Harley Davidson, Boeing, Ford Motor Company, Carrier-United Technologies Are Among the Thousands of Businesses Moving Factories Outside the United States For Lower Payroll Costs, Taxes & Access to International Markets.

What About America?

By Mary B. Blair @Skifflegirl

Harley Davidson wanted to break into the one billion plus market in India.  Unfortunately for HD, India has protectionist trade regulations.  If you are a company that wants access to their market, you must build your products in-country. What a concept. Apparently, Harley is still manufacturing parts in the USA so that they can claim their bikes are ‘made in America’ – for the time being, anyway.   Harley Davidson is conducting an experiment in globalism, having opened fifteen dealerships and a plant in India back in 2011.  Importing motorcycles from America to India involves a 100% tariff, so in order to break into the domestic market, they build the product in India with U.S. imported parts.  Technically made in India with parts made in the United States.  Plans are suspected to be in the works to eventually move all operations out of America.

All thanks to Congressman Paul Ryan and Senator Ted Cruz and the rest of the Republicans and Democrats in the House and Senate.  According to bizjournals.com:

The Street motorcycles being sold in the U.S. will be manufactured in the Milwaukee-based company’s Kansas City facility, Wandell said. The Street bikes for international riders will be made in the company’s Bawal, India, plant that opened in 2011.

Harley-Davidson (NYSE: HOG) currently assembles motorcycles in India and Brazil to avoid tariffs, but the parts are made in America and shipped as a kit to those countries. 

From The Treehouse:Harley rider in India zrtn_001n347ea034_tn

…build [Harley Davidson motorcycles] in India and export from India and the tariffs are avoided upon arrival.

How does this help the U.S. manufacturing of Harley Davidson?  How does this help jobs here in the U.S.?  How does this help the U.S. factory worker?

It doesn’t.

But the corporate side (Wall Street / NYSE “HOG”) books of Harley Davidson look great.

See how that works?

In essence, Harley USA will build Harley’s for the USA (disclaimer: “for now”), and Harley in India will build for most the rest of the world.   They are still in the working-out-the-kinks-process part of the global plan, but it is a plan being executed. (Emphasis added)

It’s not just the all-American Hog leaving us.  And it’s not just the leaving.  Boeing wants to sell it’s high end, technologically superior airplanes to China.  China’s trade policies require that Boeing build the planes in their country.  See a pattern?  Every other nation in the world is allowed to practice protectionism except the U.S.A.  We invited the hollowing out of American industries with disastrous agreements like NAFTA and TPP and anti-Constitutional World Trade Organization regulations.

The furor over whether Donald Trump’s ties and Ivanka’s scarves were made in China highlights the absolute gutting of our textile industry in America.  If you are an entrepreneur looking to start a clothing line, good luck finding anything but t-shirt fabric made in America.  There are few alternatives available in this country and most would likely contract their product from India’s neighbor, Bangladesh. Or China and Viet Nam. Or  Mexico and South America.  There are very few fabric or clothing factories in the United States anymore.  Those few that still exist are usually small, specialty companies.

The problem goes further than the fact that our American companies are forced to build plants and factories in other countries.  Once the manufacturing is on their home turf, the host country steals the technology and patents.  It’s the theft of decades of investment and innovation worth billions of dollars to our American companies.

 

Once the theft occurs in China, they kick the company and its products out and then start producing their own version for a fraction of the price.  Basically, Boeing is participating in it’s own demise by moving factories overseas.

According to the 2013 Intellectual Property Commission report:

The Impact of International IP Theft on the American Economy

Hundreds of billions of dollars per year. The annual losses are likely to be comparable to the current annual level of U.S. exports to Asia—over $300 billion. The exact figure is unknowable, but private and governmental studies tend to understate the impacts due to inadequacies in data or scope. The members of the Commission agree with the assessment by the Commander of the United States Cyber Command and Director of the National Security Agency, General Keith Alexander, that the ongoing theft of IP is “the greatest transfer of wealth in history.”

Millions of jobs If IP were to receive the same protection overseas that it does here, the American economy would add millions of jobs.

A drag on U.S. GDP growth  Better protection of IP would encourage significantly more R&D investment and economic growth.

Innovation The incentive to innovate drives productivity growth and the advancements that improve the quality of life. The threat of IP theft diminishes that incentive.

Long Supply Chains Pose a Major Challenge

Stolen IP represents a subsidy to foreign suppliers that do not have to bear the costs of developing or licensing it. In China, where many overseas supply chains extend, even ethical multinational companies frequently procure counterfeit items or items whose manufacture benefits from stolen IP, including proprietary business processes, counterfeited machine tools, pirated software, etc.

Three Hundred Billion Dollars annually.  Lost to theft of intellectual property, the lifeblood of business and entrepreneurialism in America.  Stolen after decades of hard work and imagination.  And our government does nothing except warn us of trade wars and higher prices, making isolationism charges against anyone who protests.

 Gordon Chang, author of “The Coming Collapse of China” says that if Donald Trump were to become president, he would not be able to start a trade war with China. That’s because the Chinese have already been targeting American businesses, according to Chang on CNBC’s Squawk Box.

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“People say he would start a trade war. Well, no matter what The Donald does he can’t start a trade war because we’re already in a trade war with China. But only they are waging it. The question is how do we end it on terms not only advantageous to the United States but also to the international community.” (Emphasis added)

Chang said tariffs on Chinese exports to the U.S. might have to be on the table. “All choices are really bad.”  The only worse choice is what we’re doing now: nothing.

“China is stealing intellectual property from the United States,” he said, pointing to the 2013 IP Commission Report. “The dimension of that is somewhere maybe $200 billion to $300 billion a year. That is a war in a sense.”

Ford has several plants in Mexico and are opening new ones almost every year.  Thousands of jobs for Mexicans, millions of dollars of investment in Mexico, millions more in their tax base. Where does that benefit Americans?  It doesn’t.

Although reauthorization of the Ex-Im Bank was finally signed late last year by President Obama – remember Ted Cruz said he flip flopped his support of the Fast Track/Trans Pacific Partnership (after it had more than enough votes, and was a bill that he co-authored with Paul Ryan) as a result of Mitch McConnell’s infamous ‘lie’ –  one of the biggest reasons manufacturers like Boeing and Ford move to other countries is that it’s easier and cheaper to produce (lower wages and taxes along with fewer restrictions or regulations on business) and more and more nations require products be made domestically in order to take advantage of their markets.

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During Sarah Palin’s recent speech in Wisconsin, she pinpointed the problems that President Reagan faced with unfair trade practices by Japan:

Wisconsin, Reagan saved the Hog here. Your Harley Davidson. That was Reagan who saved that. He saved it with a forty five percent tariff that he put on Japanese motorcycles to combat their cheating. He also saved the semiconductor industry with a hundred percent tariff. Shoot, let’s learn from Reagan. Or what, in the establishment they’re going to start a hashtag movement, a hashtag #NeverReagan? They don’t like that.

Wisconsin Governor Scott Walker, along with the local Sikh enthusiasts will soon join India’s Spice Coast Motorcycle Clubs, riding their very own Hindustan Davidson motorcycles.  Ride to Live, Live to Ride but definitely NOT built only in America anymore.

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