A Harley-Davidson rider flying the flag of Mexico had hair to match during the Harley-Davidson 110th Anniversary Parade on Aug. 31, 2013.
Michael Sears / Milwaukee Journal Sentinel
From the saddle of a Harley-Davidson motorcycle, you not only get a view of the open road but a glimpse into a manufacturing world where parts of the American-made bikes could be from Asia, Europe or South America.
Harley, the world’s largest manufacturer of heavyweight motorcycles, doesn’t disclose where most of the parts are sourced, but industry sources say the company gets them from the U.S., Japan, Italy, Mexico, China, Australia and other countries.
For years, Harley has used Showa-brand suspension components from Japan. Brake and clutch parts have come from Italy, wheels from Australia and electronics from across Asia.
Increasingly, this is the world of manufacturing for everything from airplanes to home appliances. Global companies seek the best deals they can find on parts shipped to their factories; in some cases, it can be a way to sidestep import tariffs that add to their costs.
The sign for Colorado's largest Harley-Davidson dealership, Thunder Mountain in Loveland, advertises the upcoming All American celebration in advance of the July 4 holiday, as seen on June 26, 2018.
Trevor Hughes, USA TODAY
Harley says it uses U.S. suppliers when it can, but that for some components there isn’t an American source that makes what the company wants in the amounts it needs.
“Sourcing decisions are based on quality, component availability, supplier reliability and cost,” Harley said in a statement to the Milwaukee Journal Sentinel.
The company assembles most of its bike lineup in Kansas City, Missouri, and York, Pennsylvania. Its V-Twin engines are made in Milwaukee, and there's a small factory in Tomahawk, Wisconsin, that makes fiberglass and plastic components for some of the company's most expensive touring bikes.
Harley is moving the production of motorcycles destined for Europe to its international factories. The company is opening a plant in Thailand this year and has assembly plants in India and Brazil.
Monday's announcement by Harley was in response to the European Union slapping a 31 percent tariff on motorcycles made in the U.S.
Last week, the EU began rolling out tariffs on American imports including Harleys, bourbon, peanut butter and orange juice. The tariffs on $3.4 billion worth of U.S. products are retaliation for duties President Donald Trump has imposed on European steel and aluminum.
Harley's move triggered a slew of angry tweets from Trump, who scolded the company, revered by many for its American heritage, for shifting production overseas.
Industry sources say the percentage of foreign-based parts on a Harley varies by bike model and year, but the company, like most manufacturers, shops globally for the best deals.
Motorcycle makers squeeze nickels and dimes, per part, to save dollars on the finished bike, said Robert Pandya, a veteran of the industry who has worked for Polaris Industries, the maker of Indian Motorcycles.
Most consumers care more about value and price than where something comes from, according to Pandya.
“These days it’s a matter of pride to have a Lexus or a Honda Acura or a BMW in your garage parked next to your Harley,” Pandya said.
“We are a global-trade society, whether we want to admit it or not,” he added.
But having an all-American Harley matters to some riders, such as Monte Whiteaker, who heads up the Oconomowoc, Wisconsin-based Rock River chapter of the Harley Owners Group.
He has owned Harley-Davidsons for 18 years.
Whiteaker says it’s critically important to him that the bikes are made in America.
“I want a quality bike, but I would also like to see all of the components made in the U.S.,” he said.
He believes many Harley riders feel the same way.
“It does come up in conversation. The ability to have what you are riding be an American bike means … a lot to someone – to be proud that this bike was made in the United States.”
Industries go global
It’s not uncommon for American-brand cars and trucks to contain parts from around the world or to be manufactured in other places altogether.
In fact, not a single 2018 model-year vehicle sold in the U.S. gets 100 percent of its parts from the U.S. or Canada, according to the National Highway Traffic Safety Administration.
Over the last several decades, the auto industry has gone global, typically locating suppliers near where vehicles are made to minimize costs.
“The reality is there’s so many parts from all over the world that make up a vehicle,” said Jeff Schuster, an LMC Automotive analyst who tracks vehicle manufacturing.
Sometimes foreign automakers manufacture vehicles with more American-made components than domestic automakers.
For example, Japanese automaker Honda occupied four of the top 10 slots on Cars.com’s 2018 list of the top 10 most made-in-America vehicles. That index is based in part on "which cars are manufactured in America, have the most American parts and support the most American factory jobs," Cars.com said.
The Honda Odyssey minivan and Honda Ridgeline pickup get the highest share of their parts from the U.S. or Canada at 75 percent apiece, according to NHTSA.
Only Tesla makes all of its vehicles here, and that will change when the company opens a plant in China. Dozens of vehicles get no parts at all from the U.S., which means they are entirely imported.
John Miller has developed a motorcycle windshiled business called "Glowshild" Now the company is called Illumatek. His windshields are laser etched with custom artwork, then led lights are inserted into the glass to create a glowing pattern. He also cites safety reasons fo rhis windshield that creates a colorful edge that can be seen by motorists at night. In addition he created colorful lighting under the bike to make him seen more clearly. He cleans the glass on his custom Harley Davidson at his home in Milwaukee, Wednesday, May 19, 2010. Rick Wood/RWOOD@JOURNALSENTINEL.COM
Rick Wood, Milwaukee Journal Sentinel
Some motorcyclists complain about Harley using foreign-sourced parts, and yet the first thing they do after buying a bike is adorn it with accessories made in China, said John Miller, a Milwaukee-area Harley rider who owns a motorcycle windshield company.
“There’s a lot of stuff on bikes that’s foreign-based,” Miller said.
Some bikers might not like the foreign parts, but they understand the predicament Harley is in trying to keep its costs down, said Tony Sanfelipo, a Harley rider from Milwaukee.
“I think the bigger problem for Harley is attracting a younger audience in America,” he said.
August 28, 2014 Tony Sanfelipo of Milwaukee sits astride his 2005 Police Road King model Harley-Davidson. He believes loud pipes do save lives for a variety of reasons, but also admits there are some who go out of their way to make noise when they would not have too. He was at the Harley Museum in Milwaukee. MICHAEL SEARS/MSEARS@JOURNALSENTINEL.COM
Michael Sears, Milwaukee Journal Sentinel
Loren Wahl, treasurer of the Wisconsin Dual Sport Riders club, owns foreign-built off-road motorcycles and has little allegiance to the country that built them.
“Am I as a motorcycle owner emotionally concerned about the origin, or source of parts or point of assembly? The answer is no,” he said.
“I am concerned about function and cost and reliability, in that order.”
'Shorthand for American manufacturing'
About 43 percent of new Harleys are sold outside the U.S., a figure the company aims to increase to more than 50 percent through fast-growing foreign markets where the brand is associated with American culture and self-expressionism.
The emphasis on international sales, coupled with tariffs, trade disputes and Trump, puts the spotlight on where Harley locates factories and buys parts – but the company isn’t alone on that turf.
“All motorcycle, power-sports and automotive manufacturers with global aspirations have global operations,” industry analyst Craig Kennison of Robert W. Baird & Co. in Milwaukee said.
“The Harley-Davidson story has legs because the Harley-Davidson brand is shorthand for American manufacturing — not because Harley-Davidson is making unusual decisions,” Kennison said.
The company's American-built image prompted ThrottleX, a Grand Rapids, Mich., company that sells aftermarket batteries, to ask on its blog where Harley gets its components.
ThrottleX first blogged on the topic four years ago, and that post continues to receive comments from readers today.
The comments range from those who say a company building a complex piece of machinery must rely on suppliers around the globe to insistence that every Harley bolt should be American made.
“It’s been a topic,” said Jeff Hillis, a manager at ThrottleX. “Not one we could answer, but we wanted to start the conversation.”
A complex supply chain
Harley-Davidson has been selling motorcycles abroad practically since the company was founded in a shed in Milwaukee in 1903.
The company is no stranger to working with manufacturing partners, but now that its bikes are sold worldwide, the supply chain has become increasingly complex.
When the company introduced its Street-model motorcycle four years ago, manufacturing issues surfaced that slowed getting the bikes to dealerships.
“This is the first time we’re manufacturing product internationally, and with that, a majority of the supply chain is international,” Chief Financial Officer John Olin said in a 2014 conference call with analysts.
“And not only is it a much longer supply chain, but it’s with a lot of new suppliers. … We’re going through a learning curve,” Olin said.
Anxiety over complex supply chains and the fallout from trade wars extends far beyond motorcycles. Under the latest tariffs, it’s expected to wash over a plethora of consumer goods that have a global footprint such as automobiles, home appliances and agricultural products.
The Trump administration has imposed and threatened several rounds of tariffs and penalties so far this year, targeting a broad range of trade partners — many of them major American economic allies for the last 70 years: the European Union, China and India, as well as both NAFTA partners Mexico and Canada.
Economists say Americans will pay a price for trade penalties in the form of higher-priced goods, lost competitiveness of American-made goods, disrupted global supply chains and, ultimately, lost jobs.
More collateral damage comes in the form of global economic uncertainty as plant managers no longer can predict their steel and aluminum costs.
“If the trade war begins to sow doubts in the minds of business leaders and investors about the management of the economy, and those people then hold off from expanding or investing, that change in sentiment can spark a downturn,” said Philip Levy, a senior fellow who studies the global economy at the Chicago Council on Global Affairs.
Contributing: John Schmid, Milwaukee Journal Sentinel, and Nathan Bomey, USA TODAY
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