Cycle News is a weekly magazine that covers all aspects of motorcycling including Supercross, Motocross and MotoGP as well as new motorcycles
Issue link: https://magazine.cyclenews.com/i/126635
Harley-Davidson Chairman Vaugh Beals fielded reporters' quest ions: Beals explains ยท H-D/} apan 'aid' offer; Honda holds '83 prices By Dale Brown LOS ANGELES , CA, APR. 8 Harley-Davidson Chairman 'of the Board Vaughn Bea ls to ld the press that an offer of assistance from Japan to the U .S. manufacturer did consist of a $20 million loan guarantee - as an advanceon purchasin g $20 million in HarleyDavidson motorcycles. Beal s said the offer was turned down because "Harley does not have 30 a n excess inventory problem," and th at no new negotiations hav e been undertaken. Beals met with reporters a week after President Ronald Reagan im p osed stiff import tariffs on most imported motorcycles over 70Occ. In a telegram to its dealers, Ameri ca n Honda said th at, "The in crease in duty will not affect any 1983 (H o n da ) models over 700cc because th e majority of the imports of these units are usually comp leted by this time. Also, our current Ohio production of the C BIOooC and GUIOO series will not be affected by th e ta riff in creases, and , needl ess to sa y, any un its in o ur in ventory now will n ot be affec ted by th e tari ff inc rease. Moreover , we do not ant icipa te any immediat e in crease in prices for 1983 and prior year mod els ." In Los Angeles, how ever, Beal s was bu sy explaining wh at had transpired between the j apanese Ministry of Int ern a tio nal Trade a nd Industry, wh o o ffered aid on behalf of th e japan ese manufacturers to avoid th e tariffs. "S ome time before Daytona ," Bea ls said, "The japanese, through the Un ited States Trade Representative 's office, came in and said, 'We 'd like to make a proposal to negotiate a sol ut ion rather thari have these tariffs.' Th e USTR came to us and we said yes - our objective wa s to get a problem solved and we didn 't much ca re exactly h ow th e problem was so lved. If th ey had a better id ea th an the Trad e Commission , we'd be happy to listen. " We li sten ed. For prett y o bvious rea sons, th ese were inten ded to be co n fide ntia l di scu ssions. Our a ttorneys, th eir a ttorneys, everybody sa t around in a room and th ey made a proposal. The proposa l had two eleme nts, a lthoug h it was pre tty co mpl ex . Th e first eleme n t was ' We' ll bu y so me motorcycles; we'll bu y so me o f your excess inve ntory,' T he seco nd ele me nt was ' We' ll provide yo u with technical ass ista nce .' T he proposa l to bu y m otorcycl es was a bit co m p lica ted. Essentially they said, ' We' ll g ua ra ntee you a lo an o f $20 milli on , an d we'll buv $20 mill ion worth of motorycles fr~m you . Wh en yo u sell th e motorycles yo u tak e th e proceeds an d payoff the loa n ,' So , it was a n adva nce down payment on th e purch ase of motorcycles, Our response was that it wou ld n 't solve our problems. We do n 't have excess motorcycles - we shut our bloody factory down and la id off people, We cu t our staff 40%and our inven tory is 20%of wh at it was a yea r ago, That was a conscious plan. We wanted to get our production level to th e market level. "Secondly, with a ll due respect, we told them that we didn 't want their technical assistance either. We don't think we need it ," Beals continued, " We then proceeded to say th at , 'If yo u are looking for a so lu tio n to th e problem , here is th e domain in which yo u shou ld look for a solution.' We didn 't want th em to walk away and think we'd just say no and giv e them no id ea of what we th ought wa s a reasonab le a ltern a tive. That wa s wh ere it stood when I went to Daytona," Wh il e in Daytona, Beals sai d th at he learned of a br ea ch in th e confidenti ality o f the negotiations when th ose details were printed in a japanese finan cial publication. "There were so me discussions - I wou ldn't dignify th em by ca ll in g th em negotia tions - following that. They wouldn ' t let me in because th ey didn 't want me to exp la in m y feelings in response to the japanese pr ess. T he dis cussio ns never am o unted to an ything, a nd th ere are no negotiati ons goin g o n today. "I should add th at non e o f th e n egotiat ion s involved a ny owne rsh ip in H arle y." Asked a bo ut a ny possibility o f fu ture negotiat ions, Bea ls sai d , " If th ey were to a p pea r o n o ur doorstep with a proposa l, it wo ul d be p re tty si lly not to a t least lis ten to it." On o ther su bjec ts, Beal s said tha t 47 o ther clai ms fo r protectio n under th e statute tha t Harl ey-Davidson used, had been made. H e sa id .th a t o n ly ni ne gai ned Intern ati on al T rade Co m mission support , a nd that H arlev's case wa s th e first to ha ve been approved by the President o f th e U n ited Stat es. , The H -D chai rma n also reiterat ed th roughout th e press co n ference th at th e rea son for H arl ey seeking th e ac tion in th e first .p lace was th e 18month inventor y o f un sold japanese motorcycles in th e U.S, Asked abo u t th e inclusion of 700-999cc motorcycles in th e tariff inclusion, Beal s sa id, " I recognize that if a guy wants to buy, one of these 750 In tercep tors, then he's not a ca nd ida te for anything we sell. That's an accidental injury process. There was a lon g dis cussion a bo u t this and quite a bit of effort went into the 7oo-plus. But we feel th a t th e evidence is overwhelmi ng that 750s compete with 1000s. "This is like warfare, Somebody may get h it by a ricoc h et. That's rea lly too bad and I feel sorry for them. We didn't start the war; we didn 't flood th e place with inv entory. We on lv h ad th e laws available on th e books i nd we used th em . We hope to benefit from th em . If an innocent bystander gets hit , well , the la st thing I want to see is th e m otorcycle indus- , try get hurt. Excus e me, th e next- tolast th in g. (L augh ter) The last thing we wa nt to do is ge t kill ed . You people in Los Angeles ca n rem ember th earthqua kes, a n d ho w th e people below th e dams th at cracked were scared to death. Beli eve me, we've been living under a dam o f motorcycles, and we've been scared to death. ')1 " We kn ow how the japanese hav e handled th eir pricing in th e past .. J II When you're sca red to death, you do 01 what yo u ca n. Wedid wh at we co u ld . If th ey don't lik e their consequences, (N th en as far as I'm co ncerned , th ey should look to the guys who started ., the game." Some of th e dis cu ssion was centered around new products from Har- .ley, which have been a lluded to by both H arley-Davidso n executives and the press for some time. In 1981 Cycle , News ran pictures of the wa ter-cooled V-4, and Beals joked about it to the rnotojou rnalists a t th e con feren ce: " We had to show the IT C some projects we could never show you fellows." Asked -about the cost of produci ng such a new model, Bea ls said, "Any investment in a new product has to be amortized against that new product. We're on ly talking about one new product, or on e new family of products if yo u will. If it doesn 't provide a good return on our projections, we're not going to do it. It was a very viable project; we knew how to finance it when we bought the com- . pany, even though we took on an immense amount o f debt when we purchased th e com pa ny, Even in our worst-shape projections, we could still self-finance it. However, if we had our worst-shape forecast as rea lity, we would be delirious with joy. We still think th at it is a via ble program, it will sta nd a lo ne, a nd our investment in it will not refle ct adversel y on us." Beal s also said, that during the first quarter -o f 1983, Harley -Davidson made a small profit. In oth er reactions to Reagan' s approva l of the tariffs, Yamaha released at statement sayin g, "This ruling will raise the pri ces of newl y-imported mot or cvcl es. Th e exact amount of r this increase ha s not yet been determined, but it will be less th an th e 45% . o f th e newl y-imposed tariff. Yamaha inten ds to explo re a ll pot ent ial ave: nues to keep prices as co m pe ti tive as possibl e. Includin g in th ese o p tio ns will be a review of a poss ible U.S. manufacturin g pl ant." BMW , o ne o f th e small -volu me m a nufa ctu rer s ba sicall y exe m p ted from th e tariffs, was happy. " We are pl eased th at th e ad m in istra tio n structured its determination so as to a llow sma ll-vo lu me manufacturers access to th e market ," sai d j ohn A, Co ok , presid ent o f BMW o f North Am eri ca . " BMW took th e positi on with th e admin istrat ion th at o u r product range, bu yer profil e, limited production a nd m arket in g stra tegy in no wa y com pe tes with H arl ey-Davidson ," added Cook. T h e tariff quota for motorcycl es over 700cc imported from West German y begins a t 5000 per year in 1983, then ra ises year ly to 6000, 7000, 8500 a nd 10,000, not 1000 per year as was reported in this paper last wee k. T a riff q uotas for motorcycles from co untri es other th an japan begi n at 4000 and go up 1000 units per year. Heavyweight motorcycles from japan have a tariff q uota beginning at 6000 units and th en in creasing by 1000 per year. I{