Question

Due to tariffs implemented by the Trump Administration, the costs of Harley Davidson increased. Harley Davidson responded with the decision to not pass these additional costs onto the consumer by relocating jobs overseas to lower cost labor markets. What ethical dilemmas does this raise and how, as an executive, would you address this?

Answer 1

The European union imposed a 25% import duty on June 22. To counter this act, the Trump administration put tariffs on steel and aluminum products imported from EU. This move by Trump has adversely affected Harley Davidson which is one of the biggest manufacturers of heavy-duty motorcycles.

To not transfer these additional costs to the customers, Harley decided to shift jobs overseas to low cost markets such as Brazil, India and Thailand

The ethical dilemmas this raises are

1) By moving the jobs overseas, it will lead to a job cut in the US market. As an executive the dilemma faced here is to either keep the jobs in the US market and increase the cost of the bike by $2200 per motorcycle and transfer these costs to the customers or transfer the jobs to the low cost labour market and sell the bikes at the same cost to the consumer. As an executive I would look at the long-term business gains for Harley. If i continue to keep the jobs here and transfer the cost this would lead to lower bike sales which means lower profits to cover the cost for the company. This again means that in the long run if I am not able to cover cost the company will have to cut corners which includes downsizing. So eventually people will lose their jobs. So not only is Harley losing out on sales, but the very jobs it tried to maintain will be lost.

2) The second ethical dilemma this poses for Harley is, if it should go against the Trump administration which has clearly upset Trump who tweeted that he is disappointed by Harley's decision after all the support he has given them or secure the EU demand which accounts for its second largest earnings after the US. Again, as an executive, securing the earnings is a better decision to go with because with the tariff imposition and the import duties of EU, Harley is going require funds. Also, the demand overseas for a Harley vehicle is more than US. In fact, Harley had to shut one of its plants on Kansas due to the lack shipments. The rising costs of the metals plus the dispute between EU and the US has put a major dent in Harley's share price. As it is a better decision to move the labour abroad and maintain the EU demand.