10/11/2008

Procycle Group Inc - which manufacturers CCM and other brands - along with Raleigh Canada Ltd. have convinced the CITT that their market share, and therefore their businesses and employees are in jeopardy because of inexpensive imports from China, Taiwan and Vietnam.  Procycle and Raleigh say that imports for the models in question - bikes aimed at teens and adults - have almost doubled in recent years to 1,063,768 units in 2004 from 538,523 in 2000.

Geoffrey Kubrick, the lawyer employed by Procycle (Rocky Mountain's parent company) and Raleigh summed it up this way: "The Canadian industry is being so swamped by imports from China and from a bunch of other countries - mostly Asian economies - that they can't keep up with all the competition so they're asking for a temporary protection."

Some Canadian bike dealers feel that this is actually about these two companies trying to monopolize the market.  Bikes coming in from Taiwan and China generally hit a higher price point than those manufactured here in Canada by Raleigh and ProCycle.  The bikes in question, with an FOB (Freight On Board) price of $225CAD or less would be hit with a 30% surtax in the first year, 25% in the second and 20% in the third year.  Procycle and Raleigh originally asked for a 48% tariff.

According to Jake Helibron of Kona, Raleigh and Procycle only manufacture steel frames using an inferior MIG welding process while even the least expensive bikes from Taiwan or China are TIG welded aluminum.  Any suggestion that these companies have fallen behind current technology and manufacturing techniques was rejected by the panel - which consisted of two judges from Quebec and one from Ontario. The panel came to the conclusion that the steel-framed bikes made by Raleigh and Procycle in Quebec are interchangeable with the TIG welded aluminum frames being imported from Asia.

Roger Yip of brodie bikes here in B.C. feels this could have a significant impact on the bike industry in Canada; "I see prices going up and selection going down.  With gas prices rising we should be trying to encourage people to ride bikes rather than making it more difficult."

Helibron, who is also head of CASBI - the Canadian Association of Bicycle Importers - told me that actions like these have been going on since 1977 when these companies first began asking for "government handouts."  "Their M.O. has always been to seek government protection."  Helibron concedes that these businesses are hurt by imports but he suggests it has more to do with the quality of the product than the pricing.

Bicycle makers like Kona, Banshee and Norco export their products worldwide and this has lead them to manufacture bikes overseas.  "You need to find the most efficient means of production in order to be a global player" Helibron added.

Norco, while not a member of CASBI, also opposes the imposition of these surtaxes, despite the fact that they could probably avoid them because their bikes are assembled here in Canada. 

At this point the decision is in the hands of Ralph Goodale - the Finance Minister.  "If the government cares about the impact on your average person as well as reducing greenhouse gas emissions this initiative won't be approved" concluded Helibron.

A decision either way will alienate voters which may mean a final ruling won't be made before a the looming federal election. 

So why is this important to freeriders?  There are a few of reasons.  The bike shop you count on for service and sales could be profoundly impacted by this ruling - and many shops have a rough time of it already.  The panel rejected any suggestion that Canada's roughly 1000 independent bike dealers could be hurt by these surtaxes.  Cheryl Beattie of Bicycle Café in Kamloops feels this could lead many of her customers to make their purchases at mass-market stores - which is unlikely to get them hooked on riding a bike. "When people buy bikes at box stores the pricing is good but the follow up service is non-existent because they aren't able to provide a full service tech shop to service the bikes".

The second factor is that this surtax will mean bikes will become more expensive and hence less accessible to your average person, making driving a car or riding the bus more attractive. Another consideration is that retaliatory duties could be imposed by the countries affected by the surtax, putting a damper on Canadian exports.

The way I see it the world becomes an incrementally better place every time someone swings a leg over to go for a ride. Hopefully Ralph Goodale won't get in the way of the goodness of the bicycle and this ruling will die a slow and painful death.

You can download all 70 pages of the decision here.

Cam McRae