Bicycle Brouhaha

A turf war has broken out between two Canadian bicycle industry associations.

Aturf war has broken out between two Canadian bicycle industry associations. One wants substantial tariffs and import quotas applied to bikes coming into Canada, while the other argues such measures are anti-competitive and would ultimately penalize Canadian consumers.

The Canadian Bicycle Manufacturers Association, which represents two domestic manufacturers, Procycle Group Inc. and Raleigh Canada Ltd., made a complaint to the Canadian International Trade Tribunal in November, seeking protection from cheaper foreign bicycle imports, primarily from China. The submission calls for a hefty 48% duty on all imported bicycles and painted frames. Raleigh Canada's VP of finance, Ken Morrison, says domestic bike manufacturers simply want a “level playing field.” Otherwise, Raleigh and Procycle may have to close their factories, laying off up to 600 workers.

Alas, tariffs and quotas levied on imported bikes are about as appealing as a flat tire for Canada's bicycle importers and specialty retailers.

Challenging CBMA's desire for increased protection is the Canadian Association of Specialty Bicycle Importers, which is supported by 14 importers (over 20 brands) and about 800 specialty bicycle retailers across Canada, collectively employing more than 5,000 people.

CBMA's move was prompted by recent changes in the way Canada interprets China, with respect to the bike industry. In 1992, Ottawa enacted anti-dumping duties that prevented Chinese companies from importing bicycles deemed (by Ottawa) to be unfairly priced. The Canada Border Service Agency reinvestigated the matter in March 2004, and decided to stop treating China as a subsidized “non-market economy.” China can now ship bicycles without being subjected to anti-dumping penalties.

CASBI spokesman Jake Heilbron, who is also chairman of Vancouver-based Kona Bicycle Co., notes that the protection was, if anything, counter-productive in terms of fostering innovation.

“[Procycle and Raleigh] really haven't changed much–their method of fabrication is 20 to 30 years old,” he says. Spokesmen from Raleigh and Procycle refused to comment on Heilbron's assertion.

It is smaller shops, such as Toronto-based Cervélo Cycles Inc., that are leading the way in innovation, producing world-class bikes that retail for up to $12,000. Segment leader Ivan Basso rode a Cervélo in the 2005 Tour de France.

CASBI's Heilbron maintains a 48% tariff on bicycle imports, plus quotas, will be “deathly serious” for retailers, and claims prices for imports could increase 30% to 40%.

Gerard Vroomen is the co-founder/owner of Toronto-based Cervélo Cycles. Vroomen notes border cities such as Buffalo and Detroit will become “bicycle shop Meccas” for Canadian consumers if the tariff goes through and says he will have no choice but to relocate.

A price increase would also hurt Canadian cycling enthusiasts, says Benjamin Sadavoy, publisher and editor of Pedal and Bike Trade Canada magazines. He contends the tariff is likely to slash bike sales by more than half: “What rational business model can accept a 48% [price] increase?” he asks.

The tribunal presents its report to the federal cabinet in September.