Bicycle makers plead for protectionLow-cost overseas competition prompts call for safeguard measures fromOttawa
By STEVEN CHASE
Monday, June 20, 2005 Page B1 OTTAWA -- Canada factories threatened by lower-cost foreign imports -- begin a last-ditch effort today in Ottawa
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.
