Rising costs of importing product from overseas and the increasingly volatile exchange rate is forcing the bike trade to look closer to home for production, according to new reports.
Currency fluctuations have seen importing and production costs skyrocket, cutting margins and causing headaches for the UK’s bike trade. The pound’s strength against the dollar has plummeted since the summer – which has made sourcing product from the US far less attractive. Similarly, increased costs in China have made importing goods from the territory costly for UK firms.
The falling value of the pound has impacted on bike distributors over the last few months too, and is likely to continue to over much of 2009, according to Mission Cycles: “The dollar will, in my opinion, continue to drop through the first quarter of 2009 and I think it will stabilise around the $1.50 mark for all of 2009,” Mission Cycles owner David Wilshire told BikeBiz. “I am pricing all future consignments at the $1.50 rate and one has to bear in mind that at the same time raw material prices will increase unless the Chinese economy drops, which is on the cards as we all buy less.”
With concerns that the pound is unlikely to recover from the downturn in the short-term, firms who manufacture closer to home have praised the advantages of staying local and within the EC, including Zumbi Cycles, which sources product directly from Poland.
“Using a European manufacturer has many advantages for my business,” explained Zumbi Cycles’ Duncan McCann. “I am only a short low-cost flight away from the factory and have more control over what products they produce for me. I can honestly say the cost of my products hasn’t increased.”
The pound’s decline is also impacting on components brand Deluxe. Founder Mark Noble told BikeBiz: “In terms of our UK sales and retail price, I’ll keep a close eye on the currency fluctuations making sure we can maintain quality at the right price.”