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Harley-Davidson Takes Tax Cut, Closes a Factory, and Rewards Shareholders

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In September 2017, one Harley-Davidson plant hosted House Speaker Paul Ryan, who touted the Republican tax bill as a benefit for American manufacturers, allowing them to better compete in the global economy. Four months later, workers at a different Harley-Davidson plant were informed their location was closing their doors and that 800 people would lose their jobs.

Employees at the shuttering facility, located in Kansas City, Missouri, were informed that operations were shifting to a York, Pennsylvania, plant, creating a net loss of 350 jobs. Workers and representatives from the union stated that they didn’t see the closure coming.

After the announcement, workers were sent home for the remainder of the day, without pay.

According to Greg Tate, a United Steel Workers District 11 staff representative, the union was not informed in advance.

“We really never had any belief that they were going to shut the Kansas City facility down,” he said, adding that the announcement was “the first anyone found out about it.”

Just days after employees were informed of the closure, Harley-Davidson announced a dividend increase. Additionally, a stock buyback plan, where the company would repurchase 15 million shares that had a value of approximately $696 million, was also announced.

Additionally, Harley-Davidson is moving forward with an overseas expansion, including a plant opening in Thailand that should start production later this year.

Since the tax cuts passed, not every company has used it to benefit workers. In the first three months of 2018, according to a report by Vox, a record-setting $178 billion in corporate stock buybacks has been announced.

Over the past year, the average earnings for American hourly workers have only increased by 67 cents.

Harley-Davidson estimates that their effective tax rate, the amount the company actually pays, has decreased by around 10 percent since the tax cuts went into effect. They anticipate paying 23.5 to 25 percent during 2018.

Considering the company makes between $800 million and $1 billion in pre-tax profit, that’s a substantial savings.

Harley-Davidson is traditionally seen as an American symbol. In September, Ryan told workers, “Tax reform can put American manufacturers and American companies like Harley-Davidson on much better footing to compete in the global economy and keep jobs here in America.”

Trump also made promises to employees in February 2017, stating, “I think you’re going to even expand – I know your business is 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.” He added that the coming changes to “taxing policies” would only make things better.