On your bike

Sep 18th 2008 | TAICHUNG, TAIWAN
From The Economist print edition

Obesity and high oil prices are good news for the world’s biggest bikemaker

THESE are tough times for carmakers, many of which are labouring under high oil prices, slowing demand and financial weakness. For makers of human-powered, two-wheeled vehicles, by contrast, business is booming. Giant Manufacturing, the world’s largest bicycle-maker, sold a record 460,000 units last month and is heading for its best year ever. Such is the demand for bikes that shortages were reported in New York earlier this year. In Taiwan, Giant’s home market, supply is tighter still: for many models, buyers put down deposits months before their bikes come off the assembly line.

After a slow 2006, sales took off last year in Europe and America as fuel prices shot up. Suddenly a bicycle seems like the remedy for many modern ills, from petrol prices to pollution and obesity. Each market has its own idiosyncrasies. Europeans mainly use bikes for commuting, but have the odd habit of ignoring models made explicitly for that purpose in favour of sleeker, faster models which are then expensively modified. Americans prefer off-road BMX trail bikes. Taiwanese demand is led by racing-style bikes used for exercise.

Giant, as the largest producer, makes everything for every market. Its share price has held up fairly well despite stockmarket turmoil and dramatically higher costs for raw materials, notably aluminium. Strong demand and a desire for better bikes have allowed bikemakers to pass higher material costs on to buyers. Since 2004 wholesale prices of bikes have gone up by 23% in Europe, 45% in America and almost 50% in Asia, even as thousands of low-cost factories in China, including some run by Giant, churn out boatloads of cheap bikes.

Giant began in 1972, taking advantage of low-cost Taiwanese labour to make bicycles for foreign firms as well as domestic buyers. A critical early order came from Schwinn, the dominant American brand of the time, which wanted to reduce its dependence on a factory in Chicago that was beset by poor labour relations and low productivity. After contracting out to Giant proved successful, Schwinn shifted its orders to a factory in southern China. But quality was poor, deliveries were late and Schwinn slid into bankruptcy. (It is now owned by Dorel Industries of Canada.)

Meanwhile, having started out as a low-cost manufacturer, Giant was moving upmarket. Even its cheapest bikes, which are sold in China, are relatively expensive (at around $100), yet Giant has the largest market share, at around 7%, according to Deutsche Bank. Globally, Giant is one of a handful of big companies that can make frames and forks (the most important components of a bicycle) out of sophisticated alloys and carbon fibre. Components from other manufacturers are then added to the frame. The resulting bikes are sold under Giant’s own name, or under contract to big customers in Europe and America.

Because frame- and component-makers are happy to sell to potential competitors, there are in effect no barriers to entry to the bike business-all that is needed is a brand name. As a result, competition is brutal. Capturing customers at volume, and at ever-higher prices, requires an unending series of improvements. Giant will soon begin distributing a new frame with built-in lightweight shock-absorbers, which should appeal to riders on potholed streets and off-road trails. Details of the design remain a secret, because good ideas are commonly copied within a year. By then, Giant must come up with a further innovation. It is the only way to survive.

Q: How many hipsters does it take to screw in a light bulb?

A: It’s a really obscure number. You probably wouldn’t know.

Courtesay of Mr. Madshaw

A while ago I wrote about my stolen commuter.  After hunting on craigslist every night and checking out every bike rack in town just in case I left my commutey locked up by accident, I finally got myself a new bike thanks to Ally. 

With a birthday right around the corner, I was starting to feel old until I got my fixed gear.  After riding a touring bike for 4 years and switching to fixed gear craze, I almost feel like I need a change in wardrobe to reflect my new bike and new-commuter-identity.  There is no more riding in flowy skirts, I’ve gotta get some black tapered jeans and a pair of Vans.  And maybe a mohawk.  Which really really might not be the best look for me.

Just this week I’ve actually had the urge to exercise, which means training is right around the corner

I went to Interbike last week with my sponsor Ritchey.  Awesome.  Check out the new Wet Black . . . they are bringing sexy back to the world of stems.

People can say what they want about Las Vegas.  I like it.  Maybe it’s because we actually took family vacations in Vegas before the strip became what we know as “The Strip”.  When you are a kid, it’s not every town where you can guzzle virgin daquiris at the pool on the room account like it’s going out of style.

Now there is the Wynn, the Palazzo, the Venetian and of course, Treasure Island.  That’s where I stay.  It’s not new and neither are the people in it.  It’s kind of like a culturally confused time capsule from the late 90’s.  

I like to spend some brain power envisioning new hotel and casino themes.  Here are a couple I’ve come up with so far:

1. Ghost Busters – Yes, I think this movie deserves it’s own hotel and casino.  There is a river of green slime that runs through the center.  Security will throw you in if you mess with the Bill Murray wax statue. 

2. A Thousand and One Arabian Nights – A genie in a bottle theme with live belly dancers and horse shoes in the middle of the casino.  No seats, just pillows.

3. The Arctic – I’ve noticed that most of the current casinos and hotels have a hot and exotic feel to them, so maybe this could mix things up.  Bring some variety to the market.  I’m not sure if this is geographically correct, but I’d like to see the poker tables actually housed in igloos and all proceeds go to helping the Polar Bears. 

Speaking of hot and exotic, the USA Criterium Finals was exactly that.  It was kind of like riding inside a giant hair dryer.  With the lights off.  And lots of barriers.  So maybe subtract the exotic part.  But I was happy and lucky to finish in one piece and roll in for 4th with Jen McRae off the front solo.  Taitt held on to her 3rd place standings in the USA Crit Series:)

So overall, I considered my trip to Vegas a success and fun time and now I am moving on to the Off Season.  Yippee!

A few weeks ago my commutey bike got stolen.

I didn’t feel like writing about it at the time.  It was a personal loss.  It’s funny how the value of that bike couldn’t be much more than 100 bucks on the street, but it has proven to be painful and expensive and difficult to replace.

A long time ago I lived in a very strange place called The Carleton.  It was basically an old hotel above an all-night pizza place in down town Berkeley.  Ted Kaczynski the Unabomber lived in the same building at one point, way before he became the Unabomber (however, I suspect The Carleton may have been the starting point of his insanity).  I moved there when I was a freshman in college – half my stuff got stolen the day I moved in.  There was no bathroom or kitchen, just a sink in the corner and one window overlooking Telegraph Avenue and a communal bathroom down the hall.  You could squeeze a microwave in the room, but there wasn’t much point because the cockroaches that crawled into and around the warm electronic screen would just ruin your appetite.  I suspect one of my neighbors was in house arrest, as he spent hours walking up and down the stairs with huge weights duct-taped to his ankles and I never once saw him leave the building.  Sweating like crazy.  Another was 92 and died but we didn’t know for weeks until the smell overpowered that of the pizza.  Then there was Ed, who was only in his 70’s, but the man was an incredible chimney of a chain smoker, and I hear he has passed away as well.  Not all the Carletonians were crazy or old, some were incredibly normal college kids and some were just plain old little kids. 

It was a funny place and lead to funny things, like throwing Snap-It lil firecrackers at noisey people out the window and driving my Honda scooter in the building, up in the elevator, and hiding it in the indoor hallway from the manager. 

The Carleton was very centrally located, so when I moved out after four years, I found myself in need of a commuter bike finally.  A friend of mine had just moved to a new place in Oakland, and low and behold we found a tiny sized Japanese steel frame, fork, and wheels abandoned in the bushes in the backyard.  I picked it up and rode across town on a mountain bike, with the new bike hooked around my shoulder.  It’s not that easy to do, especially in traffic.

I peeled off the stickers, added wrap-around handle bars, sparkle blue grips, metal silver fenders, a basket, and a Brooks B17 saddle.  And a 34 cassette for riding the tank around the hills. And suddenly I had a beautiful stealth ride to freedom – commutey. 

And then suddenly, like I said, I opened the door to the storage room and the bike was gone.  Without a trace.  It seems so strange that someone would want to steal my bike, get it . . . MY BIKE, not their bike, mine, that I keep wondering if maybe I locked it up somewhere and forgot about it? 

I keep my eyes peeled for my commutey.  But so far no luck.  It makes me pretty sad, especially since my favorite thing to do is casually cruise the streets in the afternoons.  And now I have to walk . . . everywhere, slow, boring, and stuffy.  I search craigslist for something reasonable, but lets face it - it’s all other peoples phoney fixe crap up there now. 

I am hoping I can love another bike, but not so sure.  Maybe at the bike show I will find something new that will work out, or I might be heading back to the central location of the Carleton where you really don’t need a commutey.