Huffy, No. 1 US bicyclemaker, is pedaling fast this Christmas
There's nothing like a new Christmas toy fad to put Huffy Corporation down in the dumps. Unless it's a bicycle fad. The year of the video game and before that, the year of the skateboard, well, those are ghosts of Christmases past that this bicyclemaker would like to forget. Huffy would rather see children's eyes turn bright when they look under the tree and see a brand new bike. Fortunately for Huffy, America's leading bicycle manufacturer, ''this year there are no big competing products'' to worry about, says Harry Shaw III, president of the Dayton, Ohio, company.
In addition, Huffy is riding high on a number of fads of its own. America's kids are still wild about BMX bikes, the low-slung, fat-tire, 20-inch bikes that have them peeling out and popping wheelies all over the neighborhood. Thanks to a slick TV commercial featuring BMX racer Stu Thomsen in action, Christmas sales for Huffy's $120 Thomsen BMX are going ''very well,'' says Barry Ryan, treasurer.
Apparently, the public is still cheering over the Olympic victories by American cyclists riding bikes specially designed by Huffy. The look of these ''funny'' bikes, which slant down in front and have boomerang-shaped handlebars, has been transferred to a bike for teen-agers which Huffy named the Olympian. It managed to ship the bike to retailers in time for the Christmas rush, but Mr. Ryan says the company still doesn't know how the bike is doing.
Huffy expects another bike trend to pedal its way around the next bend. Next year it will introduce ''mountain bikes'' (so named by people who take them on hikes in the woods, but termed ''city bikes'' by urban users).
''We predict they will replace the 10-speeds,'' says John Rankin, who owns The Greasy Wheel bike shop in Plymouth, N.H., and was in on the early stages of mountain bikes seven years ago. The bikes, mostly built by the Japanese, are sturdy enough to withstand potholes and are beginning to catch on with city bike riders. With 18 gears, fat tires, and weights comparable to 10-speed bikes, they range from $150 to $1,600 and are available mostly in specialty bike shops.
All of this is good news for Huffy, which coasted through its 1984 fiscal year with nearly record earnings of $8.8 million. But it's been rough going over the past 10 years. Last year, the company lost $2 million. The bike business, as Mr. Shaw describes it, is a lot of ''ups and downs,'' depending on variables such as Christmas competition from other big-ticket toys, bike styles, and now imports.
The Bicycle Manufacturing Association wheeled up to Capitol Hill last summer with a bill that would have raised tariffs on imported bikes by 24 percent. In the past year, the Taiwanese have almost doubled their exports to the United States. Bicycle sales are expected to have grown by nearly a million more units this year, to 9.7 million bikes, but most of that growth will be picked up by the imports, which account for 38 percent of the market.
Says Shaw: ''The Taiwanese companies are being subsidized. It's unfair competition.'' The lower prices they charge are ''squeezing our margins, and not only ours, but those of our vendors, too.''
Although Huffy owns the Raleigh brand, a range of 10-speed bikes built in Taiwan and sold in specialty stores here, most of its bikes are sold for the mass market in stores like Sears and K mart. The imports haven't reached that market in a big way - at least not yet.
''Huffy is worried the department stores are going to start buying from Taiwan,'' says Stephen Ready, executive director of the 7,000-member National Bicycle Dealers Association in Laguna Hills, Calif. Mr. Ready helped launch a grass-roots defense against the tariff bill, with scores of bike shop owners sending letters asserting that the tariff hike would shut many of them down, cause prices to rise for consumers, and hold back the competitive drive toward better bikes. The bill never did make it to the House floor, although it's expected to surface again next year.
Huffy executives still think they can beat the imports back, but they aren't taking any chances. In the last few years, Huffy has trimmed production costs by 20 percent, mostly through manufacturing automation but also through techniques like just-in-time inventory control, where a limited supply of parts is kept on hand.
At the same time, executives have decided that, while BMX sales are still strong (though they have flattened out) and mountain bikes could catch on for them, the bike business is too volatile to count on.
Estimated industry growth by the Bicycle Manufacturers Association is only 3 percent for the next few years. And who knows what the hit toy might be next Christmas? Huffy is now betting on diversification: in the bike business with tricycles that flip into big wheels; in Gerry baby backpacks and other child-care products; in sporting goods and excercise equipment. Shaw says the company is about halfway toward its goal of a 50-50 mix of bikes and other products.