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Here's how Detroit Bikes is transforming America’s car capital


Oct 11, 2017 Culture, Lifestyle, Natalia Angulo-Hinkson

Cycling is seeing a renaissance in the U.S. There are 60 million recreational cyclists in the country who have helped lift the bike industry to be worth $6.2 billion, according the National Bicycle Dealers Association (NBDA).

With more people purchasing bikes and ridership seeing an increase, American bicycle brands are also beginning to see a resurgence after decades of offshoring.

Zak Pashak’s bicycle manufacturing startup, Detroit Bikes, is one of those brands. The four-year-old company is not only helping give the Motor City a new identity, it aims to make the car capital easier to navigate.

 "We make our bikes for city use primarily, so we're trying to help develop an alternative form of transport," Pashak, who is president of Detroit Bikes and invested $2.5 million to get the project off the ground, told Circa.

"We're trying to help develop an alternative form of transport."

Bringing back bike manufacturing

Currently, the majority (nearly 99 percent) of bikes sold in the U.S. are imported from China and Taiwan, according the U.S. Department of Commerce. In 1990, the U.S. was producing 5.6 million units, according to data from the International Bicycle Fund. Fast forward 25 years and that number had sunk to 200,000, but the American-made bike market is staging a comeback.

According to NBDA, "There are dozens of smaller U.S. bike makers — over 100 brands in all, so there is domestic manufacturing at some level."

Detroit Bikes locally sources many of the materials it uses to cut, weld, paint and assemble its bikes, such as American chromoly steel (the kind used in race cars, which is durable and super light weight). The company hand builds its line of bikes out of a refurbished 50,000 square foot space in the city.

Since it launched in 2013, the manufacturing startup has sold 10,000 bikes, with bulk orders making up a good chunk of their sales. The company's goal is to produce 50,000 bikes a year, which would double the country's output of bikes.

From Motor City to Bike City

Pashak's interest in bikes really started when he ran for city council in Calgary, Alberta, Canada. After getting involved in transportation policy, he decided he wanted to help give urban dwellers across North America a viable and more affordable alternative to cars for getting around.

He packed up and moved to the Motor City.

"I had a sense that customers were becoming more and more interested in where their products were coming from," he said. "I thought maybe there was a chance that we could get especially American customers interested in cycling again by giving them a product that they really identified with."

"I had a sense that customers were becoming more and more interested in where their products were coming from," he said. "I thought maybe there was a chance that we could get especially American customers interested in cycling again by giving them a product that they really identified with."

Automaker bankruptcies dealt the Motor City a hard blow that led to layoffs and economic hardships. But out of the rubble, entrepreneurs have found vacant spaces and skilled workers looking for a second chance.

Locals will tell you the Midwest city is having a moment – Detroit Bikes is part of that.

"Detroit is a manufacturing place. If these are going to be Detroit bikes, I think a really important part of that is that they're made here by people here," Pashak said.

Henry Ford II is the head of assembly at Detroit Bikes. He has deep roots in the Motor City and his family is known around town as the "other Ford family" because at one point, at least 10 members of his family worked for the iconic car maker, he told to Circa.

"Long story short, my grandfather from Mississippi came up to Detroit in the ‘20s when Ford Motors did the $5 day promotion," he explained. "To be part of the revival of what put Detroit on the map is really something that I’m proud of."

A former banking professional, he lost his job after the 2008 Recession. For years after that, he gave bike tours to tourists and locals, which is how Ford found his way to Detroit Bikes.

"If you wanted to and you had the time and energy, you could ride a group ride on your bike every day of the week," Ford said.

Although bike commuting has grown in popularity in the U.S., compared to other developed countries, it still lags behind. The biggest reason for this discrepancy is the lack of bike lanes. Detroit may not fall in the top 10 American cities with bike lanes, in the last decade it has paved over 100 miles of cycling infrastructure.

"For years, we were known as the Motor City," Ford said. "With the resurgence of biking that's really exploded around Detroit, that name is transitioning to Bike City."

American made products

Surveys say American shoppers want products made in the U.S., but when it comes down to it, consumers really want a good deal. A recent Reuters-Ipsos poll cited by the Washington Post found that 69 percent of people indicated price was "very important" when making a purchase, compared to half that number (32 percent) who said it was "very important" for a product to be made in America.

The same Washington Post article cites a separate Associated Press-GFK survey that revealed another problem for the Made in America movement is that Americans might say they prefer to buy domestic products, but a scant 30 percent are actually willing to pay more for them. Pashak argues that lack of understanding around what it really takes to make something, in this case bikes, from start to finish, is part of the issue.

"There's some confusion out there about what manufacturing is," he said. "But the most concise way I know how to do it is that you need to take a raw material and you need to transform that into a finished commercial product." Detroit Bikes manufactures its bike frames in house, but other parts like tires and baskets they assemble.

He also believes that just because a product is made in China, or the U.S. for the sake of argument, makes it inherently better. "It's one thing to buy [something] just because it's made in the U.S. Then there's the next level of what about being made in the U.S. makes it a product you want?" he said.

This situation, however, does present a pricing problem for specialty bike makers such as Detroit Bikes that retail their products at $750 on average. For comparison, big box sellers offer bikes from overseas that average $90 a pop, according to research from NBDA.

So how do you justify the specialty price point to riders?

"For us, the manufacturing side is really important as part of our story. We're in Detroit. We're selling Detroit Bikes. That's our challenge – to find that connection for the different customers," Pashak said.

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  • 01 Apr 2017 ― After decades of off-shoring and outsourcing established big name bike brands to other countries, the American made industry is now bringing the art of bicycle manufacturing back into the United States. This is happening as oversea trading costs continue to rise and as companies are now realizing the value of local win-win business models. A sign of things to come This shift is happening across the entire spectrum of cycling, from high-end boutique racing bikes, to 3-wheeled trikes, to high-volume manufacturing & assembly; dedicated American biking entrepreneurs are now beginning to reshore bike production into the United States. There is a perfect convergence of factors is happening in the United States these days; rising offshore trading costs, young entrepreneurs seeking bicycle-driven win-win business models, there’s a huge increase of people seeking healthier lifestyle choices, there’s a growing popularity of urban biking with biking-infrastructure interest taking root across the nation like never before, and there’s a new-found patriotism for more robust local biking-driven economies and it’s happening everywhere you look. Domestic production The outsourcing began sometime in the 1980s when Schwinn began shifting its manufacturing to Asia in an effort to take advantage of low working wages; other high-volume manufacturers like Huffy and Trek soon began to follow. By 2015 only 2.5% of the estimated 12.6 million bikes (not including kid’s bikes) that were sold in the U.S. were made in America. In 1990 the United States was one of the top five highest producing bike manufacturing countries on the planet at around 5.5 million units per year. As more outsourcing occurred, the bike production decreased to around 200k. But in 2015 the trend-line began to swiftly take a new direction. In 2015 when offshore wages began to increase, bike manufacturers started to rethink their offshore manufacturing and their material source decisions. Driven by the increasing offshore costs, the savings in automation, and the benefits of having “Made in USA” branding, reshoring bike manufacturing in the states began to make really good sense. Bicycle Corporation of America (BCA) a Division of Kent International Arnold Kamler’s family had been in the bicycle business for a century when, in 1991, he regretfully shuttered his New Jersey bicycle plant, Bicycle Corporation of America (BCA), and moved all of their production offshore. The USA factory had been producing 30% of their bicycles. However, offshore costs began rising enough to make Kamler, now the chairman and CEO of Kent International, begin to consider reshoring some bike manufacturing to the U.S. In 2008, Arnold said, “It was a perfect storm. You had steel, aluminum, oil, plastics, ocean freight and currency – everything at one time going up. I spent about six weeks traveling all over Asia, asking myself, ‘If not China, then where?’ The answer seemed to be nowhere for bicycles. The idea in the back of my mind was that maybe one day we could do it here in the U.S.” Then, in March 2013, at the Walmart U.S. Manufacturing Suppliers Summit for the Walmart 'Made in America' initiative, Arnold met with South Carolina Gov. Nikki Haley and began discussing the possibility of Kent opening a factory in South Carolina, but the numbers had to make sense. With an annual employee turnover rate of 120% at his Shanghai factory and offshore costs soaring, Kamler turned to innovation and automation to close the total cost gap and return work to the U.S. It would take innovative ideas like thousands of feet of overhead conveyors, the latest wheel-building equipment and other process improvements for the reshoring transition to make economic sense. Kamler’s multi-dimensional approach also included a guarantee from Gov. Haley that Kent’s energy needs and training requirements would be filled. Today, Kent International, Inc. is a high-volume, mass-market bike supplier to Walmart, Toys “R” Us, Target and other retailers. This year they will roll out approximately 350,000 bikes produced in the Manning, S.C. factory, operating with 115 employees and assembling bikes at a rate that would require twice as many workers offshore. Kent has no plans to stop importing and proudly proclaims that they are not trying to reshore their business, they are trying to reshore their competitors’ business. He explained, “We sold 49% of our company to our major bicycle supplier from China in 2010.  When we decided to go forward with our USA production, I pledged to them that the idea was not to replace our import bikes with USA bikes but instead to try to continue to grow our import business and by growing our USA business, this would be stealing market share from other importers.” Americans want to buy more “Made in USA” products American made, locally sourced preference can be an important cornerstone for bringing U.S. manufacturing jobs back home. Recent consumer preference surveys, show there is a definitive preference for American-made goods: 97% have a positive view of the goods manufactured in the U.S. Americans on the whole believe it is important to manufacture in the U.S., and think it is wise to take steps to support American manufacturing, particularly bicycle manufacturing. The Motor City Turns to Bike City In the past several years at least seven bike brands have chosen Detroit as the place to manufacture and assemble bikes. Some brands are classically inspired handcrafted bikes like the Detroit Bicycle Company, some are super cool unique trail bikes like the Slingshot Bikes brand. A local Detroit firefighter founded the locally sourced 313 Bicycle Works. The fancy baggage suitcase and watch maker, Shinola, is now assembling high-end commuter bikes in their Detroit location with forks and frames coming from their partner, Waterford Precision Cycles. Detroit’s largest bike manufacturer Detroit Bikes has plans to produce as many as 50,000 bikes this year; they also won a high-stakes bid with the city that will produce bikes for the new Detroit Bike Sharing Program. Detroit Bikes Wins Bike Sharing Contract When Detroit Bikes first opened the doors in 2013, a lot of people “thought it was really goofy,” says founder Zak Pashak, who chose Detroit because it was “a good spot for urban revitalization to take hold.” Despite the fact that bicycle manufacturing had been disappearing as bike companies followed each other offshore to low cost countries, Pashak, a Canadian transplant, was fascinated with Detroit from childhood through popular TV shows and wanted to be part of its economic rebound. He thought a basic bike, perfect for urban areas, might have potential in the U.S. market. Detroit Bikes’ is set to produce 10,000 bikes this year and in doing so will create 50 jobs in a city with high unemployment. Production began slowly until Pashak got his first big order from New Belgium Brewing in Fort Collins, Colo. The company was having trouble finding a U.S.-made bike. Pashak won the 2,500 bike order and was on his way. In the spring of 2016 Pashak won a contract with Motivate, a company that runs bike-sharing programs in 12 metro areas, and uses Detroit Bikes’ assembled bicycles in New York, Boston, and Jersey City. A domestically produced bike gave Motivate a pivotal negotiating advantage when dealing with city governments, yet until finding Detroit Bikes, they struggled to find a U.S. manufacturer that could handle the quantity and specifications they needed. The bikes are assembled in Detroit but the aluminum frames come from Asia. However, Detroit Bikes makes the wheels in-house because they are expensive to transport. According to Motivate’s CEO Jay Walder, manufacturing the wheels domestically enabled the company to reduce the number of shipping containers by two-thirds. Detroit Bikes’ is set to produce 10,000 bikes this year and in doing so will create 50 jobs in a city with high unemployment. Ford Rolls Into the San Francisco Area on a “New” Mode of Transportation In an effort to rework their business strategy for a future where fewer people own cars and shared transportation is commonplace, Ford recently announced it would be collaborating with bike-sharing provider Motivate in San Francisco. “Cities globally are dealing with increased congestion, a growing middle class and environmental issues,” says Jim Hackett, head of the new Ford Smart Mobility unit. “By expanding our business model to include new forms of transportation -- from bikes to dynamic shuttles and more -- we are introducing new customers to Ford and creating new revenue and profit opportunities for the future.” Ford and Motivate are working to add new stations across the Bay Area and expect to expand the network by 7,000 bikes by the end of 2018. 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