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news
Brexit.pngHard Brexit and a Trump presidency - what do they mean for the UK cycling industry and your next bike?
Even by the standards of what has been a tumultuous few months, last week was a landmark one in politics on both sides of the Atlantic. Last Tuesday, UK Prime Minister Theresa May confirmed plans for a hard Brexit, and Friday saw Donald Trump inaugurated as the 45th President of the United States.
While both raise far more important issues than what they mean for the bicycle market, it did get us thinking here at road.cc about their potential impact on the industry – and on what your next bike might be and where it might come from.
In short, we think bikes are on the whole going to get more expensive, and especially those in the middle to high end of the market. We’ve already seen price rises from major brands due to the fall in value of sterling since June’s referendum, but the UK’s future trading arrangements with the EU, and what happens across the Atlantic, could also play a role.
Our conversation was prompted by a couple of articles published on BikeBiz last Wednesday written by its executive editor and cycling author Carlton Reid. One looked at how the Trump presidency might affect US bike brands, including Cannondale, Specialized and Trek.
The other followed a suggestion by Foreign Secretary Boris Johnson that if India were to lift tariffs on goods such as Scotch Whisky, the UK could reciprocate by doing away with them on goods including bicycles.
(Whether, a few years down the line, what’s left of the UK will have any influence over trade deals involving whisky made in what might then be an independent Scotland is a detail that seems to have escaped Johnson.)
Where bikes come from
The 2010 report on the British Cycling Economy, compiled by the LSE and commissioned by Sky and British Cycling, said that in 2010, some 3.7 million bicycles were sold in the UK, with a total retail value of £1.62 billion. UK-made bikes accounted for £51 million of that figure – just 3 per cent of the total.
Where do the other 97 per cent come from? Well, as this article from the blogger Inner Ring published in 2012 highlights, even if you are buying a mid-to-high-end bike from a company such as the US’s Specialized, say, or Italy’s Pinarello, the likelihood is that the frame will have been made in China or Taiwan.
Indeed, the UK is Taiwan’s third largest export destination for bicycles, after the US and the Netherlands, and the country claims to have a 26.1 per cent share of the British market.
Other Asian countries including Cambodia are also seeing their bicycle industries grow. India, too, has an important bicycle manufacturing industry – and it is one that is now targeting growth in Europe, including the UK.
Hero Cycles, one of the world’s largest bicycle makers – it vies for top spot by volume with Taiwan's Giant – recently announced plans for a global design centre in Manchester, where last year it bought Avocet Sports, which became its first purchase outside India.
Steel tycoon Sanjeev Gupta, meanwhile, said he plans to revitalise the UK’s own bicycle manufacturing industry through the acquisition of West Midlands-based Trillion Cycles, which he has moved to a new base in Leamington Spa.
Contract manufacturing extends to components, too – the saddle on your bike, for example, was almost certainly made by Velo at one of its factories in its home country Taiwan, or in China.
That doesn’t necessarily mean that your bike will have a big “Made in China” sticker on it. World Trade Organization (WTO) rules allow that in certain cases where finished goods are assembled in a certain country even if many of the components come from elsewhere, that the country of assembly is deemed the country of final manufacture, so you could instead have “Made in Italy.”
What about fees and duties?
Which brings us to tariffs. A fiendishly complicated set of rules governing trade between different countries and which, while typically not involving the end consumer – they are absorbed along the way in the supply chain – will, once we leave the EU, raise the price of bikes coming from the continent.
By how much is anyone’s guess. The director-general of the WTO, Roberto Azevêdo, speaking before last June’s referendum, warned that “Russia’s accession to the WTO took 20 years.”
The UK is in a different, but unprecedented, position. We are a member of the WTO in our own right and a part of the EU. Our trade deals with other countries are negotiated through the European Commission, however, so we are in effect starting from scratch.
Azevêdo warned: “It will be a very high risk bet to hope that negotiations would be quickly completed and that negotiations would be uneventful,”
Currently, the single market means that there are no trade tariffs on goods, including bicycles, accessories and clothing, imported to the UK from fellow EU member states, and vice-versa. Clearly, that is going to change.
Some have suggested that as an interim measure following Brexit, the UK and countries in the EU, pending an actual deal being struck, trade on the basis of the tariffs generally applying to non-EU countries.
So, for bicycles – complete or frames – that’s 14 per cent. On parts and components, the standard tariff is 4.7 per cent. That means the cost to the consumer of bikes deemed to have been made in Europe is likely to rise – and you already have to factor in price increases that have happened due to the decline in value of the pound since June.
Cheap bikes from China?
The EU currently has a punitive trade tariff of 48.5 per cent on bicycles made in China, to help protect the bicycle industries of its member states by preventing the market being flooded with cheap Chinese-produced bikes – which is what Reid predicts on BikeBiz may happen in the UK once we have left.
That means that at the lower end of the market, we could see cheap bikes from China coming in. And with incomes likely to be squeezed and the cost of living rising, that could prove attractive to cash-strapped consumers.
(As a side note, the ongoing row between the EU and China over tariffs on bicycles is the chief reason that WTO talks on the proposed Environmental Goods Agreement, which could reduce or remove tariffs on them altogether, failed last month.)
Price rises, higher household outgoings and general economic uncertainty are likely of course to have another effect on the UK cycling market – people deferring or even abandoning planned purchases, or downgrading to a different, less highly specced model than the one they may have initially planned to buy.
Over in the United States, of course, tariffs have regularly been in the headlines in recent months, with Trump threatening to use them as a so-called “border tax” to discourage the practice of “off-shoring” – American businesses having goods made in factories abroad, then importing them to sell to domestic consumers.
While it is the motor industry that has received most attention in this regard, with the incoming president threatening crippling tariffs on companies such Ford unless they repatriate production, other sectors too will come into the firing line if Trump pushes through with his plans.
(Incidentally, Trump's claim that offshoring is killing American jobs is controversial, to say the least.)
Reid points out on BikeBiz that 98 per cent of the bicycles sold in the US originate from abroad, the vast majority in the Far East – and if the country’s bike industry comes into the sights of the Trump administration, it would be ill-equipped to repatriate production.
The result of that, Reid says, would be higher prices and scarcer availability – something that would also affect the British, not just the US market.
Whether Trump will follow through on his rhetoric remains to be seen, and the whole issue of Brexit of course is riddled with uncertainty – just today, the Supreme Court has ruled against the government and said that Parliament must debate whether to trigger Article 50.
In the meantime, if you are itching to get your hands on a new ride, you can take a look at road.cc technical editor David Arthur’s article from last week in which he lists some Brexit-beating bargains currently to be had.
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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it feels a conveniant donkey to put the tail on imo, and Im not saying some members didnt quit BC because of the Shell thing, but Im not entirely...
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I'm never convinced how helmets with built in cameras and lights can be acceptable safe. Sounds like a good way to get a camera embedded in your...
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Did I mention that it costs £580?
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Yeah - and one of the passengers had the gall to say that the *driver* had taken a wrong turn!...
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Well what is that way? Are you suggesting that every bend on every descent can be barriered over a 180km mountain stage?
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I'm glad the barrier wasn't damaged. Whew, close one there! \s
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61 comments
*small voice* I agree with the lawyer bloke.
I take exception to the way he expressed his opinion, but as for that opinion itself - spot on.
Mere minutes after the 'lawyer' was banned a new account pops up in support of his opinion.
Pray tell, which opinions do you support? He did express quite a few.
Wow!
All I know is come the appocalypse (or a word I can spell) us cyclists will all be glad we wore the helmets and hi-viz!
holocaust?
Hallelujah looks like road.cc took out anything linked to that cycle london goon claiming to be a lawyer. That was up there with some of the vilest, thuggish, offensive, bullying use of expletives I have seen.
Back to bikes eh. You know I had a cracking spin in the sun yesterday even dicing with some snow which nearly gave me some involuntary weight loss. Grimaced smile on my face, burning in my lungs, aching in my legs and all seemed OK in the world.....
Posting a Brexit/Trump article on here was kind of asking for a shitstorm.
Anyway, the sun came up during my commute yesterday... first time I've had anything but dark while riding in for... couple of months? Awesome - lighter mornings here we come.
Thanks Admin
It would appear our road.cc benfactors may have deleted 50% of this thread.. I think we can all breath a sign of relief.
Also just for comedy effect I'm leaving this here:
[the members of "The People's Front of Judea" are sitting in the amphitheatre; Stan has just announced that he wants to be a woman and wants to be called "Loretta," and is explaining why]
Stan: I want to have babies.
Reg: You want to have babies?!?!
Stan: It's every man's right to have babies if he wants them.
Reg: But ... you can't HAVE babies!
Stan: Don't you oppress me!
Reg: I'm not oppressing you, Stan. You haven't got a womb! Where's the foetus gonna gestate? You gonna keep it in a box?
And what isn't racist...
Maybe many people that haven't jobs in Europe, with bikes and other items made in "Europe".
Maybe peoples in far east who work 12 - 14 hours.
Maybe the childrens who work in far east.
Maybe the environmental pollution in this countries.
Who knows... ?
Not the finest hour in this parish.
One of the first things I was taught as a lawyer (rather a long time ago and pre internet) was never to write anything I wouldn't be happy to hear read back to me in court. Some might want to reflect on that.
It would be good to know which firm CDML works for, so that it can be avoided. I thought legal types were supposed to excel at building convincing arguments, but it appears that standards are not what they once were in his profession.
I can only assume that the typical judge and jury are heavily swayed by lazy stereotyping, personal abuse and petty references to typos.
Double post deleted.
SteveyJ, get run over by a bus mate. Fukken troll.
Canyon bikes have already gone up about 200 quid a pop, this isn't funny any more.
I'd tell you to go and fukk yourself Bob but your head's already up there.
I'm a solicitor who has been specializing in EU law (and human rights) for coming on, what twenty years
And you know what? You bring your profession into disrepute with your conduct on this forum.
People are entitled to a different point of view to yours - we should all expect to debate our views but in a respectful polite manner that enables us to understand not only what others think but equally importantly, why.
Without this we can never move forward as a society - the internet and media seem to have driven us to the point where people must take a "side" on everything, one side always being "wrong" with the opposing side frequently retorting to character attacks and smears exactly like the ones that you have been so quick to make here.
Well, that's sorted the brexit bit out, what do we all think of Trump?
Jeez, I go out for two hours and this blows up. Some of you need something better to do, especially you Mungecrundle, get baking! I am still waiting for a packet of Mungecrundle's Fudge Crumbles.
Meanwhile we have both sides insulting each other; this won't resolve anything. But we will definitely remember the promises and make our judgement later.
Some of you seem to forget what Representative Democracy is, or did you think that when you voted for Brexit you personally would be running the country?
It will be what it is. You can be certain no one will be happy.
Back to the OP, I am surprised that in such a comprehensive load of crystal ball gazing, no mention was made of the fact that we now have a direct Beijing to London freight train, which apparently can get our frames here quicker and cheaper than shipping. Unless of course you one of those waiting for delivery of a Canyon, in which case the train just removes excuse number 37.
I'd suggest getting out for a bike ride, but I don't think there's a saddle in the world comfy enough to ease this amount of butthurt.
Well done Road.cc Presumably you knew this would happen.
How about sticking to cycling rather than politics?
As some of us would like to keep this as a haven from all of that.
Just a thought
We wouldn't need a haven if fucknuts Cameron hadn't been such a fool as to allow the referendum, or the population hadn't bought the clear lies of the Leavers or even if we had a leader of the opposition who didn't think the EU is a corporate conspiracy from the 70s.
No doubt you were not complaining about this when you thought it was a slam dunk win for the establishment. Good that he did so anti-democrats like you get to understand that people can have a say even though you don't like it. Another leftie, luvvie, liberal, hypocrite (fill in the blank) who gets abusive, insulting, obnoxious against those who take a different view. You really are a vile, rude lot.
Well, this got out of hand rather quickly.
In the short term, the bike industry will be affected the same way as every other industry probably will: the big players will see dips in revenue but, relative to everyone else, they will increase in power and influence, because many of the smaller players will be killed off by uncertainty, even before trade barriers fully come in to effect.
Longer term, the wider effects can be summarised by a couple of cycling-related documentaries. For Brexit, see Bicycle Thieves, the story of people rendered so poor by an incompetent right-wing government's rejection of peaceful European civilisation, that they have to steal bicycles to scrape a living. For Trump, see Fifteen Million Merits, the Black Mirror episode that depicts a society ruled by reality TV bastards, and in which the citizenry have been given meaningless jobs that machines can do: generating power by pedalling exercise bikes.
As for the jingoists posting here, or anyone saying "just get over it", how would you feel if you were born and living in Scotland, but identify as British, were a Scottish referendum to result in your being stripped of your British citizenship?
So fiction is being peddled as 'documentary' now? Pesky Brexiters with their lies... hang on.
As a debate, this topic is the pits. I've never known one as polarised in the UK. Most people are so biased and entrenched they have absolutely no contribution to make other than make their position obvious through insults, sneering or unfounded prophecies of doom. The majority of posts on this thread may as well have been either 'Brexit' or 'Remain' and left the rest of the shit for facebook.
Describing two obviously fictional films as "documentaries" is obviously a joke.
Spending months campaigning in front of buses and posters saying Brexit will give £350 million per week more the NHS or that the EU has anything to do with non-EU immigration - those are lies. As is claiming now to have a mandate to leave the Single Market when a year ago they said it was all about the political union.
Those are such barefaced lies, which go so far beyond normal political spin (e.g. the remain campaign's "Project Fear"), that many would argue they invalidate such a narrow victory entirely. And if anyone thinks British-born Europeans are ever going to forget this, even if Britain were to become the richest vassal state of the United Kleptocracy of Trumpania, then they're crackers.
Why *are* the above lies any worse than those from Project Fear? The emergency budget, the tax rises, the - oh God no - crashing house prices? Because they weren't told by your side, that's why.
Get a grip. Or don't. Don't forget. Continue seething at every available opportunity until the months turn into years and your bitterness has had genuine impacts on your life, and then blame those on Brexit. Look at every 2nd adult in the street and assume they're a stupid racist incapable of dealing with meaty issues as well as you clearly do. But do accept that *both* campaigns were run by self-serving arses and fuelled by bullshit.
Seems to me that you're describing a lot of people who voted to Leave, who appeared to have an irrational hatred of the EU...
Seems to me that I was addressing a poster whose every 3rd post on unrelated threads was a sneer about the type of people who voted for Brexit.
But please do continue to talk in generalisations and stereotypes. I'm sure that's the best way to resolve the debate and the wounds created by the smorgasbord of shit that came from entrusting politicians to run referendum campaigns.
And I was addressing you, what of it? Such is the nature of a public (ish) forum - anyone can comment on anyone elses posts.
I'm not trying to resolve any debate or wounds created by any means. All I did was relate something you said to my experience of almost all Leave voters I engaged with (to be fair it wasn't many because I don't know many). About 80% of the Leave voters I know voted through an irrational hatred of the EU. They presented all sorts of "evidence" to support their views, but dismissed out of hand any real evidence that proved their own views to be wrong (info from my independent sources vs info from their biased sources), often resorting to insults instead of engaging in debate, let alone considering that they might actually be wrong. For those people it was purely an emotional decision, that they tried to justify with, what I now know to be, "alternative facts".
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