, and rewarded shareholders
In September 2017, House Speaker Paul Ryan traveled to a Harley-Davidson plant in Menomonee Falls, Wisconsin, to tout the Republican tax bill, which President Trump would sign later that year. “Tax reform can put American manufacturers and American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs here in America,” Ryan told workers and company leaders.
Four months later and 500 miles away in Kansas City, Missouri, 800 workers at a Harley-Davidson factory were told they would lose their jobs when the plant closed its doors and shifted operations to a facility in York, Pennsylvania — a net loss of 350 jobs. Workers and union representatives say they didn’t see it coming.
Just days later, the company announced a dividend increase and a stock buyback plan to repurchase 15 million of its shares, valued at about $696 million.
It’s a pattern that’s played out over and over since the tax cuts passed — companies profit, shareholders reap the benefits, and workers get left out. Corporate stock buybacks hit a record $178 billion in the first three months of 2018; average hourly earnings for American workers are up 67 cents over the past year. Harley-Davidson is an American symbol, and President Trump has trotted it out as an example of business success. But as it’s getting its tax cut, it’s outsourcing jobs and paying shareholders.
The tax cuts aren’t saving jobs at Harley-Davidson
It wasn’t just Ryan who made promises to Harley-Davidson. Trump in February 2017 met with Harley-Davidson executives and union representatives at the White House. He thanked the company for building in America and predicted its operations would grow.
“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,” Trump said. He added that impending changes to “taxing policies,” health care, tariffs, and trade would only make things better.
The tax cut, at least, came through. The Republican tax bill, which slashes the corporate tax rate to 21 percent from 35 percent, is giving Harley sizable tax savings this year. The company estimates its effective tax rate — the amount it pays — will be 23.5 percent to 25 percent this year, about 10 percentage points lower than it would have been without the tax bill.
That’s a significant savings: The company makes about $800 million to $1 billion in pre-tax profit, according to Seth Woolf, an analyst at North Coast Research.
Just over a month after Trump signed the tax cuts into law, the Kansas City closure was announced. Workers found out when they arrived at the plant that morning: They were kept in the hallway, informed that the factory would be shut, and sent home for the rest of the day without pay. The union had no advance warning, saidGreg Tate, a staff representative for the United Steelworkers District 11, which represents about 30 percent of the Harley-Davidson plant’s workers. (Harley-Davidson and the two unions that represent most of its production employees last year terminated their 22-year partnership agreement.)
“We really never had any belief that they were going to shut the Kansas City facility down,” Tate said. The announcement was “the first anyone found out about it.”
The company will cut 800 jobs at the Kansas City plant when it closes by the fall of 2019 and says it expects to add 450 full-time, casual, and contractor positions in its York facility — a net loss of 350 jobs.
The median household income in York is much lower than in Kansas City, and Tate said that hiring a casual workforce there — temporary workers brought in to boost production during peak season — will be easier and cheaper for Harley.
“This is a decision we did not take lightly,” Harley said in a statement. “The Kansas City plant has been assembling Harley-Davidson motorcycles since 1997, and our employees will leave a great legacy of quality, price, and manufacturing leadership. We are grateful to them and the Kansas City community for their many years of support and their service to our dealers and our riders.”
Harley-Davidson is also expanding overseas
Meanwhile, Harley-Davidson is opening up a plant in Thailand, where it plans to start production later this year. (The company also owns and operates facilities in India and Brazil, and it is closing a facility in Australia.) The company says the Thailand plant isn’t meant to outsource jobs but toboost its international business and avoid tax and tariff burdens. Trump’s proposed steel tariffs could pose a threat to Harley and add an estimated $30 million to its costs, and the European Union has threatened to impose a tariff on the company’s motorcycles in retaliation.
Union leaders, however, have suggested that the Thailand plant opening and the Kansas City plant closing are tied together.
“Part of my job is being moved to York, but the other part is going to Bangkok,” Richard Pence, a machinist at the Kansas City plant, told the Milwaukee Journal Sentinel earlier this month when in Washington as part of a meeting between House Minority Leader Nancy Pelosi and members of the Association of Machinists and Aerospace Workers, which represents about 70 percent of the Harley-Davidson workers being laid off.
The Kansas City plant closing will cost Harley up to $200 million through 2019, according to Bloomberg’s estimates, and should result in annual savings of $65 million to $75 million after 2020.
Tate, from the steelworkers union, suggested the tax savings Harley reaped from the GOP bill might have actually freed up the cash for it to go ahead with the US restructuring plan now. “They have the capital now to move Kansas City, to shut it down,” he said. “All of that money really came from the tax cut plan, so it kind of had the opposite effect of what it was supposed to do.”
Woolf, the analyst, said he wasn’t sure that was the case. “I think what this reflects is that they’re finally coming to grips with the fact that the US market is contracting,” he said. Harley-Davidson has been struggling in recent years — sales have declined as its core demographic, baby boomers, ages and as millennials shy away from big bikes. The decline has been particularly acute in the US: Harley-Davidson’s motorcycle sales declined 8.5 percent in the United States in 2017 and 3.9 percent abroad.
The tax cuts let Harley reward shareholders
Meanwhile, since the tax cut, the company is managing to reward shareholders. Just days after revealing the decision to shutter the Kansas City plant, the company announced a dividend increase and a stock buyback plan to repurchase 15 million of its shares, valued at about $696 million.
On a call discussing the company’s first-quarter results in April, chief financial officer John Olin indicated that shareholder primacy will continue. “Beyond what we invest in the business, we will return and continue to return all excess cash to our shareholders,” he said. The company this year shut the media out of its annual shareholders meeting.
Harley-Davidson is one of a string of companies to announce major share buybacks since the tax bill was passed in December. Apple in early May said it would buy back $100 billion of its shares. The tech conglomerate Cisco in February said it would put an additional $25 billion toward a stock buyback. Troubled megabank Wells Fargo in January announced about $22 billion in buybacks. Pepsi announced a $15 billion buyback, Amgen and AbbVie $10 billion, and Google’s parent company Alphabet $8.6 billion.
Harley-Davidson isn’t the only company to shutter a US plant since the tax cuts were passed in December. The same day Kansas City workers found out their plant was closing, about 900 workers at an Electrolux plant in St. Cloud, Minnesota, found out the facility they were working in would be shutting down too. The Swedish home appliance company will consolidate its freezer production in South Carolina, where Joe Baratta, a representative for International Association of Machinists (IAM) Local 623, told me starting wages are lower.
He described a recent trip to Home Depot. “I see products that we were building here last year that say ‘Made in China’ with the Frigidaire name on it, they’re already in stores,” he said. “It’s a tough pill to swallow to go into every store in town looking at a product and saying, ‘There’s 150 jobs we lost. There’s another 200 jobs we lost.’”
Since Harley-Davidson announced its Kansas City plant closure in January, Trump — who made a big deal of saving jobs at a Carrier plant in Indiana in 2016 — hasn’t had anything to say about it, even when asked. IAM President Robert Martinez Jr. sent a letter to the White House asking him to save the Kansas City facility in March.
“For decades, hard-working Machinists Union members have devoted their lives to making high-quality, American-made products for Harley,” he wrote, later adding, “America’s working men and women deserve better than being thrown out onto the street. Our nation deserves better.”
An IAM spokesperson said Martinez met with White House trade adviser Peter Navarro on April 11 about the Harley closure, and he promised to follow up with the company’s CEO. The union had not received an official response from the president.
Man... they closed a plant here and opened one in Taiwan! Then they used the tax break to buy back shares! LMAO... Trump had them in the Oval and made a big deal about bringing jobs back. Trump said how cuts would help provide jobs and bring jobs back and companies back here to manufacture...
Last edited by OldColdDawg; 05/23/1802:12 AM.
Your feelings and opinions do not add up to facts.
I wonder when it finally sets in to those who voted for Trump, believing the words he spoke at his many photo ops, proclaiming he would bring the jobs back...
...when do those voters realize they been played by Trump.
Some will admit it to themselves but not in public
...many Trump voters will never admit that Trump played them.
Saw an interview of one of the guys that works at the plant that is closing last night. That's one ticked off factory worker. He said that about 40% of the factory employees voted for and supported Trump.. They believed him..
Not so much anymore.
To be fair, as pointed out in the article, they are going to be hiring 450 employees in a PA factory.. So the net loss of jobs is about 350.
But the ones that work at the KC plant will be out of work. I'm not sure if any of those folks are being offered jobs in PA.
This isn't isolated. The carrier plant also got killed for believing in this man.
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.” Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe." Damanshot
...when do those voters realize they been played by Trump.
...many Trump voters will never admit that Trump played them.
This stuff cracks me up ... seriously ... it cracks me up .... this comes straight out of the #PuffPuffPass playbook ....
U guys run around here saying we got “duped” by Trump ...
1st off ... who was the last POLITICIAN that didn’t dupe those who voted for him ... i’m Going to use O cause he was the latest and possibly the GREATEST duper of all time ... but U could pick any president ... with O ... we don’t even need to look at the broken campaign promises this dude continued to “DUPE us after he became president with MAJOR BLATANT LIES ...
O did a TON for blacks ... ..
I got to keep my doctor ... did u? ...
My premiums not only didn’t go down, they SKYROCKETED ...
His gov’t was possibly the least transparent ...
And thats just the tip of that iceberg ... there’s 20 more “DUPES” on O care alone ... crap his press Sec. admitted they lied to the gullible ass press through the entire thing ..
Just curious guys ...
How many times did u have to get burned by the flame before u quit putting your hand over it ... ...
Seriously ... how can anyone be so stupid or gullible as to get “DUPED” BY A POLITICAN ...
Do u really think if Bernie ran there would have been free college for all ... seriously .... ...
O did a lot of good for all americans, not just black people.
if that was out of the #puffpuffpass playbook, then your lies is what happens when you #daydrink
and it's not even 9am and you already down a bottle of jack.
“To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public.”
YO REFS ... if u decide this is suspendable ... please do the right thing and dont suspend me for TELLING THE TRUTH and calling him a stoner ... he admits it almost daily ...
I don’t drink ... he’s blatantly lying ... witch is fine by me as I just consider the source and *L* at his inmaturatity ... if u left it up to me, he wouldn’t be suspended either ... i just dont want to get suspended AGAIN for telling the truth when he’s blatantly lying ...
Thanks for your time ...
PS. I’m sorry for making your jobs so hard at times ... honestly, this ain’t one of them ... ...
Somebody is super #triggered in the morning lmao. And it still isn’t even 9 am yet.
“To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public.”
The Don's photo ops at Carrier and HD could be costly to the repubs.
Donald Trump was always going to be costly for repubs. He's a lifetime New York liberal that didn't share any conservative values. It was going to always be bad, there just wasn't any other option.
Di...so you are admitting you been played by Trump...?
Not at all ...
I’m dissapointed in some and THRILLED with some ... just like with every other president we’ve ever had ...
And i feel far from DUPED ... he’s trying to keep his campaign promises ...
U see mac ... i actually UNDERSTOOD and KNEW how gov’t worked BEFORE THE ELECTION ...
Do to my genius level math skills or just not being an uninformed moron ... i also UNDERSTOOD BEFORE THE ELECTION that he couldn’t just walk in and do whatever the hell he wanted and he’d need the cooperation of others ... and in this case he wasn’t going to get it from either side on a lot of his issues cause it would directly DESTROY their DONORS ...
U think its a coincidence that the only major piece of legislation passed put money into the pockets off all the donors on both sides and that Ocare and immagration are at a stand still ...
Dudes trying ... he has his warts ... but he’s trying ...
Nice rebuttal ... guess when its 100% FACTUAL there’s not much in the form of rebuttal ...
Do u even realize that all your trying to do is make it seem like Mr. President is the devil because he’s behaved like every single president before him? ...
Damm mac ... i don’t reply to u for a reason in the football forum ... but this one takes the cake ... ...
The Don's photo ops at Carrier and HD could be costly to the repubs.
Donald Trump was always going to be costly for repubs. He's a lifetime New York liberal that didn't share any conservative values. It was going to always be bad, there just wasn't any other option.
Damm ... wish i was as good with words as U ...
U made me look bad ... *LOL* ...
Couldn’t agree more ...
If i could just add one thing ... please feel free to re-phrase it as eloquently as u did above .. *L* ,,,
He’s a bull in the china shop even for NYer’s lifetime NY liberal ...
I knew he was going to upset the apple cart ... but holy crap ... i never expected this ... he’s like A billion bulls and the entire globe is his china shop ... *L* ...
Saw an interview of one of the guys that works at the plant that is closing last night. That's one ticked off factory worker. He said that about 40% of the factory employees voted for and supported Trump.. They believed him..
Not so much anymore.
To be fair, as pointed out in the article, they are going to be hiring 450 employees in a PA factory.. So the net loss of jobs is about 350.
But the ones that work at the KC plant will be out of work. I'm not sure if any of those folks are being offered jobs in PA.
This isn't isolated. The carrier plant also got killed for believing in this man.
I lost 2 jobs because of Obama care. Laid off twice. You act like it was trump himself that shut down the factory. Trump met with HD, they promised to do this and that. Seems like the beef is with HD, not Trump. FYI, I believe the net effect of these cuts, are still WAY into the positive with the closing of 1 factory. J/S
Man... they closed a plant here and opened one in Taiwan! Then they used the tax break to buy back shares! LMAO... Trump had them in the Oval and made a big deal about bringing jobs back. Trump said how cuts would help provide jobs and bring jobs back and companies back here to manufacture...
Sounds like Trump held up his end of the deal, and HD did not.
Funny, all those billions from the other companies that did come back and the billions in bonuses and new jobs don't get threads by you guys....
Man... they closed a plant here and opened one in Taiwan! Then they used the tax break to buy back shares! LMAO... Trump had them in the Oval and made a big deal about bringing jobs back. Trump said how cuts would help provide jobs and bring jobs back and companies back here to manufacture...
Sounds like Trump held up his end of the deal, and HD did not.
Funny, all those billions from the other companies that did come back and the billions in bonuses and new jobs don't get threads by you guys....
Wait for it... wait for it... any day now you will wake up and see trump for who he is and I'll be here for you.
WITH A BIG BAG OF TOLD YOU SO.
Your feelings and opinions do not add up to facts.
You cant force a business to do something. You can make arrangements but ultimately - its up to the that business to uphold some class. I am ashamed of HD. I used to work for them actually in the finance department. I approved financing for dealerships. Insider tip, unless you are in bankruptcy, basically ANYONE can get a loan for a 20K Harley (through Harley). That itself tells me all I need to know about their integrity as a business.
My check however, is still more than it has ever been since Trump took office.
As you know I'm not much for Trump. I do think he gets a bad rap for things that are beyond his control though. Corporate welfare is one such thing. This is nothing new that business will rape a community or state for huge tax cuts then cut and run as soon as they can. This is a prime example of why I think it should be labeled as criminal and outlawed all together. We saw it with Carrier and now Harley Davidson and it's been going on for decades. They dangle jobs out on a string like baiting carrots to a rabbit. The states and communities fight amongst themselves to give them the biggest tax breaks possible to lure their business.
I don't blame Trump for this situation but every administration for decades since this has become common practice.
However, when Trump feels some need to go public trying to act as though he's accomplished something great in these situations begging for recognition for his negotiation skills, I don't think anyone should be surprised that people laugh at him when it blows up in his face.
If you don't expect to get that blame for it when it goes south, don't act like a hero when it looks good for you.
Intoducing for The Cleveland Browns, Quarterback Deshawn "The Predator" Watson. He will also be the one to choose your next head coach.
I think a president getting involved with specific business dealings with companies, criticizing certain companies and in general getting involved with private sector business is something to only inflate his own ego and has zero to do with being president.
I know I've actually increased the business I do with Amazon as a result.
Intoducing for The Cleveland Browns, Quarterback Deshawn "The Predator" Watson. He will also be the one to choose your next head coach.
I think a president getting involved with specific business dealings with companies, criticizing certain companies and in general getting involved with private sector business is something to only inflate his own ego and has zero to do with being president.
I know I've actually increased the business I do with Amazon as a result.
Every president deals with companies and CEO's and ask for help from them, and deals with them. Your telling me Immult (sp) didn't have Obamas ear? Or Amazon? Or whoever else?
These business are a direct result to our economy, they need to have a voice and a ear - but they also need to uphold their bargain when time comes.
EDIT TO ADD: Especially a company like HARLEY who prides itself on American roots and American Made.
I don't recall Obama making public statements in a press conference type manner about what a great job he did in making deals with private businesses in order to stroke his own..... ego. lol
So no, I think you're moving the goal posts now.
Intoducing for The Cleveland Browns, Quarterback Deshawn "The Predator" Watson. He will also be the one to choose your next head coach.
I think a president getting involved with specific business dealings with companies, criticizing certain companies and in general getting involved with private sector business is something to only inflate his own ego and has zero to do with being president.
You cant force a business to do something. You can make arrangements but ultimately - its up to the that business to uphold some class. I am ashamed of HD.
This is a story that dates back a long time... politicians do what they think is in the best interest of corporations or of people and they EXPECT that those corporations or people will honor their end of some unwritten agreement.... then the corporations and people take what the government has given them and they respond by doing whatever is in their own best interest. That's what corporations do, that's what people do... the exceptions are rare.
You cant force a business to do something. You can make arrangements but ultimately - its up to the that business to uphold some class. I am ashamed of HD.
This is a story that dates back a long time... politicians do what they think is in the best interest of corporations or of people and they EXPECT that those corporations or people will honor their end of some unwritten agreement.... then the corporations and people take what the government has given them and they respond by doing whatever is in their own best interest. That's what corporations do, that's what people do... the exceptions are rare.
The very basic tenets of capitalism dictate what that there is to be no emotional or sentimental directives that result in a loss of profit.
Trump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy.
Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares.
Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price.
But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.
The tax overhaul is the cornerstone of Mr. Trump’s economic plan. It has been a big win for companies, offering lower corporate rates and a permanent break on overseas profits. Warren E. Buffett said in his annual letter to investors on Saturday that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.
What companies do with the trillions of dollars they’re bringing back to the United States, and the money they will save each year on their tax bills, will in large part determine whether the plan is a success or a failure.
As the tax cuts kick in, companies have laid out a variety of uses for the money. Some are paying out one-time bonuses to employees. Others are raising salaries. Others plan to open new factories.
In the fourth quarter, American companies’ investments in things like factories and business equipment grew by 6.8 percent. That was the fastest growth rate since 2014, but far from the giant surge in capital spending that was promised ahead of the tax overhaul.
But the buying back of shares is also at record levels.
Almost 100 American corporations have trumpeted such plans in the past month. American companies have announced more than $178 billion in planned buybacks — the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.
Trump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy.
And his tax cuts did just that.. they encouraged them to do those things, they didn't force them to do it...
But here's the thing, they aren't going to hire workers, pay higher wages or build new factories until the market and demand for their product dictates it... and that's not going to happen in a few months...
Buying back stock might be a very prudent move for some of them, stabilize the company, make them less susceptible to buyout, etc.... and yes, it might make them wealthier...
It could put them in a better position to build that factory, once the market demands it. Now whether they build it here or in India or Mexico.. well that is yet to be seen.
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