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Panel will discuss Portland as bike manufacturing hub

Posted by on June 21st, 2011 at 1:41 pm

In the shop with Joseph Ahearne

Bikes sit in the shop of
a local bike maker.
(Photo © J. Maus)

A panel discussion set for tomorrow night in Northwest Portland will deal with the topic of turning Portland into a manufacturing hub for bicycles and other “21st century active transportation products.”

The panel will be moderated by Portland architect Rick Potestio and will feature Rob Forbes, founder of Design Within Reach and PUBLIC Bikes. Joining Forbes will be the co-founder of Beloved Cycles, Matt Stein; United Bicycle Institute founder Ron Sutphin; and Cameron Larson with Chris King Precision Components.

The discussion is being billed as an “informal discussion between people interested in seeing Portland become a center for the manufacture of 21st century active transportation products” (a category which they define as including shoes, bikes, skateboards, streetcars, and even electric cars).

Reached via telephone in San Francisco, Forbes said he’s hosting the discussion in Portland due our “sophisticated” bike industry and the potential we have to someday be an exporter of bicycles. “I was inspired by Oregon’s ability to manufacture their own streetcars,” Forbes said, “we thought we could have an interesting discussion on getting things made in the U.S. and looking at realistic ways to do that.”

Forbes launched PUBLIC Bikes in 2010 and says he was surprised at how the industry was dominated by overseas manufacturing. “When we launched, one thing I wasn’t prepared for was the degree at which the market is really dominated by Taiwan and China.” (Note: PUBLIC Bikes are made in Taiwan.)

I’m happy to see this discussion taking place. Back in May 2009 we published an in-depth story titled, Could Portland become a bike industry hub?. In that article, reporter Libby Tucker shared the challenges and opportunities Portland faces in becoming a serious bike manufacturer. Here’s an excerpt:

“Taiwan’s bicycle industry is a competitive force to be reckoned with. Its tightly clustered, efficient industry has been dubbed the ‘A-team’ because of its coordinated efforts to assemble parts manufacturers, painters and other industry experts within an hour’s drive of the large assemblers. The industry has become so efficient that some 85 percent of Chinese bike manufacturers have signed onto joint ventures with Taiwanese companies.

Despite the challenges, heavyweights in Portland’s bike industry and elsewhere think Oregon would be a logical place for bicycle manufacturing to rise again.”

Details on the event are below:

    Made in Portland: Public Bikes/Design Within Reach Discussion Panel
    Wednesday June 22, 2011
    6:00 – 8:00 pm
    Design Within Reach Portland Studio (1200 NW Everett St)

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17 Comments
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    Noah Brimhall June 21, 2011 at 2:11 pm

    I wonder if there will be any discussion of the possibility of a Portland company manufacturing/designing/partnering with a Taiwanese company to introduce a mass market commuter or everyday bike at a low cost. Maybe I’m just cheap, but when I was looking for a new around town bike it seemed that the least expensive decent bike was going to set me back at least $300. I ended up buying a used bike from a fiend, but I think that if Portland is serious about having a significant portion of trips be made on bike, cost of entry is going to need to be addressed. I for one would like to see a local company be part of addressing this issue.

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      Jessica Roberts June 21, 2011 at 2:25 pm

      I am sympathetic to the concern that US-built products will be expensive, but $300 is your example of a bike that is too expensive? How much do you spend on your phone bill, or on airfare? I hear this a lot (“I want a bike under $150”) and I think people need to get a reality check about what things cost – especially given how incredibly useful and long-lived a bike can be. I’m not even going to tell you how much I am willing to spend on a nice pair of shoes, but let’s just say that I think a quality bike is allowed to cost more than that.

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      Brad June 21, 2011 at 3:30 pm

      Really? A $2000 bicycle is equivalent to three or four months of payments, insurance, and fuel costs for the typical car. Yet, many more people buy and use cars than bicycles. The real culprits are car culture, our weather, and general American laziness.

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      Randall S. June 22, 2011 at 9:28 am

      The average American drives about 1000 miles a month. At ~20MPG (national average) and $4/gal, that means they’re spending about $200 a month just in fuel. Add in the cost of parking, maintenance, registration, car payments, and depreciation, and you’re looking at significantly more.

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        middle of the road guy June 22, 2011 at 10:21 am

        You might want to list the benefits of that investment, also.

        Time saved, trip chaining, ability to transport larger goods, access to high paying jobs farther away from home, ability to go on a trip quickly, etc.

        You know, things you can’t do practically on a bicycle.

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    Spiffy June 21, 2011 at 2:17 pm

    I hope they’re talking about custom bikes… the US will never beat slave labor prices for mass production…

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      was carless June 23, 2011 at 12:47 am

      I have a lot of Taiwanese friends who would take offense at your categorizing their country as using slavery or low wages. Taiwan is highly industrialized and has a high avg income. Factory workers there pull down an average of $41k a year.

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    Peter W June 21, 2011 at 2:28 pm

    I can’t make it, but I hope someone who does can find out how electric cars can possibly be classified as ‘active transportation’ (unless we’re talking about ‘actively requiring the burning of coal for mobility…’).

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    Josh June 21, 2011 at 2:35 pm

    I agree with Spiffy. Cheap bikes are going to remain Taiwan’s and China’s business. Portland’s business is going to continue to be custom bikes, higher-quality bikes, cargo bikes, electric bikes, custom bike accessories, high-end/designer bike clothing, etc.

    We don’t have 1 billion people willing to work for slave wages here.

    $300 for bike is ridiculously cheap when you consider the hours upon hours of labor that goes into welding and assembly, etc. Anybody know how many hours goes into making a bike?

    Anyhow I don’t think price is what keeps people away from bikes. It’s often that people choose bikes over cars because they are so much cheaper.

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    MIchael Pina June 21, 2011 at 3:08 pm

    Has anyone read ‘Ecotopia’ by Ernest Callenbach? It speaks to the Northwest (much of what the nation “Cascadia” would entail) being a worldwide exporter of alternate transportation options. Its interesting to see how much of that vision is coming true, and how far we still have to go. Its a good, quick read.

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    Brad June 21, 2011 at 3:25 pm

    The biggest hurdle to Portland becoming a large scale bicycle manufacturing center are environmental regulations. The bicycle industry is notoriously dirty and what they can get away with in Taiwan and mainland China would never fly here. Nearly every waterway near a bicycle factory in Taiwan would be deemed an EPA Superfund site here.

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      David Browning June 22, 2011 at 8:32 am

      There is nothing inherently polluting about the bicycle industry. Every step in the process from extrusion, metal stamping, machining, and painting to final assembly are already done successfully here in Portland by other industries working within existing envrionmental regulations. Environmental regulations require innovative approaches to design and manufacturing. This type of thinking is where Portland excells.

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        middle of the road guy June 22, 2011 at 10:22 am

        Mining?

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    michael downes June 21, 2011 at 3:37 pm

    There are two factors that will determine if there will be a viable (i.e mass market) American domestic bicycle industry: energy costs and how big the Chinese domestic market gets. Workers in Taiwan & China do not, as is popularly believed, receive ‘starvation wages’. If they did the companies would be unable to retain the skilled welders, machinists & engineers needed to manufacture product. If energy costs rise significantly (like over $5.00 p/g) for an extended period of time then the economics start to add up. As an example…..China’s electric bicycle market is projected to top 10 million units a year. Let me say that again….10 million units, a year, just for their own domestic market. If energy prices continue to rise, which they are almost guaranteed to do in the long run, then it becomes increasingly easy for Chinese manufacturers to abandon the export market in favor of their own, growing, domestic market.

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    Tony Fuentes June 22, 2011 at 4:52 am

    I believe there is a huge potential for wider manufacturing of bikes in Portland. There are some good thoughts in the thread but I would like to add a couple more.

    First of all, the labor cost is only part of the equation and, honestly, that gap is closing. The bigger factors in terms of manufacturing has been the investment and coordination of facilities.

    USA bike manufacturing was ours to lose. There was nothing inevitable about “globalization”, we chose not to invest in our manufacturing side.

    Scaling up a manufacturing facility isn’t cheap. There is a lot more risk involved than in software and service industries. Moreover, the profit margins when you scale up manufacture don’t grow as dramatically as service sector products (e.g. the marginal cost of Hulu serving 1 million customers versus 200 thousand is significantly less than producing 1 million pieces of hardware versus 200 thousand).

    There is also a vicious cycle the comes from losing manufacturing in general over the past 30 years, namely the expertise for owning and operating these types of enterprises has disappears with it.

    The fallout from this is a couple of key things. Less potential return on investment results in private investment avoid manufacturing, thus manufacturers are stuck with corralling a lot of small investors or financing via debt, both of these scenarios are drags on an enterprise’s ability to grow. It takes a lot to cobble together a bunch of small investments and loans.

    It is also worth noting that what generally comes with equity investment (i.e VC investment) of any size tends to be the support to help ensure success. Venture capital tends not to be “here’s your check, see you in a few years”, that investment comes the expert management support from the VC as well. They want to ensure you succeed and will often help secure top level managers, sit on the board, etc. This type of support is an industry itself, Silicon Valley’s role as a VC hub is built not only on its access to capital but its access to a deep pool of experience managers in the tech field

    So what does this mean for Portland bike manufacturing?

    The good news.

    The abandonment of capital and the loss of management expertise in bike manufacturing has meant that any innovation and investment is back to the spirit and drive that created a Silicon Valley. So it is a bunch of folks tinkering, rediscovering, and reinventing in their garages – broadly speaking – is what as created the PDX bike world as it is now.

    This is a huge asset and actually means that Portland has the opportunity to reinvent this sector on a grand scale. We are building sector expertise and innovation that other areas no longer have and with it a unique brand of Portland as it relates to bikes.

    The economic opportunity is huge. Let’s face facts, bike demand is not going to shrink.

    So take what Portland has now and add in some decent equity investment and some collaborative business support?

    Is it really too far fetched to imagine a grander production of Portland bikes? Including mass market bikes in the sub $1000 market?

    Needless to say, this event really sparks my overall enthusiasm for the potential of this local industry. It pains me to miss this event tonight, definitely looking forward to seeing a report on the discussion.

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    Brad Ross June 22, 2011 at 12:00 pm

    Thanks Rick and all for putting this together. I’ll be there.

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    Bill Stites June 22, 2011 at 6:53 pm

    A thoughtful repose by Tony F as usual.

    As Stites Design transitions from custom work to a production model, I wonder what our future factory will look like? It could be a small number of humans that are well-paid, and are responsible to keep automated machinery humming.
    Or it could be many people doing human-scale tasks, mostly by hand, and being paid much more modestly.

    I’m not sure which is the right way to go, but I do think technology will need to play a significant role in order to be competitive globally.
    Alas, if we slash that global goal and concentrate ourselves on the local environ, tech becomes less important and people more so. Intuitively, I lean local.

    These feel a bit like societal growing pains …

    PS I hope there are follow up panels and some more outreach. I write as they talk.

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