Originally Posted by AllBusiness
Monday, April 15 2002
While most of the bikes sold in America are made in Asia, one segment of the bike market continues to find that U.S. builders offer greater value than their larger overseas counterparts. But this may be changing.
American frame builders last year quietly produced about 27,000 BMX frames for all segments of the 20-inch market. This number represents the production of 18 frame builders scattered across the country, building for 30 suppliers.
The frames have retail prices between $275 and $350 and represent about $8.5 million in retail sales. The forks needed to get these frames going—most of which are in the $90 price range—ring up another $2.4 million in retail sales.
Neither the Bicycle Product Suppliers Association nor the National Bicycle Dealers Association's Data Capture program track these sales.
"I never added it up before, but there are more frames being made in the States than I thought. There are a variety of good reasons too, mainly it is a strength and quality issue," said Chris Moeller, S&M Bikes' founder.
S&M, one of the largest U.S. BMX brands, supplements its in-house frame production with the help of five outside builders.
Some of the biggest BMX frame suppliers are familiar names. Waterford Precision Cycles, known for its lugged frames, builds thousands of TIG-welded BMX frames for Standard. Brew, a longtime mountain and road bike builder, is expanding its factory and adding 12 employees to support its growing BMX business. Champion, a motorcycle frame producer, and Alliance, round out the top four, which together produced 15,000 framesets last year.
The rest of the builders include Acuweld, B&E, Dirt Brothers, Fabweld, Fat Bald Man (FBM), Kinesis, Maas Specialties, Pro Concepts, Profab, Solid and Staats and a handful of others.
Though well-known brands such as S&M and Standard are selling all the bikes they can make the success of smaller garage and rider-owned companies also is contributing to the demand for U.S.-made frames.
"A big supporter of these small brands is the kids themselves. They don't want to ride what someone else is riding, which is part of the reason Schwinn, Specialized and Trek have never broken into the market," said Gary Turner, who founded GT Bicycles and is a partner in Alliant Bicycles with Mike Devitt.
"By the time you get a brand big enough to interest a Taiwanese builder, the kids are going someplace else. It's something I learned at GT," Turner said. Alliant makes bikes under its own brand name as well as for others.
So far Taiwan-sourced high-end BMX frames have found limited acceptance, but as Nate Hanson, Tip Plus' public relations manager, pointed out, the U.S. builders are currently unable to keep up with demand.
But building in Taiwan may not work for some of these smaller suppliers. They often order small lots and need fast turnaround, which doesn't fit well with Taiwan's production model. For example, on short notice Waterford can build 43 model/size combinations in 12 possible colors for Standard.
"Haro has done a good job of planning nine months out, but for most, anticipating what the market is doing early enough to buy from Taiwan is hard," said Jeff James, a Waterford partner.
James said kids are better informed than most in the industry give them credit for. The $350 price tag on these frames can represent most of what they earn over the summer so a bike's quality and point of origin are important.
Steve Garn, who owns Brew, used to support his passion for bikes with a day-job as an electrical contractor. He sold that business last year to refocus on building frames—mostly for a variety of BMX brands.
"I pick up business because I offer quality True Temper chromoly tubing built to a high standard. I am an old roadie so I am kind of finicky about alignment. Plus I am delivering bikes at good prices," Garn said.
Two issues that will make it harder for domestic frame builders in the future are the increasing quality of Taiwan-sourced bikes and the scarcity of standard mill-quality chromoly tubing.
Since Pacific Tubing, a large supplier to the bicycle industry closed a couple of years ago, sources of inexpensive tubing are drying up.
Alliant's Devitt said his company has been getting German-made tubes from its steel supplier. Many other builders are turning to True Temper, Columbus and other high-end tubing suppliers.
Builders point out that BMX frames use the same tubes and take just as much time to make as steel hardtail mountain frames that sell for twice the retail price.
"Two years ago it would have been unthinkable to bring in a high-end Taiwan-sourced BMX bike, but the rise of rider-owned companies has really changed that. Bikes from companies like MacNeil, Federal and We The People are well built, and they are getting a whole lot better margin than I am," S&M's Moeller said.
"I have to sell three of my frames to make the same $120 margin Taiwan-supplied bikes enjoy with one sale. With our tubing costs going up, if we can't push the retail price up we are going to be making even less money.
"I make all my money selling T-shirts anyway, but I don't think you can build a bike brand just around T-shirts. It's a good thing I love this business," Moeller added.
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Originally Posted by TroutBum
