Biker makers plead to protect

Bicycle makers plead for protection

Low-cost overseas competition prompts call for safeguard measures from Ottawa

By STEVEN CHASE 

Monday, June 20, 2005 Page B1

 OTTAWA -- Canada's two largest remaining bicycle makers -- their 

factories threatened by lower-cost foreign imports -- begin a last-ditch 

effort today in Ottawa to seek emergency protection from Asian rivals.

Procycle Group Inc. and Raleigh Canada Ltd. are asking the federal 

government to slap a 48-per-cent tariff on foreign bike imports to stop the 

bleeding of manufacturing jobs to China, Vietnam and other Asian 

nations. They warn a failure to get temporary safeguard protection could 

spell the end for "the vast majority" of bike manufacturing in Canada.

The case should set a precedent for how Ottawa responds to the new 

economic reality where Canadian factory owners are trying to decide whether 

to keep production going locally or move it offshore themselves.

"The manufacturing industry is watching this with considerable 

attention," said Larry Herman, a trade lawyer with Cassels Brock in Toronto who 

is not acting for either side in the case.

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Procycle and Raleigh appear at the Canadian International Trade 

Tribunal this morning seeking the rarely used "safeguard" shelter from foreign 

competitors. This is allowed under global trade rules if an industry 

faces serious injury from a sudden, unexpected flood of imports.

The case may turn into a political hot potato for Ottawa because 

Finance Minister Ralph Goodale, not the independent and quasi-judicial CITT, 

must ultimately approve safeguard actions.

Procycle and Raleigh say the imports in question -- teen and adult 

bikes -- have almost doubled in recent years to 1,063,768 units in 2004 

from 538,523 in 2000.

Mr. Goodale may be forced to choose between angering Beijing -- 

Canada's top new trade priority -- or voters in Quebec, where the biggest bike 

manufacturing plants are located and where hundreds of textile jobs 

have already been lost to Asian competitors such as China.

The retail bicycle market in Canada is worth as much as $300-million in 

annual sales, but market share held by Canadian producers has plummeted 

in recent years, sliding to 30 per cent in 2004 from 58 per cent in 

2000. Imports now control 70 per cent of the market.

Canada's largest retail stores are fighting the requested safeguard, 

warning it would drive up bicycle prices, erode selection and send 

Canadians cross-border shopping to the United States for better deals.

"It would make it much more difficult to [import] the products that are 

in demand, and if and when those products were brought in, they would 

be a hell of a lot more expensive in Canada," says Diane Brisebois, 

president of the Retail Council of Canada.

"Retailers are shaking their heads. You don't get safeguards if you are 

a retailer. If a retailer decides to come in from the United States to 

compete with you . . . you've got to compete."

She said retailers have told her that Canadian bike makers should be 

focusing on more specialized niches to stay competitive.

"You don't just continue producing commodity products . . . especially 

when there's an incredible demand for specialty products in that sector 

and we are importing them from Spain, Italy and France. We would rather 

buy them from a Canadian supplier."

Retailers say the situation facing Canadian bike makers does not meet 

the test for safeguards because manufacturers have themselves to blame 

for lost sales.

They also note that Canadian bike makers have enjoyed some government 

protection against low-priced imports from various countries for a long 

time.

"With the exception of a few years, they have had anti-dumping 

protection since 1978 . . Since 1992 there has been steady protection," said 

Darrel Pearson of Gottlieb & Pearson, whose client is the Retail Council 

of Canada.

"This is a very, very small industry which has had a tonne of time to 

adjust to imports," he said of Raleigh and Procycle.

The CITT will render its decision on the case Sept. 1. If it agrees 

with bicycle makers and recommends safeguards, then Prime Minister Paul 

Martin's government will have to decide whether to enact them.

Both companies' significant operations are in Quebec: Procycle's in St. 

Georges-de-Beauce and Raleigh's in Waterloo. Between them, Raleigh and 

Procycle employ approximately 600 people.

Both build their own frames, as well as some handlebars and other parts 

such as rims and they assemble the wheels from Canadian and imported 

parts. 

Their domestic competitors include Canadian importers, companies that 

assemble bikes from wholly-imported parts and some smaller 

manufacturers.

Ken Morrison, Raleigh's vice-president of finance, said the company 

does not want to shut down its Waterloo factory. "We are the major 

employer in our town. Many of our employees have been with us for over 20 

years. There are no other places where they can readily seek employment if 

the factory was to close."

Bike makers say that if Ottawa doesn't want to slap a 48 per cent 

tariff on imports, it could instead impose quota restrictions, limiting 

imports to 600,000 units -- half of the total bikes entering Canada.

Opponents of the safeguards warn it will anger China, which is a major 

bike exporter to Canada.

"This is like the finger in the dyke approach to trade policy," said 

Peter Clark, a trade consultant acting for an importer opposed to the 

safeguards.

Two-wheeled flood

Procycle Group Inc., and Raleigh Canada Ltd. are asking Ottawa to slap 

a 48-per-cent tariff on foreign bike imports to stop the bleeding of 

manufacturing jobs to China, Vietnam and other Asian nations.

$300-million: Annual sales of bicycles in Canada.

111%: The rate at which bicycle imports rose between 2000 and 2004.

969,300: The number of foreign-made bicycles that hit the Canadian 

market in 2004, up from 460,425 in 2000.

30%: The market share held by Canadian producers in 2004, down from 50 

per cent in 2000.

70%: The share of the bicycle market now made up of imports.