Of motorcycles and competition

Motorcycle enthusiast and MSNBC host Lawrence O'Donnell corrects Trump on Harley-Davidson history and tariffs

By: Adam Smith Project
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Photo: Roman Tiraspolsky/Shutterstock
   Executives from Harley-Davidson paid a visit to the White House last week, where President Donald Trump hailed the company as an American manufacturing success story.
   “In the 1980s, I remember this, you were victims of big trading abuse where they were dumping, all sorts of competitors, and Ronald Reagan stepped in and he put in large tariffs and you wouldn’t be talking about Harley-Davidson probably right now if he didn’t do that,” Trump said during a photo opportunity in the Roosevelt Room.
   On the Feb. 2 episode of MSNBC's The Last Word with Lawrence O’Donnell, the host tried to knock down perceptions that trade is inherently negative for American workers. Here is the entire segment, transcribed with permission from the show's producers:

   “So there’s Donald Trump telling Harley-Davidson executives a lie about their company’s history. They know they didn’t get in trouble in the 1980s because of dumping by Japanese motorcycle manufacturers. Dumping is when someone sells a product for less than it costs to manufacture it. The story about Harley-Davidson is a very important story about international trade, but it’s not the story that Donald Trump told today. The president rewrote that story to fit his false narratives about international trade.
   “Here is the truth of what happened to Harley-Davidson: William Harley and Arthur Davidson were childhood friends who worked for a couple years to design and build a motored bicycle at the home of a friend of theirs in Milwaukee. Their first design couldn’t quite make it up hills. But by 1905 they started very limited production of motorcycles.
   “By 1906 they built their first factory. By 1920, Harley-Davidson was the largest motorcycle manufacturer in the world. By the 1980s, Harley-Davidson was the only motorcycle manufacturer left in the United States. Most of its competition was pouring into the United States from Japan. Honda, Kawasaki, Suzuki. Germany and the United Kingdom were also significant exporters of motorcycles to the United States.
   “Harley-Davidson’s sales were suffering not because the foreign competition was cheating, but because Harley-Davidson’s machines were not as good as the imported machines. Harley-Davidson was making the worst motorcycle in the world.
   “I preferred English motorcycles myself in those days, as my first was a BSA when I was in college. My second was a Norton, and then I totaled that beautiful Norton in a high-speed accident and stayed away from motorcycles for a few years. And then when I went shopping for a motorcycle again, I looked at all the Japanese bikes, the British bikes, the German bikes, but at the end of the day, just for the heck of it I stopped by the Harley dealer on Cape Cod and I have never thought about foreign motorcycles again.
   “My first Harley was their smallest bike then: a Sportster. After a couple of years I traded that in for a Heritage Softail. The reason that I switched to Harley is that they finally figured out how to make a motorcycle. When I was buying British bikes, brand new Harley-Davidsons couldn’t stop leaking oil. You had to be a mechanic to own a Harley-Davidson, to even get one started.

The competition from international competitors to Harley-Davidson made Harley-Davidson motorcycles better. Much better.

   “The temporary tariff that Ronald Reagan imposed on Japanese motorcycles gave Harley Davidson the breathing room it needed to figure out how to make a better motorcycle, which they did by going to Japan and visiting Japanese motorcycle factories and studying how the Japanese did it. The competition from international competitors to Harley-Davidson made Harley-Davidson motorcycles better. Much better.
   “My first Harley spent the winters as the most beautiful ornament in my living room in my Manhattan apartment without ever dripping a drop of oil. And I convinced friends of mine who had owned only Japanese bikes to buy Harleys.
   “Harley-Davidson requested that the protective five-year tariff be removed a year early because Harley didn’t need it any more. After the tariff was removed, Harley’s CEO actually said, ‘For years we tried to figure out why the Japanese were beating us so badly. First, we thought it was their culture. Then we thought it was automation. Then we thought it was dumping. Finally, we realized the problem was us, not them.’
   “They had been making a terrible product and they had been doing it in an inefficient way. So in addition to designing and building a better motorcycle, Harley-Davidson cut jobs, laid off workers, streamlined the assembly line.
   “So, Harley-Davidson doesn’t fit the simplistic story Donald Trump wants to tell you about international trade. Harley-Davidson became a fat and lazy American company making a terrible product because it didn’t have enough competition. And so, yes, one American company was saved by one temporary tariff. And it worked because of the unique circumstances. The tariff was designed to protect only one small company, not an entire industry.
   “That same strategy would never work for an entire industry, like the American automobile industry, which has also been helped enormously by foreign competition. American cars are better tonight thanks to foreign competition forcing them to be better.”

Lawrence O'Donnell is a journalist and host of MSNBC's The Last Word