Harley-Davidson, the iconic American brand from Milwaukee, has announced the building of a new assembly plant in Thailand. Parts and components will be shipped from factories and suppliers in the USA, while the completely knocked down (CKD) bikes will be put together in Thailand. The plant is expected to operate by 2018.
H-D already has similar setups in India and Brazil, where CKD motorcycles are assembled in order to better respond to regional competition. Assembly plants are able to get around high import costs, reducing the burden of customers overseas while cutting shipping times — especially in countries like India where the import tariff is set at 100%. In Thailand, it is currently 60%.
The plan for a Thailand operation aligns with H-D's strategy for global growth, and will serve the emerging markets of China and Southeast Asia. The waning Baby Boomer demand for large, heavy cruisers has also convinced H-D to put more focus on their Custom Vehicle Operations (CVO) and beginner friendly bikes like the Street series.
The move to increase off-shore operations has been causing tension with outspoken American labor groups as well as hardcore H-D enthusiasts, who are worried about lost job opportunities and the diminishing prestige of the brand's "Made in America" heritage. The issue was lightly touched on by President Donald Trump in a February meeting with H-D executives in Washington DC. The American motorcycle manufacturer, however, maintains that international expansion should prove a win-win for everyone as parts are still made in US factories.
"Increased access and affordability for our customers in the region is key to growth for the company in total. By opening this plant, we expect our regional operations to help reduce those costs,” said Harley spokeswoman Katie Whitmore. "There is no intent to reduce Harley-Davidson US manufacturing due to this expansion. We anticipate an increase in the number of additional US-manufactured components that will be shipped to the Thailand facility."
By 2027, Harley-Davidson hopes to increase international business by 50%.