What's Wrong With The Bicycles?

 

  “Our future lies in China and one of our goals is to develop this rapidly expanding market”--Giant CEO, Anthony Lo (2011)


Despite all the glad handing and praise the bicycle industry is facing some serious challenges in the short to medium term. There are increasing signs that things are not all well in paradise despite the passage of the Economic Cooperation Framework Agreement (ECFA), which was rapidly pushed through Taiwan's legislature and signed by Taiwanese and Chinese representatives in 2010.

“The markets are changing so fast that the rules have been reset, and if we don’t catch up, it is going to be harder for us to hold our own in the global market,”--Giant CEO, Anthony Lo (2013)

Aside from the chemical and mechanical doping scandals that have plagued the professional peloton--bicycling's advertising juggernaut--and possibly squelched interest in the sport, brands have been looking toward new technologies to buoy the industry and churn profits in a sluggish year. Shimano had been a major proponent of disc brakes in the pro ranks for some time and had been expecting reap the benefits. Now with both the UCI and the French Cycling Federation banning the components, a major source of market stimulation has been destabilized. 

Shimano profits are down 20% in the first quarter of 2016, and SRAM is tightening its belt with layoffs due to flagging sales. SRAM's plan to layoff 40 employees deemed "redundant" by the company will be spread over the company's global business, including the United States, Europe and Asia. 

“No one ever wants to be in position to request that people leave an organization, but sometimes it has to happen. I am confident that this restructuring positions us where we need to be and puts us on a firm foundation to drive forward into an evolving bike market.”--SRAM President, Stan Day

Wholesalers carry too much inventory into the first quarter, with the new product year looming (what is it now, May?). 

The lack of sales growth over last year is worrying in light of better weather conditions in much of the country this year. The Upper Midwest and Northeast were slammed with heavy snows in early 2015 but saw better conditions this year. However, the BPSA figures show that sales to retailers in January and February still lagged, though March wholesale sales showed a 6 percent improvement over 2015. 

Suppliers are seeing slow road and cruiser shipments at the start of the year, with road bike sales falling 9 percent overall. But mountain bike shipments are up 13 percent, and hybrid and commuter are up 16 percent.

The trouble coming from the two largest suppliers of drivetrain components is especially ominous, especially as Shimano does not simply supply the high-end, but supplies drivetrain components for everything from Walmart children's bikes to the Tour de France. A sizeable dip says a lot about demand in all sectors and that may have some serious repercussions in Taiwan. But hey, China is where its at, anyway. It is the world's largest emerging market and Taiwan has a free pass, right. 

Now, as a little reminder, ECFA was supposed to stimulate trade between Taiwan and China, opening up China to imports from Taiwan, with the bicycle leading the way on Early Harvest list set for an immediate and lasting impact. In a report from 2010:

Giant Global Group plans to increase its investment to build a bicycle plant in Kunshan, which has gained great support from the mayor of Kunshan Guan Aiguo. The 40-hectare new plant will consist of plants for bicycles, frames, carbon fiber and electrical vehicles. Besides, the cycle track & bicycle theme park plan will also be pushed forward. The investment in the initial stage amounts to USD 36 million (NTD 1.16 billion). 

Sources revealed Giant Global Group currently possesses a bicycle plant in Kunshan with an annual output of 2.5 million. As the Group's largest manufacturing base in the mainland, the plant boasts about 50% of the products meeting the domestic market demands. After being put into operation, the new plant will meet the market demands for both GIANT and MOMENTUM and the plant will trade with Taiwan bicycle plants after the signing of ECFA.

So, how are things looking in the post-ECFA world? 

Taiwan’s economy contracted on a yearly basis for a second straight quarter as China’s economic slowdown dragged on the island’s exports. 

Gross domestic product fell 0.28 percent in the three months through December from a year earlier, according to preliminary data released by the statistics bureau Friday. That compares with a 0.6 percent drop projected by the median estimate in a Bloomberg survey of economists and the 0.63 percent decline in the third quarter. The economy grew 0.85 percent in 2015. 

Taiwan’s exports shrank last year as local manufacturers grappled with the double whammy of slower economic growth in their top market China and tougher competition from mainland rivals. It wasn’t all bad news though: The economy grew 3.22 percent at a seasonally adjusted annualized rate, the most since the third quarter of 2014, as lower crude prices helped consumers.

That rosy?! But what about a greater parity in trade? 

Exports totalled USD 22.2 billion in January, which represented a notable 13.0% contraction in year-on-year terms. January’s result represents a slight improvement over December’s 13.7% drop. Imports tallied a total of USD 18.7 billion in January, which was a sharp 11.7% fall over the same month of last year. The figure came in above to December’s 14.8% decline. 

FocusEconomics Consensus Forecast panelists expect exports to fall 0.6% in 2016 and to rise 3.9% in 2017.

But at least we have the growing demand for E-Bikes in China to make up for the dip in high-end/high-margin leisure bicycle consumption, right? The E-Bike is the fastest growing market segment for bicycle manufacturers and China is leading the way. 

China bans E-Bikes in largest cities. 

Following legislation in Beijing, Shanghai and Guangzhou, it has been reported that Shenzhen may also start to limit the use of electric bikes. Chinese people are getting wealthier and buying more and more cars, which as we know has caused many problems, such as heavy traffic, serious air pollution and poor physical health in big cities. In fact a highly viable alternative to fossil fuel powered vehicles is already available; bicycles and e-bicycles together with public transit form a good system and a true solution to the problem.

So, how is that China thing working out? 

The Chinese market for Taiwanese bicycles declined by 33% to 79,000 units. Though not yet that large, the Chinese market was seen as a main growth market for several years. This development has now stopped due to the economic decline in China.

Bike-ademia

The Mingdao Private High School and Mingao University have signed an agreement with Giant Manufacturing to establish a scholarship and program to promote cycling. The project is aimed at providing training and financial assistance to young, talented riders who seek to compete at the professional level.

It is really a shame that Taiwan, one of the world's centers for bicycle production and an enthusiastic base of talent does not have a support system to put Taiwanese into the professional peloton.

As Taiwanese tennis player Lu Yen-hsun was quick to point out in the midst of local adulation and government suits hailing him as 台灣之光, or Pride of Taiwan, the government has actually cut expenditures to support advanced athletic programs and therefore Taiwan does not deserve taking any credit for these accomplishments.

It is nice to see the private sector stepping up to promote cycling in Taiwan and I would like to see a Taiwanese (not a Chinese-Taipei..er) rock the pelotons of the future. With such a healthy cycling culture emerging it would be a shame to waste Taiwanese talent.

Tour de France Preview

The 2010 Tour de France, which is arguably the greatest of the Monument races in cycling, is set to get under way on July 3 for the 8.9km Prologue in Rotterdam.

The Tour is always fun to watch, but this year will be extra special as it is the last that will combine two elements people love to hate-- France and Lance Armstrong.

After this year's stellar Giro d'Italia, the Tour de France will have a lot to live up to. The route and teams are in place and a year had passed to let the bad blood fester in the media. Floyd Landis and Fabien Cancellara have added a couple twists to the mix with allegations of blood and bike doping.

Here are a few of the teams and riders to watch out for:

Team Astana will be back with defending champion, Alberto Contador, who will try to assert his dominance over the peloton after an ugly, and very public spat with former teammate and rival, Lance Armstrong. Contador will have some capable back up with ex-doper Alexandre Vinokourov, who is back from a 2 year suspension. He just reminds me of Drago from Rocky IV.

Quick Step will be riding without the master sprinter and leader, Tom Boonen. After a couple seasons of personal and health issues, he has developed a severe case of tendonitis and again must sit out another race.

Team Sky will be coming into the Tour headed by Bradley Wiggins, who looks more at home as the guitarist from a 70's British rock band. Sky has been looking strong this year.

HTC-Columbia will see if Mark Cavendish can sprint his way to win the Green Jersey for points; a prize he barely lost to Cervelo's Thor Hushovd.

Team Saxo Bank will again field the Schleck brothers, Andy and Frank, who will decide which of them has the legs to compete for the GC. Last year they finished 2nd and 5th respectively. Frank Schleck demolished the competition in Time Trials this year as well and that could play a factor.

The Cervelo Test Team will have Carlos Sastre battling for the GC, with Thor Hushovd along side.

Liquigas has the formerly suspended doper, Ivan Basso, up front to make an attempt to follow his Giro win with the TdF. Vincenzo Nibali will be waiting in the wings if Basso falters.

Team BMC has again pinned their hopes on Cadel Evans, who is hungry and due for a major tour victory, especially after a 5th place finish in the Giro. The climbing duel between he and Bosso during the Giro was spectacular. Cadel and George Hincapie are the Chicago Cubs of cycling.

Team Rabobank has Denis Menchov, who might be a dark horse favorite to win this year. He is a skilled climber and has won two Vuelta de Espana (Tour of Spain) titles, one Giro, and has placed 4th, 5th and 11th at the Tour de France in the GC category.

Team Radioshack, which was established by Lance Armstrong after his bitter public feud with Astana captain, Alberto Contador, is stacked with talent to carry Armstrong's ancient 38yo. legs to the finish line. Aside from the legendary Armstrong, Radioshack will feature 2 time runner-up Andreas Kloden and the Armstrong's capable wingman and confidant, Levi Leipheimer, who is ready to leave Armstrong's shadow after one final Tour. Armstrong finished second in this year's Tour of Switzerland, which is a warm up to the TdF.

I am sure there are several I missed, but that leaves plenty of room for debate.

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Here is the link to the official TdF Website for updates and Webcasts.

VeloNews has some great route profiles here.

The Shot Heard Round The World: Landis

The Wall Street Journal published a lengthy piece today in which the disgraced and disqualified 2006 Tour de France winner (and loser), Floyd Landis, took pot shots at several of the biggest names in cycling, including the 7 time TdF winner and Team Radio Shack leader, Lance Armstrong.

Landis alleges that he and his fellow U.S. Postal Service teammates routinely used testosterone patches and Erythropoietin (EPO) under the instruction of coach Johan Bruyneel and the President of USA Cycling, Stephen Johnson. Landis implicated Armstrong, George Hincapie, Levi Leipheimer, Dave Zabriskie and essentially the entire professional cycling establishment in colluding to promote and disseminate performance enhancing drugs to the peloton of professional cyclists.

Until these latest emails were sent to ESPN and The Wall Street Journal, Landis has vehemently denied ever using performance enhancing drugs. Landis even secured a book deal from Simon Spotlight Entertainmen for Positively False, a book in which he co-authored an in-depth denial of the allegations leveled against him.

Floyd Landis took the matter to court, which resulted in the bizarre and emotional testimony of three-time Tour de france winner Greg Lemond, who testified under oath that he had implored Landis to "save cycling" with a simple admission to doping. Lemond further testified that he had shared confidential details of his childhood sexual abuse with Landis in an attempt to draw him into an honest confession and help clear his conscience. A 2007 report from ESPN details the matter here:

The only sure bet is that Landis' battle to win over public opinion took a massive hit Thursday after his business manager, former teammate and close friend Will Geoghegan was revealed to have made a legally ill-advised and personally vicious phone call to LeMond on the eve of LeMond's appearance at Landis' arbitration hearing.

Everyone in the courtroom knew LeMond agreed to testify for the U.S. Anti-Doping Agency because he was out to help the agency's case against Landis. Case insiders also knew that the two riders had an acrimonious phone conversation last August, shortly after Landis' positive tests were announced, and assumed LeMond would describe that call in unflattering terms.

But few people were prepared for the broadside LeMond delivered with the simple, modern act of handing his BlackBerry to USADA lawyer Matt Barnett, who placed it on the podium to display the phone number on an overhead projector.

The number shown was one reporters covering the case had entered in their cell phones many times over the past few months as Geoghegan barnstormed the country with his friend Landis, rallying support for Landis and asking fans for contributions to fund his defense.

One can only imagine how donors to the Floyd Fairness Fund felt when they learned about what LeMond said next.

The courtroom was silent and still, except for Landis lawyer Maurice Suh, who whirled toward Geoghegan at the first mention of the phone call and began whispering to him intensely. Geoghegan, a former rider who first befriended Landis when Landis was a teenager, sat with his head bowed and his exposed neck flushed crimson in the row of seats behind the defense table.

LeMond earlier had said that during the August phone call, he confided details of his own childhood sexual abuse to Landis and implored him to admit that he had doped, a confession LeMond said could "save cycling" and Landis' own mental health.

"You were sharing this in an effort to help him?" Barnett asked.

"Yes," LeMond said.

According to LeMond, Geoghegan tried to use that information in a threatening phone call placed at 6:53 p.m. Wednesday night.

"I'm your uncle, and I'll be there tomorrow," LeMond said a then-anonymous man told him, and continued with references to vocabulary best known to pedophiles. LeMond later traced the number using a paid Internet search.

With his reputation in tatters and a two year ban, Landis has recently attempted to revive his career with a few middling results for Rock Racing; a team that cultivated a "bad boy" image through its liberal employment of ex-dopers and tainted names. In 2010, Rock Racing was not issued a professional license and was relegated to amateur status. The downgrade caused the team's big names to seek their fortunes elsewhere and Landis has failed to get picked up by a new team.

This is why I view the latest allegations with a little caution. It seems that Landis is in desperate need of publicity and more importantly-- income. Accusing some of the most decorated figures in the sport of doping is a very great way to generate a new stream of revenue. Seeing as we are now in the middle of cycling season and in the lead up to the Tour de France, these new revelations are guaranteed to keep Floyd Landis' name in the headlines a little bit longer. Not only does his sudden need to come clean feel oddly timed, but his allegations and insinuations that Mellow Johnny himself taught Landis how to dope seems a little extravagant. Again, Landis seems to be mislaying blame from himself onto others. In his admission he is again attempting to avoid taking responsibility by painting himself as a victim of a corrupt system and corrupt leadership.

I don't know if Armstrong or others doped. I know they have yet to test positive and I know they are routinely tested and I know the French have prayed for a positive result for nearly a decade. I also know that Floyd Landis holds zero credibility at this point and these allegations, whether true or not, make him appear to be a troubled and vindictive individual who was denied the full glory of the podium by doping and so he hopes to drag everyone else down with him. If Floyd can not shine... then nobody else shall either.

It just sounds like a sad way to win.

Updates:

Link to one of the actual letters: here

New York Times Article: here

VeloNews Ongoing Coverage: here

UCI Denies Allegations: here

Armstrong Responds: here

Quote From NYT:

I think Landis is in a very sad situation and I feel sorry for the guy because I don’t accept anything he says as true,” McQuaid said in a telephone interview on Thursday. “This is a guy who has been condemned in court, who has stood up in court and stated that he never saw any doping in cycling. He’s written a book saying he won the Tour de France clean. Where does that leave his credibility? He has an agenda and is obviously out to seek revenge.”