U.S. markets have been so big for so long companies simply have not bothered to look for customers outside our borders. It is no surprise to the global bicycle industry that the U.S. is the world's leading trading nation. Our industrial and consumer markets lead the world in the value of annual imports, and in total export sales. However, the U.S. exports a smaller share of its annual output - about 12 percent of GDP - than other leading industrial nations. This compares to about 25 percent for Canada and Germany. Our domestic markets have been so big for so long that many companies simply have not bothered to look for customers outside our borders. But this is changing rapidly as U.S. economic growth slows and domestic companies cast around looking for new markets for today and for the future. Fortunately, the significance and viability of world markets has become very apparent over the last decade.

Exports' prominent role in the U.S. economy may rub off on the bicycle industry. Exports already play an important role in the U.S. economy and forecasters now indicate they will play an even more important role in U.S. growth in the next decade. Despite global economic problems, the overall long-term outlook is solid and with the onset of a slowdown in the U.S. economy, real growth will be driven less by the U.S. consumer than by prosperous foreign consumers who are eager for American brand merchandise of all kinds - including bicycles!

U.S. exports have become more and more important as the total domestic production of bicycles has continued to decline. Table 1 shows U.S. bicycle exports from 1992 through 1999. While the quantity and total value of exports peaked in 1993, exports as a percentage of both U.S. domestic production and the total revenue of U.S. bicycle companies has become more and more important as total domestic production has continued to decline from 1997 through 1999. Today exports of U.S. bicycles are a US$75-80 million piece of the overall business. This is large enough to make it significant and also large enough to attract and keep the competitive attention of U.S. domestic brands as they search for the markets of the future - and more immediate ways to enhanced profitability.

There are fewer big U.S. players, but quite a few mid- to small niche companies. With the recent sale of Murray and the withdrawal of Huffy and Brunswick from production in North America, the U.S. domestic players who can take advantage of export opportunities have been reduced to Trek, Raleigh USA and Cannondale in the top tier. However, there are at least several dozen mid- to small size bicycle manufacturers and assemblers in the U.S. who produce high-end niche products ranging from full-suspension mountain bikes, road/700c to recumbents, tandems and electric bicycles, who are ready and willing to take full advantage of new market opportunities, including exports.

Table 1

U.S. Bicycle Exports, 1992 - 1999 Actual

Prepared by Jay Townley & Associates, LLC

All Wheel Sizes (1,000 Units)

Source:   U.S. Department of Commerce Import Statistics for 1992 - 1999

Where are U.S. bicycles exported? Table 2 shows the most current export statistics by the top ten destination countries, eight months YTD 2000. It should come as no surprise that export of bicycles follows the overall pattern of exports with Canada and Mexico as the number one and number two destination countries. The North American Free Trade Agreement also plays a role here, but the simple fact is that Canada and Mexico are the largest export markets for U.S. products, including bicycles. The average unit value of bicycles exported to both Canada and Mexico indicate an up-market mix of product, we suspect primarily to the dealer trade in both countries.

U.S. bicycles are currently exported to a total of 83 countries - but, as is the general rule, the top ten countries account for over 76 percent of the units exported. It is of note that Taiwan is number six on the current list of destination countries with over 19,000 bicycle units imported from the U.S. at an average value of US$74.55.

Overall through nine months in 2000, Taiwan is the eighth largest U.S. trading partner with total trade of US$48.69 billion, after Korea (number seven) and ahead of France (number nine) and Italy (number 10).

Table 2

Total U.S. Exports

By Top Ten Destination Countries, Eight Months Year to Date

Prepared by Jay Townley & Associates, LLC, August 2000

The short-term trend in U.S. bicycle exports is up. Exports have increased each of the last two years, from 1998 to 1999. For eight months year to date 2000 bicycle export units are ahead by over 34 percent and total export value is up just under three percent as shown in Table 3. However, the average unit value has dropped by just over US$44 or about 23.5 percent.

Table 3

Total U.S. Exports, Eight Months Year to Date

Prepared by Jay Townley & Associates, LLC

August 2000 compared to August 1999

Source:  U.S. Department of Commerce Export Statistics

Future growth in U.S. bicycle exports. I am sticking my neck out and predicting continued growth in U.S. bicycle exports with a forecast of 563,000 units and just over US$81 million in export value for the full year of 2000. Table 4 shows my 2000 forecast for U.S. exports along with a three-year actual history with annual variances.

Table 4

U.S. Bicycle Exports, 1997 - 1999 Actual, 2000 Forecast

Prepared by Jay Townley & Associates, LLC

All Wheel Sizes (1,000 Units)

Sources: U.S. Department of Commerce Export Statistics 1997, 1998 and 1999 /Jay Townley & Associates, LLC forecast for 2000

I have this conviction about the opportunity presented by exports. Even if I am way off my forecast this year, I believe exports of U.S. bicycles will still hold the very real potential to increase the sales for larger companies who have run out of market expansion potential at home, and for mid-size, small and start-up companies who simply have to find new markets with the same or better growth potential for their embryonic and niche products to gain market acceptance beach-heads and expand share over the short term.

It is all about finding and creating the bicycle markets of the future!

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