Scott W. Wine, Polaris Industries Inc.

Polaris Industries CEO Warns US Jobs May Move to Mexico If Tariffs Rise

May 8, 2019
Costs for U.S. manufacturer could reach almost $200 million.

Scott Wine jokes that he doesn’t want to have to start building snowmobiles in sweltering Mexico.

But the chief executive officer is dead serious about the unintended consequences that higher U.S. tariffs on Chinese goods will have on Polaris Industries Inc. -- including forcing him to consider moving jobs to Mexico.

“We just can’t stand for it,” Wine said in a phone interview Tuesday. “I don’t want a Fortune 500 company like we are to be very vocal against the tariffs and undermine our negotiating position as a country. That said, if it goes to 25%, I will become one of the most vocal people you’ve ever heard on the issue.”

Tariffs, which Wine said have been just one of his top priorities over the last year, became his No. 1 after U.S. President Donald Trump tweeted early this week that the U.S. will boost levies on $200 billion worth of Chinese goods to 25% starting Friday.

Wine said that if Trump follows through on this threat, tariff costs for the maker of recreational vehicles, snowmobiles and boats would rise by $80 million to almost $200 million this year -- an additional burden the company is unable to bear. The tariffs would make it more expensive to procure parts including wire harnesses, stampings and castings. Polaris makes about $450 million of profit a year, he said.

Shares of Medina, Minnesota-based Polaris have slumped 8.2% since Trump’s tweet through Tuesday’s close, amid a rout in global markets.

Alabama Plant

Investors hounded him, he said, for making a decision in 2014 to build a $150 million plant in Huntsville, Alabama, and employ 1,000 Americans instead of lower-wage workers in Mexico. Rival BRP Inc., the maker of Ski-Doo snowmobiles and Sea-Doo watercraft, isn’t getting hit by tariffs because it’s making its products in Mexico and Canada.

“They do not pay tariffs, and I do,” Wine said, calling it “lunacy” that Polaris will be penalized and foreign rivals including Valcourt, Quebec-based BRP will benefit. “I’m paying tariffs because I hired American workforce and I’ve invested in American plants. And I cannot stand for that.”

Polaris also has facilities in Ohio, Wisconsin and Minnesota -- key battleground states in the Midwest that will determine whether Trump is reelected. But some of the products the company builds in Huntsville are also manufactured in Monterrey, Mexico.

“I do not want to do it, but if I can’t get relief, I’ll be forced to think about moving some of those jobs to Mexico,” Wine said. “It is not my desire to ever move a job out of the U.S. We have great employees here, we make great vehicles here, and that is what we’re trying to do.”

By Craig Trudell and Chester Dawson

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Licensed content from Bloomberg, copyright 2016.

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