RTH10260 wrote: ↑Tue Jun 29, 2021 1:39 pm
inspired by a vlog entry on YT
Bicycles
The vlogger mentioned the fact that due to Covid the demand for bicycles has risen as exercise for those stuck at home. As a result there is extra demand for bike spare parts.
Fun fact: due to the shortage of truck drivers the deliveries of spare parts to retailers has been pushed to second tier while food is considered essential. Seems that large retailers are buying massive amounts of parts, and small retailers face difficulty purchasing them. Seems that there is also some price increase visible.
The British trucking issue and the "buy British" aspects are unique to the UK but the bicycle shortage is worldwide. Here in the US, nobody's got product at any price point (from Walmart specials to high-end $10,000-plus dream machines).
Here's what I have learned in conversations with two different bike shop owners:
Typically, cycling industry growth in developed economies is relatively flat, with a slight decline in the number of units sold offset by price increases in higher-end bikes that have more capability and reliability at lighter weights. When Covid hit, cycling demand spiked by 50% at the same time that the factories all closed, dropping production by 50%.
However, many manufacturers thought that orders would plummet, so before demand spiked, they slowed production. They then tried to recover quickly by opening the floodgates to orders from bike shops, accepting orders beyond the credit limits they had extended to shops to purchase inventory. In other words, they didn't care if you wanted to order $1 million in product even if your credit limit was only $200,000. This then resulted in a huge backlog of crappy quality orders. When it then appeared at the end of last summer that the bike boom might persist into 2021, they had to go back and rationalize their order pipeline and clean up all the questionable orders they accepted.
Meantime, the factories in Asia (primarily Taiwan, especially for higher-quality bikes) and the component manufacturers in Japan and Taiwan, were hit early by the need to keep their people safe. Even those with Covid safeguards had to close plants and then had to reduce capacity. Even though they now believe that the bike boom will persist, they can't go out and double manufacturing capacity overnight. And they don't trust the big bike makers (Trek, Specialized, Cannondale, etc.) who gave them rosy forecasts with all those dodgy orders.
High-end component manufacturers (Shimano, SRAM, etc.) also had to worry about what the shortage would do to their 2021 product announcement plans -- should they just go ahead and produce 2020 parts for another year or endure the month-long cutover to re-tool for the 2021 designs they were just about to put into production? Higher profits now, but at the risk of a potential erosion of competitive position. It now looks like the industry is going to continue to produce 2020 models in 2021, and just skip the 2021 model year.
However, it's still a scramble for components, as people are trying to buy on the spot market, which is one of the factors driving prices up. Customers, particularly on the high end, who tend to be fairly particular about component choices, are not going to be happy if their high end bike arrives with different components than advertised. I can tell you that the Cannondale Topstone 4 I just bought for my girfriend has some amazingly shitty components (along with some good ones) on a pretty good frame, and I'm not happy about having to redo the brakes, seat and stem on a brand new bike, even though I understand it's a relatively entry level bike.
Another major issue has been freight costs. The big retailers (Walmart, Amazon, Target, etc.) all do their own importing on behalf of their suppliers and have contracted for reserved space on ships for years in advance. Walmart is responsible for something like 5% to 10% of trans-Pacific container volume. They have the firepower to keep those contract slots alive during the downturn. But the cancellation of so much business last Spring followed by the surge in demand and supply in the Fall resulted in many smaller manufacturers (including bike vendors) to cancel their contracted slots and then scramble later to get capacity on the spot market, which is currently running (IIRC) 4x or 5x historic levels. That adds maybe $20 to the cost of a bike, not much on the high end but bad news for the low end models that sell for $250 at Walmart. And throughput is a problem -- there are dozens if not hundreds of ships waiting for dock space at LA/Long Beach to unload. So price increases are here, typically running 4% to 7% in the US, even without the unique costs the Brits have imposed on themselves.
It should be noted that "buy British" in the bike industry is a joke. There are a number of small to mid-sized specialty bike makers in the US that build frames domestically, and there are some domestically produced components. But it is impossible to buy all the components domestically that you need to assemble a completely US-made bicycle. Same in the UK. I suspect the UK is going to learn that "buy British" is easy to say, but impossible to execute, and it certainly won't make up for the export markets that they have closed themselves off from.
And I doubt that many Australians or New Zealanders will want to change for the British weather.
