Is Harley-Davidson Sacrificing its Workers For Excessive Corporate Profits?
Shortly after his election, President Donald Trump thanked Harley-Davidson and several major companies “for building things in America.” Then last February, Harley-Davidson turned around and closed a factory, cut up to 800 jobs, increased dividends and announced a $696 million stock buyback plan all in a matter of months, as a new PR Watch report stated.
House Speaker Paul Ryan told Americans there would be “more jobs, fairer taxes, and bigger paychecks” because of the Jobs and Tax Cut Act of 2017 which lowered corporate tax rates from 35 to 21 percent and Harley Davidson is now a beneficiary of. The PR Watch report suggests its Harley Davidson and not blue-collar Americans benefiting from the Tax Cut Act.
Harley-Davidson Says Thailand Factory Will Assemble Motorcycles with Parts from the US
Closing its Kansas City factory will cost residents 800 jobs. The company disclosed that the lost jobs would be offset by 400 new jobs to be created at its York, Pennsylvania factory. However, industry experts maintain that several workers will still be rendered redundant due to Harley-Davidson’s new plant opening in Thailand.
Conversely, analysts say Harley-Davidson cannot yet be taken at their word to create 400 new jobs in Pennsylvania. Even if the company makes good on its promise, current employees from the Kansas City plant would need to cut their losses and move to Pennsylvania to be employed. The company has assured that only motorcycle spare parts produced at its U.S. plants would be used to assemble machines in Thailand.
While Harley-Davidson may think that its proposed $700 million stock repurchase plan is good for the company, analysts argue it makes things worse for average Americans. As the PR Watch report stated, analysts claim the plan will only increasingly concentrate ownership and dividends in the hands of a few influential investors. PR Watch found that “companies poured more than twice as much into share buybacks and cash mergers than into hiring more workers and raising wages–$305 billion versus $131 billion–in the first quarter of 2018.” Analysts predict the value of C.E.O. stock options will rise, and the gap between the rich and the poor will grow wider.
David Santschi, research director at TrimTabs, noted that this situation will “deliver far more wealth to top management and investors than to typical American households.”
Seven Financial Firms Own Majority Stocks and “Run” Harley-Davidson
More than half of Harley-Davidson’s 165 million shares are owned by Blackrock and six other financial institutions. As the company’s share values and dividends increase the seven firms owning the largest stocks in Harley will earn increasing profits. Blackrock happens to be the largest private equity fund in the world.
The PR Watch report stated that the Center for Media and Democracy (CMD) showed the three top holders of Harley Davidson stock made “an additional $5 million above what they would have made last quarter without the tax cut, even as the 800 Kansas City machinists and steelworkers received pink slips.”
Harley Davidson’s first quarter earning already exceeded expectations by 14 percent because of its announcements but those boosted earnings may only be making the rich richer and the middle-class jobless.