Dorel Industries to Diversify Products & Locations

MONTREAL, Canada (Nov 1) - Dorel Industries Inc., a major importer of consumer goods from China, is checking out other countries as manufacturing sources for fear that rising labour costs and transportation jams could hurt margins on goods from booming China, chief executive Martin Schwartz said Monday. Schwartz said his company was a North American leader in buying from China, starting 25 years ago, but he said it's time to start looking elsewhere, as a backup. Dorel, a designer and seller of goods like bicycles, baby car seats and simple furniture, is checking out manufacturing possibilities in Thailand and Indonesia, Schwartz said after a speech to the Canadian Club, on the exact 100th anniversary of the club's first luncheon speech. "We're just looking for a secondary source, to have a Plan B. That country is about to face labour issues," Schwartz said, especially in the more industrialized areas of China. Another factor to rising costs, Schwartz said, is that "today, importers in North America and Europe shy away from factories with poor working conditions." China's one-child policy will also shrink its population over the next 10 to 20 years, he said. "The rush to rely on China should not be seen as a cure-all. They have to be efficient like we in North America are efficient. They can't just throw cheap labour at the factories like they used to." While Dorel has 125 suppliers in China, it is expanding into eastern Europe and has plans for Mexico, Central and South America, both for buying products and selling them. The company is also developing a new product platform called leisure and fitness, following on the acquisition of Pacific Cycle in early 2004 which brought in well-known bicycle brands including Schwinn, GT and Mongoose. The company employs about 5,000 people in 14 countries and had 2004 sales of $1.7 billion US.