When Harley Davidson made the strategic decision to explore new opportunities in Thailand, a significant shift in their global operations was set in motion. With an eye towards expanding their market presence in Asia and minimizing trade barriers, the renowned motorcycle manufacturer chose to establish a plant in the vibrant country.
While the precise moment of this decision may elude you, it is essential to delve into the historical context and influential factors that led to this pivotal move. As you navigate through the following discussion, you will uncover a timeline of key events, assess the impact on Harley Davidson, and gain insights into the future implications for their operations.
Prepare to embark on a journey that will shed light on the when, why, and what lies ahead for Harley Davidson's relocation to Thailand.
Key Takeaways
- Harley-Davidson's decision to move to Thailand was driven by their goal of expanding their manufacturing presence in Southeast Asia and establishing a stronger foothold in emerging markets.
- The move allows Harley-Davidson to capitalize on the growing demand for motorcycles in the region and take advantage of lower production costs in Thailand, leading to potential cost savings in production and logistics.
- Setting up a manufacturing facility in Thailand and shifting production from the United States will streamline their supply chain and distribution network, enhancing product availability and affordability in Southeast Asia.
- While there are potential challenges and risks, such as potential backlash from American consumers and competition from local manufacturers, the move to Thailand presents an opportunity for Harley-Davidson to tap into the rapidly growing motorcycle market in Southeast Asia and cater to the rising popularity of leisure and recreational activities among the emerging middle class.
Historical Context of Harley-Davidson's Decision
Analyzing the historical context of Harley-Davidson's decision to build a plant in Thailand unveils a complex web of international trade agreements, shifting economic landscapes, and the pursuit of growth in emerging markets. Thailand, a Southeast Asian Nation, is an attractive destination for manufacturing due to its strategic location and trade arrangement among members of the Association of Southeast Asian Nations (ASEAN). The decision to establish a factory in Thailand allows Harley-Davidson to tap into the growing Asian market while reducing costs and expanding its global footprint.
One key factor behind Harley-Davidson's move is the favorable business environment in Thailand. The country offers tax breaks when exporting motorcycles to other ASEAN countries, making it an ideal location for manufacturing. Additionally, Thailand's proximity to emerging markets in Southeast Asia provides access to a large customer base, allowing the company to capitalize on the region's economic growth.
Furthermore, Harley-Davidson's decision was influenced by the changing landscape of international trade agreements. The US withdrawal from the Trans Pacific Partnership (TPP) trade deal created uncertainties for American manufacturers. By establishing a Thailand facility, Harley-Davidson can mitigate potential tariffs and trade barriers, ensuring continued growth in the Asian market.
Factors Influencing the Move to Thailand
The decision to build a plant in Thailand was driven by a combination of factors that influenced Harley-Davidson's move. One key factor was the desire to seek new buyers in Asia. With the U.S. withdrawal from the Trans Pacific Partnership (TPP) trade deal, Harley-Davidson saw the need to expand its presence in the region to maintain competitiveness. Lower tariffs in Thailand offered a strategic advantage, allowing the company to reduce costs and reach a broader customer base.
Another factor was the trend of U.S. manufacturers expanding their presence in the Asia-Pacific market. By building a plant in Thailand, Harley-Davidson aimed to take advantage of tax breaks and reduce import distances to China, a growing market for motorcycles. This move aligned with the company's strategy to tap into emerging markets and increase its global footprint.
However, the decision to open the Thai plant faced backlash from U.S. union workers, particularly the United Steelworkers union. They expressed concerns about potential job losses and questioned the company's commitment to American workers. Despite Harley-Davidson's assurance that the Thai plant wouldn't result in American job cuts and would enable growth using American-built parts, the controversy surrounding the move highlighted the complex dynamics between global expansion and domestic interests.
Timeline of Harley-Davidson's Announcement
Harley-Davidson's announcement of building a plant in Thailand sent shockwaves through the industry, sparking intense debate and raising questions about the company's future direction.
Let's delve into the timeline of Harley-Davidson's decision to move to Thailand.
The pivotal moment came in April 2017 when Harley-Davidson confirmed its plans to construct a manufacturing facility in Thailand. This move was driven by the desire to tap into new markets in Asia and reduce tariffs on motorcycles imported to the region. It was also influenced by the United States' withdrawal from the Trans Pacific Partnership trade deal, which created uncertainty for the company's business in the Asia-Pacific region.
Following the announcement, construction of the Thai plant swiftly commenced, with operations commencing in late 2018. Located in Rayong Province, this facility represents Harley-Davidson's third plant outside the United States.
By establishing a manufacturing base in Thailand, Harley-Davidson aimed to take advantage of tax incentives and minimize import distances to China, a crucial market for the company's growth.
However, the decision to move production to Thailand faced backlash from American union workers, who criticized the management's choice to offshore manufacturing.
Impact of the Decision on the Company
The decision to establish a manufacturing base in Thailand has had a significant impact on Harley-Davidson, reshaping the company's global strategy and prompting a critical examination of its future direction. Here are four key impacts of this decision:
- Expanded Market Presence: The Thailand facility allows Harley-Davidson to serve the Southeast Asian market more efficiently by producing motorcycles locally. This strategic move positions the company to tap into the growing demand for motorcycles in the region.
- Tariff Reduction: By manufacturing motorcycles in Thailand, Harley-Davidson can avoid the hefty tariff imposed by President Donald Trump on imported motorcycles. This enables the company to maintain competitive retail prices and improve its market position.
- International Expansion: The establishment of a plant in Thailand marks a shift towards international expansion for the Milwaukee-based company. It demonstrates Harley-Davidson's commitment to exploring new markets and diversifying its manufacturing footprint.
- Workforce Implications: While the decision has positive impacts on the company's global strategy, it has faced criticism from U.S. union workers who see it as a disservice to American workers. Harley-Davidson must navigate these stakeholder perceptions and maintain healthy relations with its domestic workforce.
Future Implications for Harley-Davidson's Operations
With the establishment of a manufacturing base in Thailand, Harley-Davidson's decision has set the stage for future implications on the company's operations and its pursuit of international growth.
The move to open a Thailand factory signifies Harley-Davidson's plans to tap into the Southeast Asian market and strengthen its competitive position in the ASEAN region. By manufacturing in Thailand, the company aims to serve the growing demand for motorcycles in Southeast Asia and reduce its reliance on exporting from the United States. This strategic decision allows Harley-Davidson to not only cater to the Thai market but also leverage its proximity to export motorcycles to neighboring countries.
The future implications for Harley-Davidson's operations are twofold. Firstly, the establishment of a manufacturing facility in Thailand will enable the company to be more competitive in the ASEAN region. By producing motorcycles locally, Harley-Davidson can reduce manufacturing costs, optimize its supply chain, and respond more quickly to market demands. This will give the company a significant advantage over competitors who rely on importing motorcycles to the region.
Secondly, the Thailand factory will play a crucial role in Harley-Davidson's future growth strategy. As the company aims to increase international business to 50% by 2027, the Thailand facility will serve as a key production hub for motorcycles destined for the Southeast Asian market. By expanding its manufacturing presence in the region, Harley-Davidson can establish a stronger foothold in emerging markets, capitalize on the growing demand for motorcycles, and achieve its long-term goal of global growth and profitability.
Conclusion
After the U.S. withdrawal from the TPP trade deal, Harley-Davidson made the strategic decision to shift its operations to Thailand. This move allows the company to tap into the Asian market and benefit from lower tariffs and tax breaks.
With assembly plants already in Brazil and India, this new plant in Thailand will further reduce import distances to China. Like a motorbike cruising through new roads, Harley-Davidson's move to Thailand opens up exciting possibilities for its future growth and success in the region.
