What Harley-Davidson Did with Its Tax Break

Harley-Davidson paid its President and Chief Executive Officer, Matthew S. Levatich, $11.1 million in 2017, a 19% increase from his $9.35 million take the prior year, rewarding him for taking the company’s net income to $522 million, down 25% from 2016’s $692 million. Five years ago, he collected a paltry $3.7 million. A share of H-D stock (HOG) was priced at $69.24 at the end of 2013; $50.88 at the close of 2017, down 27%. ($42.31 on May 25, 2018.)

Long the ride of choice for outlaw motorcycle gangs and aging yuppies, Harley-Davidson has a storied history. William Harley and Arthur Davidson produced their first motorcycle in 1903. Since then the company has survived several changes of ownership, manufacturing re-structuring, near bankruptcy and periods of prosperity to become an icon of American pride: powerful and loud.

H-D’s real glory days began in 1983, when President Ronald Reagan imposed a 45% tariff on large Japanese motorcycles.

Rep. Paul Ryan visited H-D’s Wisconsin factory in 2017 to promote the Republican tax plan. “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,” He said. Earlier that year, Donald Trump brought H-D executives and union representatives to the White House to display them before the media and proclaimed, “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.”

A month after the tax giveaway was signed into law, Harley-Davidson announced sizable bonuses and wage increases for employees and announced they would be hiring additional workers.

Ha ha, just kidding.

Harley-Davidson announced the closure of its Kansas City factory, giving no advance warning to the 800 employees that they had just lost their jobs. (H-D said it would hire 450 casual workers –temporary non-union contract workers – at their York Pennsylvania plant.) In the meantime, they are planning to open a manufacturing facility in Thailand. Oh, and of course they’re using the tax savings for a stock buy-back, $686 million worth.

So much winning!

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