article

<b>Canada 2006:</b> Bicycle Sales Are on the Roll

Sales & Trends

In a movement reminiscent of the 1970s bicycle boom in North America, Canadians are being reminded to get out and exercise. This time it is not so much the fear of a heart attack on reaching fifty years of age, but the more insidious dangers of obesity and diabetes and especially the health care costs that go with it.

<b>Canada 2006:</b> Bicycle Sales Are on the Roll

WINNIPEG, Canada – In a movement reminiscent of the 1970’s bicycle boom in North America, Canadians are being reminded to get out and exercise. This time it is not so much the fear of a heart attack on reaching fifty years of age, but the more insidious dangers of obesity and diabetes and especially the health care costs that go with it.
 
Health care and medicine in Canada are the business of provincial governments, backed up by the federal government in Ottawa. Escalating health care costs and longer waiting times for treatment are forcing the politicians to act. The Canadian government in Ottawa recently announced a rebate on income tax for parents with children enrolled in a recognized sports programme. Ice hockey and Canadian football are expensive sports to play, all that protective equipment of helmets and padding.

Remove taxes

How about cycling? Well that is not really an organized sport is it? We can build more cycle paths in the newer urban developments, good for a half an hour spin around the neighbourhood after being stuck in the car during the rush hour commute. At the recent Manitoba election, the Conservative leader even promised to remove the provincial sales tax on bicycles if elected, but the people of Manitoba preferred to re-elect the New Democratic Party, whose health care plans are amongst the best and most comprehensive in Canada.

 

More people on bikes

How is all this affecting the Canadian bicycle business? Very well it would appear, more people are to be seen on bicycles than for many years, dealers are reporting good sales, and at the city bike auctions, bicycles which have been stored in garages since the 1970’s are being sold and dusted off, and once more taking to the roads. The high price of fuel makes the bicycle an inexpensive alternative to the SUV for a short trip. There is even the fun of finding those skinny 26×1-3/8 black tyres, making up three speed gear cables, or trying to find French threaded bottom bracket cups.
 
The gap between the IBD’s and the mass merchants is widening, while almost 80% of the over 1.4 million bicycles being sold,(not including kids bikes with wheels smaller than sixteen inches), are in the hands of the big chains with their inexpensive CAD$ 250 (€ 174) to CAD$ 350 (€ 244) bikes being imported from China, the IBD’s are providing bikes in the CAD$ 350 to CAD$ 1200 (€ 837) range, not counting the high priced carbon fibre racing bikes of which every dealer who calls himself a real dealer has one or two examples hanging on the wall.
 

Comprehensive workshop

The IDB’s have the advantage of well educated, bicycle loving, and in many cases club cyclists living and sleeping bicycles, who sell the right bicycle to fit the customers size and needs, with knowledge and enthusiasm. They also have a comprehensive workshop with the many specialized tools necessary for repairing the modern bicycle, and well trained mechanics to carry out the work in a competent manner.
 
The chains and big box stores have another tactic. Pile them high and sell them cheap. Bicycles are often used as a loss leader in the spring, and by the end of summer the Back to School sales are in full swing with this year’s stock being sold off to make room for next years new models, or other winter sporting goods. For this reason their bicycles are of the inexpensive variety designed and built to last for a year or two and then to be replaced with a new one. It is interesting to note that they carry and sell most of the dual suspension mountain bikes in Canada!
 

Bike makers

Raleigh Canada is now the largest bicycle manufacturer in North America and has produced some 320,000 units in their factory in Waterloo, Quebec, over the last twelve months. Other manufacturers are Procycle, who are increasingly importing and assembling in their factory; Devinci who have a small, but very nice selection of better quality aluminium racing and sports bicycles, and Cervelo, based in Toronto, who design and market top quality bicycles which are increasingly seen on the European and North American racing scene winning big races with the CSC Team professional riders. Everything from the most renowned time-trials to the Paris- Roubaix, Hell of the North, has brought victory to this prestigious Canadian bicycle.
 
Raleigh brand bicycles are sold exclusively by Canadian Tire Corporation, Canada’s largest automotive, hardware, and sports chain with a store in almost every Canadian town. The IDB’s sell the Diamond Back bicycles, another brand of Raleigh. Diamond Back has undergone a complete change since Raleigh took over the brand and now they have some very sophisticated machines from BMX to MTB, freestyle, and road racing to trekking and city bikes.

 

Production for the Orient

Norco products of Vancouver, British Columbia have built up a very good business as Jim Harmon the President says: “Not bad for two guys in a garage in 1964, to a business with 130 employees, warehouses in both Vancouver and Toronto, and a manufacturing facility in Burnaby B.C.” They produce some bicycles in Canada, and import bicycles built to their own specifications from the Orient. They are also distributors for the Masi and Haro brands of bicycles. Their line of parts and accessories is well known, and Jim is proud of the fact that they have twenty four distributors, of which fourteen are in Europe, the others in the Orient, Australasia, Mexico and Israel. Norco runs their own business in the USA. Dorel Industries from Montreal sell the Pacific line of bikes to many of the mass merchants with their well known Schwinn and Mongoose brands.
 
The Canadian bicycle business is doing well at present, but behind the scenes there are matters of concern for the future. The Canadian International Trade Tribunal has already started another investigation on the dumping of bicycles and frames originating in China or Taiwan.
 

 

Dumping Investigation Re-Opened in Canada

On March 27, 2007 the Canadian International Trade Tribunal (CITT) initiated an expiry review concerning certain bicycles and frames originating in China or Taiwan. As a result of this the President of the Canada Border Services Agency (CBSA) ordered that a study should be made to determine whether the expiry of the order would result in the continuation or resumption of dumping of the goods from the aforementioned countries.
 
Once more the Canadian Government is trying to determine the fate of bicycle manufacturers in Canada, whilst at the same time trying to keep the Chinese happy. Some have said that this is a problem like squaring the circle, whilst others have said that it is simply another Canadian Government “Make Work Programme.”
 
The “certain bicycles and frames” referred to bicycles with an FOB China or Taiwan value of no greater than CAD$ 225 (€ 157) and wheel sizes over sixteen inches, and frames are with a value no greater than CAD$ 50 (€ 34.90). Interested manufacturers and importers were asked to submit questionnaires and other information by May 7, 2007. By the end of May the CBSA study information was to be available and case arguments due from interested parties arguing that continued or resumed dumping and/or subsidizing is likely or not likely.

 

Final results

On July 26, 2007 the CBSA’s determination should be passed to the CITT. The final result of the investigation should be made by the end of August. Once again importers and manufacturers have to gamble on the outcome of the investigation as they work on presenting their new bicycle range for the 2008 season. At the end of May the CBSA had received many replies to their questionnaire.
 
Prominent amongst the producers are Raleigh Industries and Cycles Devinci who had been asked to work through a seventy six page questionnaire, giving production and marketing figures, details labour costs, machinery and factory investment. The review covers the period from January 1, 2004 to March 31, 2007.
 
The importers had an easier task with only forty pages to deal with. Prominent importers are, Wal-mart, Zellers, Canadian Tire Corporation, Norco, Giant, Specialized, and Trek. Amongst the exporters there are replies from Ace bicycles, Yong Chi, Oyama, and Hu Chin from China, and Fairly, Giant and Ideal, originally Taiwanese companies, now with facilities located in China.

 

Chaotic situation

Farid Vaya, President of Raleigh Canada had this to say about the concerns of the Canadian manufacturers: “We have seen the price of bicycle parts from the Chinese factories decrease between twenty and thirty percent over the last year. The situation is very chaotic. Chinese bicycle and parts manufacturers have lost markets in Europe, and South and Central America leading to overproduction, fierce competition for the North American market, and decreases in prices.
 
The Taiwanese factories based in China are still producing good quality parts at reasonable prices, but it is the Chinese factories which are fighting for survival, and cutting corners to manufacture bicycles and parts at a lower price than their Chinese competitors. I can imagine that if this continues then a CAD$ 60 (€ 41.90) retail mountain bike will be for sale in some of the big chain stores before long.” He could be right, and who would volunteer to be the first rider of one of these bikes on a rugged mountain trail?
 
Taiwanese companies in China are also suffering the effect of the Chinese competition, with prices being driven down, and products being copied out of hand. Recently a Chinese tyre of questionable quality has appeared bearing the name Wanda on the sidewall. The lettering being in the traditional Kenda Rubber Co. style which Kenda have had registered since the 1960’s.

 

Quality

One remembers the chaos in the market in the 1970’s when the American Consumer Products Safety Council brought in new tests and specifications for safe bicycles, shutting down Taiwanese factories for several months as they tried to meet the standards. Even some of the many American manufacturers at the time could not meet the standards, and it was up to the French and Japanese to be the first to conform.
 
The importers of higher priced bikes including Norco, Trek, and Specialized have little to worry about, their bikes being of a better quality, and hence a higher price than those under review. It is the importers of opening price point bicycles that must carefully consider how to ensure that they are receiving a quality product at a fair price. It remains to be seen how the CITT can resolve the concerns of the Canadian bicycle industry to everyone’s satisfaction.

 

Chinese Scooters with an European Name

Finally motorcycles are appearing on the Canadian Prairies again. After a long, cold, winter the snowmobiles have gone back into storage until next year, Quads are now raising clouds of dust on the gravel roads instead of ploughing through the snow and mud.
 
Currently the Piaggio and Vespa scooters are selling well in Canada. They have the name and reputation, but it is the Chinese machines which are selling in increasing numbers. The importers of these machines are getting organized.
 
Typical of the newer PTW retailers in Canada is EuroScooter Sales and Service in Winnipeg, Manitoba. They have been in business for a little over two years, and Kim Wilson, the operations manager is well pleased with the way that business is developing. “We are selling Pertutti scooters, and we also have quite a selection Quads and Mini-Quads. We sell a lot of them.”
 
The Pertutti scooters, and quads, in spite of their Italian looks and Italian name are manufactured by the Jianshe Group in China. “When we started the importers were not so well organized for service, but today we have a stock of the most common spare parts in our warehouse. A quad made by Jianshe, the JS-400 four by four, retails for CAD$ 5999 (€ 4,188). It is maybe not as sophisticated as the latest Bombardier, but look at the price.”

 

Motorcycle or 50cc?

Next to the Chinese bikes also a European make is sold by EuroScooter Sales. It’s a Tomos Streetmate; looking at first glance much more of a motorcycle than it’s 50cc two stroke motor appeared to offer. “We find a lot of men who have previously owned bigger motorcycles come in looking for a scooter to get them to work. They see the Tomos, and it is love at first sight. It looks like a man’s bike, and it is economical to run as well as quite fast enough and manoueverable enough for facing the city traffic with confidence.”
 
It seems that EuroScooter and Sales have already found themselves a place in the PTW market. Safety concerns are being raised about pocket bikes in Canada. These little, mostly 50cc, racing look alike machines, are being produced in increasing numbers in China. In Ottawa police have made it clear that pocket bikes are subject to the same rules as other vehicles under the Highway Traffic Act. A fine of CAD$ 5,000 (€ 3,490) could be levied for driving without insurance. The Motor Vehicle Safety Act in Canada states “That all vehicles imported into Canada must meet certain safety standards, and manufacturers must certify their compliance at the time of manufacture.”
 
However there are categories for “Competition Vehicles” and “Restricted Use Motorcycles” that must have stickers in both English and French attached by the manufacturer stating that “This is a competition vehicle and is for use exclusively in closed-course competition.” Transport Canada states that pocket bikes should only be driven on closed courses, and that it is up to each Province to enforce the on-road use of all vehicles.
 

Comment on this article