Tuesday, January 27, 2009

Whither the custom bike industry?

Talking to friends (both pro and non) in the framebuilding world, it's clear that orders and interest are way, way down (and personally, I can report that I've never had a slower January for orders, given that I've had zero so far). This probably has something to do with stunning declines in house prices and massive layoffs and banner headlines reporting them, but I digress. People aren't as flush with easy cash as they were, and I understand that putting food on the table comes before bike purchases, let alone *custom* bike purchases.

The question then becomes - what will happen to the custom bike "industry" in a true economic downturn? There's no question that a custom bike is a frivolous item for most people (heck, any high end mountain bike is frivolous!) Probably 80-90% of the custom builders currently in business started building in the last 10 years or so (myself included) and have never experienced truly difficult economic times. I have a feeling that half, if not more, of these folks (many of them my good friends) will be out of of business in 2009.

Was there a "bubble" in the framebuilding world? Probably. An awful lot of people decided to do this for a living who probably shouldn't have (many of them refinancing houses or taking out loans to pay startup costs), and the market is pretty darn saturated. I'm guessing the folks who are living frame to frame and scrimping by (this is a LOT of framebuilders, including many who charge $2000+ for a frame) will be the first to go, but I wouldn't be surprised to see almost all the custom bike businesses in the US go belly up in the next 2 years or so.

There will be carnage among the big box bike manufacturers as well, I predict. Most people don't need a new Madone every year, but many of them have been buying one anyway. That's probably over for a while, even with Lance back to pump up sales.

For myself, even if I run out of work to do, I'll continue building as jobs pop up, simply because my overhead is essentially zero (I work out of a large garage/shop at my house) - so even a bike or so a month (rather than 4 or 5) is plenty to make it worthwhile. So all you WW owners out there - don't worry, I'm not going anywhere.

I'm also hopeful that people will start wanting to hang on to their bikes for longer, and hence will see it as worthwhile to have them repaired. I've done several repairs of what most folks would consider beater bikes lately (mid 90s vintage Rockhopper type bikes). But honestly, if you can pay $50 to replace a broken dropout and keep your nice commuting bike running for another decade, I think it's worthwhile. Of course, fancier bikes are worth fixing too, and people will keep riding (and breaking) stuff no matter how bad the economy gets, I think.

Long story short, I'm not too proud to go work at the bagel shop if I have to, but I think that 5 years down the road, I'll still be building custom bikes and hopefully putting big smiles on the faces of the riders. Only time will tell.


Chewieez said...

Interesting take on things! I'm not surprised to hear about slower times and agree with many of your assessments. I work in the music recording business in Nashville, TN and we've been seeing the decline for the past 3-4 years. So if things are slower now with the current economic situation, it's hard to tell since they've been going down steadily for years. We can blame more of the "music should be free" mentality than the over-mortgaged housing market or stock market.

I agree though that I still love working when I can and if that means adding a second job so be it. Time to either get creative or get a 9-5 job....eek!!

guess who! said...

I'll keep you in business....

Jon said...

Bummer post there, Walt.

But, yeah, I've been worried about you and your friends at least since October. I've certainly wondered if all these builders could really make a living off what must be a fairly small customer base.

If anything, though, I think this is the time to "invest" in a quality American-made bike.... you haven't raised prices (yet), so what better time to convert ever-less valuable dollars into tangible steel? That's what I'm telling my wife, anyway.

Don't steal music (or bikes).

warren said...

I have a hard time relaxing when there's no money comming in. if you can get over that fact, just think of all the seat time you'll get

the mighty war-khan said...

Just make sure the bagel shop makes them properly, boiled of course! None of this baked nonsense. What's next, steamed donuts? Oy vey!

Walt said...

Oh, trust me - if work doesn't pick up, I will be *wicked* fast this year - plenty of time to ride, baby!

And trust me, I'd never work for a bagel place that didn't boil. What, a "rolls with a hole" shop? I think not! I know too much about gluten formation and carmelization to ever sink *that* low!

Reid said...

You gotta stay in business so I can buy my next bike from you! ;)

It might be a while (like a decade), but that's what I intend.

maelgwn said...

So, with all this time you got now, where are the random project bikes? (All those ridiculous and crazy ideas you come up with at the pub ...)

Anonymous said...

Your assessment is spot on. I also expect the backlogs of some of more prestigious builders to shrink dramatically as not only orders slow down, but customers in line desperately ask for their deposits back due to financial hardship, despite some builders' policies of no refunds. In this economy, how can they not capitulate to their customers?

I've always maintained that the custom frame market couldn't possibly be large enough to support many of the framebuilders full-time so it would be to their advantage to perform other fabrication work to support themselves and view framebuilding as a part time job. But I'm musing here and suppose the situations are as varied as the number of builders out there.

Good to hear you'll be one of the survivors.

Anonymous said...

This economy sucks and people are afraid. Quality and fair pricing.Keep that up and you'll do fine.

Anonymous said...

I don't know that the frame building market was over saturated. When the wait time on a frame is 6-8 months for most builders (as it was) most people are not going to wait that long. That wait time and the prices indicated to me that there was a shortage of good builders to meet demand. You can get a nice spec house built in 4 months! With wait times dropping to the 3 month minus level, maybe you will see an increase in business, as people decide to go custom who before could or would not justify the 6+ month wait.