I need some help with a LARGE project relating to bicycle and component production.

Hey guys, here's the deal. Some friends and I have started working on a plan to move bicycle production from Taiwan/China to Detroit, MI. I'm going to Interbike to pitch it to people, but I need some numbers to be pitching. What I need is some fairly solid numbers as to the cost of producing a bicycle in Taiwan, and the same bicycle in Detroit. There are obviously tons of factors that can't be accurately estimated, but a rough picture should be possible.

please hit me up with anything you come up with. Treechunk@gmail.com

http://www.retroit.org/blog/

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Permalink Reply by Brendan Kevenides on September 15, 2009 at 4:20am
Perhaps someone associated with this group could help you: http://www.bicycleretailer.com/index.html.

It would be great if you could pull it off. If you are talking about mass producing bicycles, I would be fascinated to know how you with overcome the tremendous labor cost differences while still making a quality product. Check the U.S. Dept of Labor's website for labor cost comparisons. Here's an address: http://www.bls.gov/fls/home.htm.

Good luck!
Permalink Reply by Sam Van Dellen on September 15, 2009 at 4:46am
My intention with the labor aspect is to take a two-prong approach. I am going to aim directly at the entire population of the United States and start an ad campaign that 1. Raises the perceived value of the bicycle, and 2. Makes the support of the bicycle industry a national goal, a patriotic purchase if you will. My intent is to get workers paid what they deserve the world round, not take low paying jobs and bring them to America.
Permalink Reply by Dr. Doom on September 15, 2009 at 6:03am
This is a really interesting idea. I might drop a line to Grant Peterson of Rivendell Bikes. He's been in the bike industry forever, is unusually open about manufacturing costs, and goes out of his way to sell products manufactured in the States. So he might have some ideas and insight to offer.
Permalink Reply by Doug Haynes on September 15, 2009 at 7:29am
Best of luck but to be very honest with you the only real thing I think you may accomplish is raising the price of bicycles...

However if you have any questions regarding the tooling and machinery moving costs associated with set up or the set up of full scale production please feel free to contact me. One of the largest hidden costs of a project like this is the cost of tooling that everyplace else already has in place. Often times this can be offset by purchasing used equipment but due to the fact that so much is done overseas the cost of transport will be a massive issue.
Permalink Reply by J on September 15, 2009 at 7:55am
Sam, I wrote much of this in email, but Doom's suggestion to speak with Grant Petersen is a good one.

If you go to Interbike, I'd chat with Serotta, Lynskey, and Waterford for a real world perspective on small/medium sized production. These firms are small enough that you might actually get some good advice. Trek and Cannondale are both in the process of outsourcing domestic production and are of course much larger companies... you might chat with retailers of these brands, because they are in a bit of an interesting pickle -- having sold these brands on the strength of the "made in the USA" message, and now that this is changing, they are having to retool.

The only realistic way to expand domestic bicycle production is through the use of tariffs -- and there are a lot of entrenched interests within the industry that would oppose this. Industry groups like Bikes Belong and the NBDA are also represented at Interbike, however, and you should look into these.

This is an interesting academic exercise... one that has been discussed ad nauseum for the past twenty-five years in some circles, but the Detroit angle is interesting! Although... one might argue that Chicago is really the historical Detroit of the bicycle industry, if you are thinking about supply chain clustering and urban mass production of frames and components. Of course, that was two generations ago, and so the labor pool no longer exists.
Permalink Reply by Sam Van Dellen on September 15, 2009 at 9:08am
One of the reasons Detroit calls for this so strongly is that there is so much left over from the big auto, although not everything will transfer over. One of the many reasons that I think this or something like it MUST happen is that quality standards are plummeting in the bicycle industry. If companies and employees had as their primary goal to provide every customer with an awesome bike, knew their labors were valued, and that it was worth taking the time, I really believe we could turn around the QC problem. Also, my goal is not merely to produce bikes in the US, but to give Detroit a way to once again be an integral part of the US economy. One of my goals is to give Detroit the tools it needs to transform itself, with jobs for everyone who wants one. If real money is flowing into Detroit, the city can revitalize, rebuild, and have infrastructure that will be people friendly, not just car friendly. I see this not just as an opportunity for Detroit, but a model for lots of rust-belt cities. I see a future where youth are trained in manufacturing, not just burger flipping and paper pushing. Any of the aspects of my plan taken on their own would fail. The broader vision is why I see this as a real possibility, as something that can and will alter the way we operate in this country.
notoriousDUG said:
Best of luck but to be very honest with you the only real thing I think you may accomplish is raising the price of bicycles...

However if you have any questions regarding the tooling and machinery moving costs associated with set up or the set up of full scale production please feel free to contact me. One of the largest hidden costs of a project like this is the cost of tooling that everyplace else already has in place. Often times this can be offset by purchasing used equipment but due to the fact that so much is done overseas the cost of transport will be a massive issue.
Permalink Reply by J on September 15, 2009 at 9:31am
I'll respectfully disagree with this statement insofar as manufacturing is concerned. What metric are you using? Many Taiwanese and Chinese factories are ISO 9001 compliant. The aluminum and cromoly alloys of today are much more reliable than twenty or thirty years ago. And of course even low end component finish work is much improved.

If you are talking about the prevalence of plastic vs all metal low end components, or the high ratio of department store-quality bikes sold in the U.S., or the lack of proper installation and assembly of said bikes (or even those sold through IBDs), then I would agree with you -- but those aren't manufacturing issues.
Sam Van Dellen said:

One of the many reasons that I think this or something like it MUST happen is that quality standards are plummeting in the bicycle industry.
Permalink Reply by Sam Van Dellen on September 15, 2009 at 9:51am
What I am specifically talking about is the quality of frame assembly and low to mid range components. We have had, in the past year, to create a warranty manager position to deal with the volume of bikes we need to get our manufacturers to deal with.

J said:
I'll respectfully disagree with this statement insofar as manufacturing is concerned. What metric are you using? Many Taiwanese and Chinese factories are ISO 9001 compliant. The aluminum and cromoly alloys of today are much more reliable than twenty or thirty years ago. And of course even low end component finish work is much improved.

If you are talking about the prevalence of plastic vs all metal low end components, or the high ratio of department store-quality bikes sold in the U.S., or the lack of proper installation and assembly of said bikes (or even those sold through IBDs), then I would agree with you -- but those aren't manufacturing issues.
Sam Van Dellen said:

One of the many reasons that I think this or something like it MUST happen is that quality standards are plummeting in the bicycle industry.
Permalink Reply by J on September 15, 2009 at 10:10am
Point taken.

I agree that today's entry level components are less reliable than those from 25 years ago, but wouldn't you say that this is a function of product design and not necessarily manufacturing? Modern drivetrains are needlessly complicated and as a result require tight tolerances, which are impossible to achieve with stamped steel and plastic. But if we are making apples-apples comparisons, quality has improved.

The point on factory-based assembly (as opposed to frame fabrication) is right on. The use of power tools and JIT delivery systems (not to mention full factory boxing) leads to all sorts of trouble... improperly torqued bottom brackets, too-tight headsets, untrue wheels, etc.

That a domestic factory would necessarily do things better doesn't necessarily follow, but I see your point.

As to the increased need for dedicated retail-level warrantee support -- we can point to many reasons for that. The need to deal with dozens of vendors instead of a handful. Shorter product cycles and experimental materials leading to higher failure rates. Modern drivetrain components having "black box" construction as opposed to dealer-serviceable issues, etc etc.

Sam Van Dellen said:
What I am specifically talking about is the quality of frame assembly and low to mid range components. We have had, in the past year, to create a warranty manager position to deal with the volume of bikes we need to get our manufacturers to deal with.

Permalink Reply by S on September 15, 2009 at 12:04pm
Sam Van Dellen said:
My intention with the labor aspect is to take a two-prong approach. I am going to aim directly at the entire population of the United States and start an ad campaign that 1. Raises the perceived value of the bicycle, and 2. Makes the support of the bicycle industry a national goal, a patriotic purchase if you will. My intent is to get workers paid what they deserve the world round, not take low paying jobs and bring them to America.

Sam, what do you mean by paying workers what they deserve world round? A decent living wage can vary by an order of magnitude or more in different countries. As an example, 80k a year will give someone a fairly good living in someplace like memphis but the same salary doesn't go as far in san francisco.

I'm not sure how much of a typical bike's costs go to labor but if it's significant then it'll be tough to compete against companies using asian outsourcers even if the asian workers are paid enough to give them a better standard of living than us workers.

Permalink Reply by Dr. Doom on September 15, 2009 at 12:31pm
One thing about the Chicago-Detroit comparison to keep in mind is that Detroit is the metro equivalent of a failed state; it simply isn't functioning. We all have our problems with Chicago government, but its problems are completely different from those of somewhere like Detroit. One implication of this is that even if you had a really solid plan for domestic bicycle manufacturing you very likely wouldn't be able to find anyone in Detroit government capable of really working with you on it, whereas there are probably some Chicago pols who wouldn't mind creating some jobs and would be capable of moving the process along. Obviously Chicago also has some juice in DC right now, which couldn't hurt as far as maybe getting tax breaks or federal funding for what could easily be pitched as a 'green jobs' initiative.
Permalink Reply by Doug Haynes on September 15, 2009 at 12:56pm
Nothing will cross over except, maybe, a small amount of the tube manufacturing and cutting lines but most of those are still in pretty active use for the auto industry and not geared for anything as thin wall as bikes see.

you have to keep in mind that much of bike production, or any production work these days, while hand handled is very much an automated process and the machines required to do the work are very, very dedicated to the task at hand and adaptation from what application to the other is, if even possible, far from cost effective.

Getting people to do the manufacturing work itself, and even the more skilled work of maintaining the plant equipment is also going to be an issue for you. As a society we have fucked ourselves by pushing people away from high skill blue collar jobs to low skill white collar jobs that require a degree but very little specific knowledge or skill. This has resulted in a stigma around real blue collar work when in many cases it requires more intelligence and skill then many white collar jobs. even with decent pay you may have a hard time getting people to move to manufacturing jobs when white collar stuff is 'what they are supposed to do to get ahead.' I see people all the time who are smart and skilled enough to make a killing as a plumber become wage slaves in an office for 50% less because they don't want to be a plumber...
One thing to remember is that the bicycle industry has nothing to do with the 'quality crisis' you see in low end bikes as much as the consumer does; unless you are able to create a new mindset in a society that has been trained by advertising for years that cheap is the best value then you are never going to be able to pay a decent wage to produce a decent bike that will actually sell in any kind of volume because it will always be passed up for the cheaper alternative by the average American consumer.

Sam Van Dellen said:
One of the reasons Detroit calls for this so strongly is that there is so much left over from the big auto, although not everything will transfer over. One of the many reasons that I think this or something like it MUST happen is that quality standards are plummeting in the bicycle industry. If companies and employees had as their primary goal to provide every customer with an awesome bike, knew their labors were valued, and that it was worth taking the time, I really believe we could turn around the QC problem. Also, my goal is not merely to produce bikes in the US, but to give Detroit a way to once again be an integral part of the US economy. One of my goals is to give Detroit the tools it needs to transform itself, with jobs for everyone who wants one. If real money is flowing into Detroit, the city can revitalize, rebuild, and have infrastructure that will be people friendly, not just car friendly. I see this not just as an opportunity for Detroit, but a model for lots of rust-belt cities. I see a future where youth are trained in manufacturing, not just burger flipping and paper pushing. Any of the aspects of my plan taken on their own would fail. The broader vision is why I see this as a real possibility, as something that can and will alter the way we operate in this country.
notoriousDUG said:
Best of luck but to be very honest with you the only real thing I think you may accomplish is raising the price of bicycles...

However if you have any questions regarding the tooling and machinery moving costs associated with set up or the set up of full scale production please feel free to contact me. One of the largest hidden costs of a project like this is the cost of tooling that everyplace else already has in place. Often times this can be offset by purchasing used equipment but due to the fact that so much is done overseas the cost of transport will be a massive issue.

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