By Chris Fortune
Editor's note: Chris Fortune is the owner and president of Saris Cycling Group, the parent company of Saris Bike Racks, CycleOps Indoor Bike Trainers, PowerTap Power Meters and BikeFixation Cycling Infrastructure. Fortune submitted a letter to the U.S. Trade Representative this summer supporting the Trump administration's proposed 25 percent tariffs on Chinese bicycle products, including bike racks. In the letter, Fortune also notes that industry groups have lobbied against the tariffs. The tariffs are still under consideration and a decision could be announced any day. We asked Fortune — who remains a PeopleForBikes supporter and board member — to explain his position further in this guest editorial.
In 1989, my wife Sara and I made a decision to pack up our three girls and move back to Wisconsin. We wanted to be closer to our families, but we also wanted to make a difference in our community. The 1980s were a turbulent time for U.S. manufacturing. Companies began outsourcing good paying jobs overseas, destroying many Midwestern towns and families while diminishing a middle class. As we watched this happen, we knew we could make a difference if we could find a way to manufacture products in Wisconsin. Soon, we found a small bike rack manufacturer in Madison who was ready to sell. After some honest discussion and a handshake agreement, we found ourselves the owners of Graber Products. Our ambition may have had the better of us! We were getting into U.S. manufacturing when most manufacturers were fleeing overseas, but we had two things in our favor: our family’s support and the word “can’t” is not in our vocabulary.
Thirty years, one name change, four acquisitions and lots of sweat and tears, our little rack manufacturing business has grown into four brands with 92 percent of sourcing and manufacturing happening right here in Wisconsin. We have two production facilities — one in Madison and one in Minneapolis, Minnesota, with over 200 employees. We have four product divisions and distribute to over 72 countries around the world. We are incredibly proud of our economic impact on the local and regional economies.
While the last three decades at Saris have been hard and rewarding, they have never been as challenging as today. The American economy is a complicated system with challenges for everyone in the bike industry.
As a U.S. manufacturer, there are unique major challenges that we face and because of this, we support the administration's additional tariffs on Chinese bicycle racks and components. While PeopleForBikes has worked to provide information to the industry about the impact of the tariffs, I believe that understanding perspectives from both sides of the situation is important and I want to share with you how this impacts my business and our customers.
The Introduction of Tariffs
On March 8, President Donald Trump announced his intention to impose a 25 percent tariff on imported steel and 10 percent tariff on imported aluminum. Following the president’s announcement, domestic steel and aluminum producers began to dramatically raise prices. While the tariffs benefit the suppliers at the bottom line, domestic manufacturers further down the supply chain, like Saris, who rely on domestic steel and aluminum for their finished products, faced difficult decisions around raising consumer prices and reducing investment in jobs and innovation. Our material costs have increased substantially since the tariffs went into place, which is an extremely significant cost for us to absorb without increasing prices for our customers.
The Competitive Landscape
Most of Saris’ domestic and international competitors have moved their production and accompanying jobs overseas. Since the president’s tariffs only apply to raw steel and aluminum, these overseas bicycle rack manufacturers have not been impacted by either the March tariff surcharge or the accompanying increase in material costs leading to a competitive advantage over U.S. manufacturing companies.
Eleven of the 12 top bicycle transport racks sold on Amazon in the U.S. are manufactured in either China or elsewhere in Asia. Saris is the lone exception to this rule. We continue to create products sourced and manufactured here in Wisconsin. For example, the Saris Bones Rack is iconic in the trunk rack category with over 1.5 million sold, and 100 percent manufactured in Madison from materials sourced within 120 miles of our facility. Hundreds of U.S. jobs have been created and sustained as a result.
What is the importance of keeping US jobs local? How does it impact local economy?
A strong manufacturing base is vital to maintaining the American economy’s strength. It is a key player in strengthening the shrunken middle class.
U.S. manufacturing has continued to grow since the 2008 recession. Between 2010 and 2017, manufacturing has created 940,000 jobs. States like Wisconsin, Ohio, Pennsylvania, Indiana, Michigan, Illinois and Minnesota rely on manufacturing especially in the rural communities.
Our decision to manufacture in the United States has a multifaceted impact. Successful economic development relies on human capital. When you build and strength your human capital (i.e. your employees) more opportunities will arise, and your business is stronger.
At Saris, we require a large workforce in order keep up with demand for our products. We continually invest in these employees in both their professional and personal development. Whether it is ESL courses or mindfulness training, we are committed to developing our workforce. Due to our investment, our employees go out and invest in their local communities, whether that is supporting our local independent bike shops or local farmers at the grocery store. As a result, we are keeping our money local, which increases economic activity, creates more jobs and promotes healthy communities.
Feasibility of Manufacturing in the United States
We continue to hear the same rhetoric: it is not feasible to manufacture in the United States, and we do not have the infrastructure to support manufacturing. However, if the Europeans can rebuild and grow their manufacturing, why can’t we?
The European Union imposed a 48.5 percent tariff on China and other Asian countries in 1993. Almost 25 years later, the tariffs continue to protect the European bike industry allowing companies to grow and succeed. For example, the European e-bike industry is booming, in 2016 there were over 90,00 direct and indirect workers employed and over 1 billion euros ($1.18 billion) invested in development. This type of investment encourages innovation and competition, while providing significant employment opportunities.
At Saris, we prove that investing in U.S. manufacturing works and is profitable. It is possible (not easy, but possible).
Getting Back to the Tariff
On August 7 President Trump proposed an additional tariff of 10 percent on Chinese bicycles racks and components. He later changed the proposal to 25 percent. We understand that most our industry will be affected by this proposal. PeopleForBikes has done a fantastic job supporting the industry and helping lobby against the tariffs, however, if these tariffs do not pass our company will suffer as a result.
These increased tariffs will help level the playing field for American manufacturers like Saris. We are not asking for special treatment, but rather for an equal playing field in a nondiscriminatory business environment. We are invigorated by competition and our commitment to American craftsmanship continues to serve us well. However, without these tariffs, we will be facing an unfair disadvantage. Our competitors will have cost advantages that will be incredibly difficult to overcome.
My goal is to protect and serve my people here in Minnesota and Wisconsin, as well as the companies supported by our manufacturing operations. I must support the administration’s proposal of an additional tariff on Chinese bicycle racks and components. My support includes the Harmonized Tariff Schedule 8302.30.30 (Bicycle car rack components) and HTC 8708.29.50 (Complete bicycle racks for automobiles). Considering the effects of the president’s decision to raise import tariffs on steel and aluminum, I strongly support the proposed tariffs on Chinese bicycle racks and components as it levels the playing field with our foreign and domestic competitors who have chosen to not invest in local manufacturing.
