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Wheels on fire
by Tina Nielsen

While other industries feel the pinch, the British bicycle business is thriving. How long can its renaissance last? And just how good is it for the UK economy?

In these straitened economic times, at least one sector in Britain seems to be holding firm. "The bicycle industry over the past two years has not really experienced the recession," says Phil Taylor, president of the Bicycle Association. "While we may have had a slight downturn, it has been nowhere near as bad as that in the rest of the economy."

It was the same story, says Taylor, during the last recession. And the one before that. "I have been through several recessions, and it has pretty much been the same."

The British bicycle industry has experienced a renaissance in recent years—one that's helping it to buck the economic trend. A new report from Allegra Strategies reveals that the consumer value of the UK market for bicycles and cycling goods will exceed £2.1bn in 2010, representing a 15 per cent increase for the year, and estimates it will pass the £3bn mark by 2015. The management consultancy says six per cent of adults' bikes purchased in the last 12 months cost over £1,000 while the average price paid for a cycle in the UK (children's bikes excluded), exceeds £300. Allegra's Project Vélo research says sales of bicycles will reach four million units this year. And according to a 2010 Mintel report 12 per cent of British adults are regular cyclists while six per cent cycle most days. Membership of bicycle clubs has soared.

The trend is most clearly seen in London, where bicycle journeys on major roads have increased by 117 per cent since 2000. Every day, around half a million journeys are made by bike in the capital—a number that's bound to rise as Boris Johnson's rental scheme makes 6,000 bikes available for hire in central London.

"The cycle trade has seen a good upturn, and that is because the whole culture has shifted," says Adrian Williams, chief executive of Pashley, Britain's oldest bicycle manufacturer. "When I joined Pashley 15 years ago, if I said to people at a dinner party that I worked in the cycle industry, the response would almost be, 'What's the next subject?', but these days people tend to be interested," he explains, citing the 2012 Olympic Games and programmes to encourage youngsters to take up cycling organised by Cycling England, the soon-to-be-abolished quango. "Across the board the interest is increasing." Taylor believes the Cycle to Work Scheme, which was introduced in 1999 by the Labour government and allows employees to buy bicycles tax-efficiently, has played a big part in getting people on their bikes. "The Department for Transport began to take cycling seriously as a form of transport," he says.

The scheme has been especially important for smaller independent bicycle retailers. "The independent retailers have done particularly well over the past few years. Not only has interest in cycling increased, but the average bicycle value has too, so people who would normally go for a £79.99 bike, use it two to three times and then put it in the garage, buy with different intentions," explains Taylor.

Those "different intentions" are being felt by manufacturers such as Pashley, which, famous for supplying bikes to Royal Mail and for its retro style, produces around 10,000 units a year. "Our customers are looking for individuality. They want something that is a bit different from the mass-produced item," Williams says. "On top of that, while 15 years ago there was a trend for mountain bikes that were good for going down mountains, people are now more realistic about user requirements and want something functional."

In an industry where 99 per cent of bicycles are made overseas, in countries such as Vietnam, Bangladesh and China, Pashley has another USP. "We have seen a growing awareness by customers that our bicycles are made in Britain," Williams adds.

This points to what, for many, is a sad irony. The two-wheeled bike, that proud British invention, is now seldom made in the UK. The resurgence of the bicycle and the continuing strength of the British market has coincided with a trend among big-name makers for outsourcing overseas. Raleigh, which once produced bicycles from Nottingham factories, offshored manufacturing completely in 2002. Pashley and fellow niche-market makers Brompton and Moulton are now the only three bicycle companies manufacturing in the UK. And together, they account for just one per cent of the British market. For big-scale makers, a UK manufacturing base makes little economic sense.

Raleigh, perhaps the best-known name in British bikes, manufactures 350,000 units a year for the "home" market alone. "We closed the [UK] factories because we had to move premises and we had to look at reinvestment, which was never going to pay for itself," says chief executive Mark Gouldthorp. "In a way, it was a good thing, because if we hadn't been forced to close we would still be struggling on now and not doing it very successfully."

Has he considered bringing some manufacturing back? "Clearly, it would be nice to be able to say 'made in Britain'," he says. "And I do think there are opportunities for limited production of higher value, which we're considering, but for staple-diet products the difference in labour costs between the UK and elsewhere makes it unfeasible."

Small-wheel bicycle maker Brompton, known for its folding bike, has kept production in west London and has seen annual growth of 25 per cent for the past six years. Its factory produces 28,000 bikes a year, 75 per cent of which are exported. Brompton was awarded two Queen's Awards this year, one for international enterprise, the other for innovation. Managing director William Butler-Adams flies the flag for British manufacturing. "We are very competitive. People say manufacturing is dead, but that is rubbish. If we come up with innovative ideas and great quality products then we can beat the world," he says.

Taylor pays tribute to British innovation. "You have to be innovative. That is the only way to compete in the market, and there are UK companies that are innovative and they do extremely well exporting. They tend to make high-end products because that is where one would normally expect to find innovation," he says. "This is where the true bicycle was invented so innovation hasn't really stopped. There are people like Moulton, which invented the small-wheel bicycle, and that is still going strong with Brompton."

Nonetheless, Taylor, and others, sound notes of caution. The decline of UK manufacturing is not the only blight on the industry and Britain continues to be low down in the league of cycling nations. "Although in the last two or three years there has been an increase, the number of bikes in use has been in steady decline for the past 30 years, and that has been mainly seen in reduced usage for cycling to work as more and more people have chosen the car or public transport instead of cycling," says Gouldthorp.

Taylor agrees: "Compared with cycling utopia, Holland, where 40-50 per cent of all journeys under three miles are made by bicycle we have a long way to go: here, the equivalent figure is barely two per cent," he says. While he acknowledges the achievements of the Cycle to Work scheme, Gouldthorp says further investment by government is vital. "We are a country mile from Germany and Holland, and the big difference is that they both have massive and sustained cycle network routes. For us to truly embrace cycling as an alternative way of getting from A to B we need that kind of proper investment," he says.

He adds that there's a lack of government support for the industry—and for UK manufacturing in general. "There is no support at all, there has been no interest in manufacturing in this country for the past 30 years. It's shambolic."

Gouldthorp's position is one with which Williams would probably sympathise. Earlier this year, Pashley was part of a consortium bidding for the £140m contract to provide the infrastructure, pay stations and bikes for the London rental scheme. But it lost out. The contract went to Serco, with the bikes being supplied by Bixi, the Canadian firm behind the equivalent scheme in Montreal. Williams questions the wisdom of the decision.

"As far as I am aware, there was little UK content on what was a major public project. I think other countries tend to look at the local content of the bid when public money is spent," he says. Others in the bicycle market seem to have little to complain about. Companies selling parts and accessories in the UK have experienced huge growth in value as well as volume. And some of them see no plateau in sight.

"We benefit from a gently following wind. The market is steady and sustainably growing. In the 1990s, there was a perception that there was a massive boom, but a lot of that was just media hype and for about five years the market was flat," says Jim McFarlane, founder of Endura, one of the UK's biggest cycle clothing brands. "The underlining drivers of the general cycle market currently, and in the last three or four years, are not fads: I believe they are long term."

He says the company's manufacturing plant in Scotland is continually growing even if it is only responsible for 20 per cent of production. The remainder has been outsourced to the Far East. McFarlane says skills shortages in the UK left him with no option. "When I started in the early 1990s, the textile industry was falling apart, and thousands of people were being laid off, so we decided to use some of that spare capacity," he explains. But the technical requirements of sportswear proved too much for the British workforce.

"We are growing the whole time here, and getting skilled machiners and production people is very difficult today. People are not attracted by manufacturing: they would rather work in a call centre."

Endura struggles to source material in the UK. McFarlane continues: "With the best will in the world, the fabric you can buy from British mills is rubbish. There is the odd exception, but there is no investment in the UK, no critical mass to be able to afford the capital investment."

At the same time, McFarlane recognises the benefits of keeping part of the production in the UK. "It is good to be recognised as a manufacturer in the marketplace rather than just a brand that has things made for it. It also allows us to accelerate the product-development process because we have all the technical equipment needed in our Livingston plant. It allows us to do short-run batch production either to top up when we have a problem with a supplier or to see what works ahead of a product launch," he says.

Taylor is hopeful that more manufacturing can return to the UK. "There are still many manufacturers in Germany, Holland and the rest of Europe, and that means that there is potential for us to do some in the UK. When or if that time will come I don't know, but it is not in the short term," he says. He stops short of calling Britain a world leader in cycling innovation, saying that it is difficult to assess how good UK bike manufacturers are as there are so few of them.

Brompton's Butler-Adams is in no doubt that the sector can get a lot better. "The cycling sector in the UK is so small it is a shame. The scope for improving what the UK can offer the bicycle industry is immense, and it is a sector that has been dismissed, given up on, left to rack and ruin, but there is this tremendous renaissance going on right now—we're going back to the 1930s," he says.

"We have had all these trends of road racing, mountain biking and BMX, but this is going back to a time when the bicycle was a mode of transport. The bicycle has a long way to go yet."