Harley Davidson has announced the closure of a US manufacturing plant.
However, the plant will not merely cease to exist. The plant is being relocated to Bangkok, Thailand. The iconic US motorcycle will now be produced in another country. So you can take your US flags off your Harleys and throw them in the trash. You can stop buying Harley emblems and merchandise with US flags. Put them all in a closet and hope they may be collector’s items one day which you can sell at auction.
Of course, the company made this decision after receiving a massive tax break from the GOP tax bill recently passed. So you can stop talking about how giving rich people and corporations tax cuts will create jobs in this country.
Congratulations, you’ve been trickled on.
This does bring up several other issues. Collateral damage.
When something like this happens, a plant closes, there is always localized collateral damage. Like businesses in the local community which rely on the spending of plant employees to sustain the small businesses. If it is a small community and that plant is central to that community, it can destroy the entire community. America is littered with ghost towns which ceased to exist when central manufacturing plants closed.
In a situation like this, it is worse. The brand name is iconic and drew tourism into the town. So now only does the town lose internal revenue but they lose external revenue in the form of tourist money. Hotels, restaurants, gift shops all suffer.
Then you have ripple effects. Harley did not fabricate every component on site. Even if they did, it required materials to do so. This means that contractors lose business. Some contractors rely completely on the income from their business with Harley.
With iconic brands such as this, the ripple effect keeps going. How many small and medium size businesses have made an income by making licensed, customized clothing, bags, decorations, etc with the company emblem on it? That will be lost as well. Will it be replaced with the Thai flag? Good luck with that.
Then you have the effect on tax revenue. First you have the obvious. Federal and state tax revenue lost because the corporation will no longer be paying some taxes. Then the same is true for income taxes collected from the workers. Then you lose sales tax revenue when those workers and tourists are no longer spending. Then you lose property tax revenue which sustains the municipality and goes toward schools, roads, libraries, etc.
The one few will even discuss is the effect this has on the trade deficit. The US already has a trade deficit with nearly every country we trade with. Meaning we buy more from other countries than we sell to them. That situation is unsustainable. It means we pay out more than we take in from other countries. This is an add-on, cumulative situation which has gone on for decades. One company will not make or break the US economy or the trade balance. But when you add it to all the other corporations that have exported jobs and manufacturing the effect becomes tremendous. This has been happening for decades and shows no sign of abating.
The US government is attempting to resolve the trade deficit situation by force. Tariffs, threats, sanctions. None of that will work. It CANNOT work. Because none of that creates a condition where the US manufactures products which other countries, where PEOPLE in other countries will buy our products or even want to. Our arrogant attitude on the world stage has the dampening effect on motivation that even those in other countries who can afford what products we offer are less likely to buy them. Do you recall the “Buy American” movement many years ago? Do you really think other countries do not have anything similar? You cannot MAKE them buy something from you.
Some people will claim we can fix the trade deficit and tax issue by printing more money. No, we cannot. When that happens, it devalues the dollar. When we buy from other countries, those purchases are based on currency exchanges. If their currency remains stable and ours loses value, it costs more dollars to buy from them. The result is inflation in this country. The Fed knows this and is currently taking steps to reduce the number of dollars in circulation. That may preserve the value of the dollar but reduces how much other countries buy from us.
So, while this story will be soon forgotten, barely a blip on the screen for corporate media, another item on the pile, we cannot fail to view the pile as a whole. Because that pile has become tremendous and unstable. It is now large enough to crush us when it falls.