Modern frame manufacturer story

[oldpotatoe]

Interesting

http://inrng.com/2012/02/who-made-your-bike

[EDS]

Interesting

http://inrng.com/2012/02/who-made-your-bike

Not very credible when there are blatant inaccuracies within the first two paragraphs.

[54ny77]

My name is Dong Uan de Marco, you killed my father, prepare to die!

[phcollard]

Not very credible when there are blatant inaccuracies within the first two paragraphs.

Like..? Please educate us :)

[Chance]

Today on Good Morning America they visited a Chinese plant where iPads are assembled for Apple. Bottom line is that workers make very little, work six days a week, and stay in tiny dormitories with various others during the work week. Mothers often don’t see their children during the week because they don’t go back home. Some employees interviewed haven’t even seen a completely assembled iPad and certainly know they could never afford one. Depression due in part to repetitive work and low pay is widespread and suicide a big problem.

As bad as all that sounds the part that got my attention the most: When GMA stated that a society can either build lots of something, or buy lots of that something. But can’t do both. This doesn't sound entirely correct to me but it makes a strong point (housing being an exception that comes to mind).

It’s true that if we had to build our own iPads they’d be too expensive for most of us, at least in present quantities. Same for high-end bikes.

[FlashUNC]

Very curious what the "blatant inaccuracies" are as well.

Inrng's post and the CyclingIQ series that inspired it are pretty in depth.

[Kontact]

There's a lot of "my guess is" in that article.

Much of it is true - everyone knows Giant makes lots of peoples bikes, including most Colnagos. But the baseless speculation about reject frames being smuggled out of factories is kinda dumb. The cheapie companies like Deng Fu make and sell identifiable models, which get painted and sold as QBP's "Foundry" and other brands. That production scale is much larger than the reject bin.


Overall, the move to Asian production has permanently damaged the industry's value proposition - now no one cares who even designed their bike, let alone built it.

[mvrider]

I've tried to read other articles on INRNG before, and I find the writing "style", full of run-on sentences and other grammatical mistakes, extremely annoying. I just can't take it for very long. For me, it erodes the credibility of their assertions, however close to the truth.

[Chance]

Overall, the move to Asian production has permanently damaged the industry's value proposition - now no one cares who even designed their bike, let alone built it.
Are you suggesting they should care? Or should the end product speak for itself?

[oldpotatoe]

Interesting

http://inrng.com/2012/02/who-made-your-bike

Geez, said it was interesting is all, 'bike' forum, about 'bikes'...need warm weather, people, including me, need to ride more.

[Kontact]

Are you suggesting they should care? Or should the end product speak for itself?
The average consumer is not equipped to know from a test ride or much else whether his bike choice accomplishes 99% of what he should expect, or just 60%. The whole idea behind a Brand is that you are paying for the expertise of a person or group of people who's experience has created a reputation.

The modern version of this is to say "Giant makes other people's bikes, therefore Giant is an expert in bike fabrication, so any bike Giant produces must have been designed with the expertise equal to any brand they produce for." The problem with that is it confuses expertise in making bikes ride well with making bikes that are durable or have few defects.

Volvo might make a good car, but that doesn't mean anyone should expect that Volvo can make any kind of car well. They could make something that looks like a Porsche, but would it drive like one?

[bobswire]

Volvo might make a good car, but that doesn't mean anyone should expect that Volvo can make any kind of car well. They could make something that looks like a Porsche, but would it drive like one?

Depends

http://i53.tinypic.com/14x2hio.jpg

Shameless plug. :rolleyes:

[Chance]

The average consumer is not equipped to know from a test ride or much else whether his bike choice accomplishes 99% of what he should expect, or just 60%. The whole idea behind a Brand is that you are paying for the expertise of a person or group of people who's experience has created a reputation.

The modern version of this is to say "Giant makes other people's bikes, therefore Giant is an expert in bike fabrication, so any bike Giant produces must have been designed with the expertise equal to any brand they produce for." The problem with that is it confuses expertise in making bikes ride well with making bikes that are durable or have few defects.

Volvo might make a good car, but that doesn't mean anyone should expect that Volvo can make any kind of car well. They could make something that looks like a Porsche, but would it drive like one?
Kontact, with due respect, that's a lot of words in the form of a lecture without answering simple questions.

Want to try again? And actually answer whether buyers should or should not care. And why? :confused:

[Dekonick]

Something that I remember from a LONG time ago... back when I was a college student taking required courses to graduate... I learned some disturbing realities about first world countries. Like it or not, we live in a first world country. Like it or not, first world countries rely on third world countries. The working conditions in China are deplorable, but similar to what our forefathers experienced during the industrial revolution. China affords us our baubles with cheap labor, cheap (well - not as much anymore but...) resources, and laws that allow those same working conditions to make it possible. It sucks, but as a parasite, the first world needs the third world economy to maintain the luxury we are used to.

Be grateful you live in the wealthy part of the world and have all of the benefits that go with that luxury. Help to promote better, safer, more humane conditions elsewhere, but also expect the cost of goods to go up. I am glad I own bikes made in the USA. I pay more for that privilege but do so happily. I also am glad that I can buy tech products cheaply from China and elsewhere...

Sucks, but that is the cost of living in the kind of world we live in today...

[54ny77]

are we blaming porsche for not designing a car that can travel through 8" thick concrete, or god for giving that man the stupid genes? :p

Depends

http://i53.tinypic.com/14x2hio.jpg

Shameless plug. :rolleyes:

[EDS]

Like..? Please educate us :)

For one, nobody is making Giant frames other than Giant.

[firerescuefin]

For one, nobody is making Giant frames other than Giant.

The article doesn't contend with that...Giant is making other peoples' frames.

[vjp]

How are you using the term "third world". It is commonly used to indicate a poor country, which China is not. The economy of China far surpasses that of the US and they currently hold most of your foreign debt.

I did contract work in an Alabama foundry last year and in two factories in China, the conditions in Alabama were Dickensian while the ones in China were state of the art.

Something that I remember from a LONG time ago... back when I was a college student taking required courses to graduate... I learned some disturbing realities about first world countries. Like it or not, we live in a first world country. Like it or not, first world countries rely on third world countries. The working conditions in China are deplorable, but similar to what our forefathers experienced during the industrial revolution. China affords us our baubles with cheap labor, cheap (well - not as much anymore but...) resources, and laws that allow those same working conditions to make it possible. It sucks, but as a parasite, the first world needs the third world economy to maintain the luxury we are used to.

Be grateful you live in the wealthy part of the world and have all of the benefits that go with that luxury. Help to promote better, safer, more humane conditions elsewhere, but also expect the cost of goods to go up. I am glad I own bikes made in the USA. I pay more for that privilege but do so happily. I also am glad that I can buy tech products cheaply from China and elsewhere...

Sucks, but that is the cost of living in the kind of world we live in today...

[EDS]

The article doesn't contend with that...Giant is making other peoples' frames.

I quote:

Once upon a time an artisan would build a frame in their workshop and stick their name on the downtube, a practice that still goes on today but only in a niche of the racing bike market. Instead your Cannondale, Cervélo, Giant, Scott and Specialized was probably not made by these companies but by a factory in China or Taiwan belonging to a completely different firm.

[oldpotatoe]

For one, nobody is making Giant frames other than Giant.


'Giant bicycle company' doesn't equal 'Giant bicycle company', even if it is Giant.

One is a manufacturer, who makes many frames with other names on them and the other is the bicycle brand, Giant, made by the factory, called Giant, which is giant.

'Giant' the manufacturer doesn't own "Giant' the bike brand, they just happen to have the same name.

[cmg]

How are you using the term "third world". It is commonly used to indicate a poor country, which China is not. The economy of China far surpasses that of the US and they currently hold most of your foreign debt.

I did contract work in an Alabama foundry last year and in two factories in China, the conditions in Alabama were Dickensian while the ones in China were state of the art.


By conditions, does that include pay in those living conditions? where did you make the most money? or the most money for the economy you were living under.

[firerescuefin]

It's pretty clear given the rest of the article what is meant. Are you arguing the premise of the article.

[vjp]

I was doing work for a Swiss based company so my pay was from there and was the same for both locations. I would think that the workers in China were paid less and worked longer.

But, my point is, that China is a much wealthier country than the US so when people bandy about terms like "third world" meaning they are poor they should think again.

By conditions, does that include pay in those living conditions? where did you make the most money? or the most money for the economy you were living under.

[Chance]

'Giant bicycle company' doesn't equal 'Giant bicycle company', even if it is Giant.

One is a manufacturer, who makes many frames with other names on them and the other is the bicycle brand, Giant, made by the factory, called Giant, which is giant.

'Giant' the manufacturer doesn't own "Giant' the bike brand, they just happen to have the same name.
The article below is outdated, but are you sure Giant the manufacturer doesn't actually own the Giant brand as originally set up? If not, who does, and why would they have sold the brand?

http://en.wikipedia.org/wiki/Giant_Bicycles

[zap]

But, my point is, that China is a much wealthier country than the US so when people bandy about terms like "third world" meaning they are poor they should think again.

By what measure is China a much wealthier country than the USA.

[Mark McM]

But, my point is, that China is a much wealthier country than the US so when people bandy about terms like "third world" meaning they are poor they should think again.


What Kool-Aid have you been sipping? According to the the World Bank (http://www.worldbank.org/), between 2007 and 2010 the US had an average GDP (Gross Domestic Product) of $14.6 Billion, whereas China had a GDP of $5.9 Billion. More telling, during the same period the US had a GNI (GNP per capita) of $47,394, whereas the GNI of China was only $4,270 - or less than 10% of the GNI of the US.

It can well be argued that the US is currently living beyond its means, but it is still a far wealthier country than China.

[EDS]

'Giant bicycle company' doesn't equal 'Giant bicycle company', even if it is Giant.

One is a manufacturer, who makes many frames with other names on them and the other is the bicycle brand, Giant, made by the factory, called Giant, which is giant.

'Giant' the manufacturer doesn't own "Giant' the bike brand, they just happen to have the same name.

I don't believe that is true. Parent company is Giant Manufacturing Co. Ltd., which owns the brand and builds products for others.

[vjp]

99% of the US GDP is owed as Foreign Debt, the most in the world, over 14 Trillion $$, so, you are #1. That is the kool aid I am drinking, reality.

What Kool-Aid have you been sipping? According to the the World Bank (http://www.worldbank.org/), between 2007 and 2010 the US had an average GDP (Gross Domestic Product) of $14.6 Billion, whereas China had a GDP of $5.9 Billion. More telling, during the same period the US had a GNI (GNP per capita) of $47,394, whereas the GNI of China was only $4,270 - or less than 10% of the GNI of the US.

It can well be argued that the US is currently living beyond its means, but it is still a far wealthier country than China.

[phcollard]

99% of the US GDP is owed as Foreign Debt, the most in the world, over 14 Trillion $$, so, you are #1. That is the kool aid I am drinking, reality.

Wow I did not know. And I had to read about it. That's fascinating... It feels weird to read As of May 2011 the largest single holder of U.S. government debt was China, with 26 percent of all foreign-held U.S. Treasury securities (8% of total US public debt).

Kinda scary.

[zap]

99% of the US GDP is owed as Foreign Debt, the most in the world, over 14 Trillion $$, so, you are #1. That is the kool aid I am drinking, reality.

This is not how wealth is measured.

You posted a liability but nothing about assets.

[Chance]

99% of the US GDP is owed as Foreign Debt, the most in the world, over 14 Trillion $$, so, you are #1. That is the kool aid I am drinking, reality.
Foreign debt accounts for about one third according to Wikipedia.

http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership

If viewed as if we are a family, total debt just means that we owe approximately one year's worth of income. That's really bad and needs to change in a bad way, but hardly makes us poor. In absolute or relative terms if reported correctly.

[vjp]

No, foreign ownership of the debt is one third, it is still 99% of your GDP. Your largest economy is buying and selling debt.

Foreign debt accounts for about one third according to Wikipedia.

http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership

If viewed as if we are a family, total debt just means that we owe approximately one year's worth of income. That's really bad and needs to change in a bad way, but hardly makes us poor. In absolute or relative terms if reported correctly.

[Kontact]

Kontact, with due respect, that's a lot of words in the form of a lecture without answering simple questions.

Want to try again? And actually answer whether buyers should or should not care. And why? :confused:
Yes, the consumer should care who designed their bike. And a company with experience and a reputation for bike design is the consumer's best bet when trying to find a the best possible bike for their money.

The "product should speak for itself" part of your question is problematic. How should it speak? Race sponsorship, magazine reviews, word of mouth (like how Bikesdirect has gotten big)? I say there are huge problems with all of those. Sometimes time is the only real way to measure the value of a design.


Were you able to follow that?

[Chance]

Were you able to follow that?
Yes, much better, thank you.

Not sure to what level most buyers should care who actually does detail design because there is so little differentiation in the bike business; that is beyond custom bikes ordered to meet distinct needs or specifications. For average riders who want two wheels and a safe bike that handles adequately it’s doubtful they can distinguish a lot beyond what a short test ride reveals.

Most of my “real” bikes were all made in US but only because my need required custom. However, if my needs included buying a new off-the-shelf mass-produced bike from a large company it would not concern me who actually designed it from a performance standpoint. Would probably test ride the various choices in my price range and pick the one that rode and handled best as long as it looked and felt sturdy enough to not fall apart. To this last point (safety and durability) manufacturer reputation would be important. Even so the reputation is with the “brand” and not whose factory manufactured it. A major manufacturer should be able to scrutinize factories and their capabilities better than most of us anyway.

[Mark McM]

99% of the US GDP is owed as Foreign Debt, the most in the world, over 14 Trillion $$, so, you are #1. That is the kool aid I am drinking, reality.

Your math doesn't add up. As mentioned earlier, you're mixing up production with liabilities (and in addition, you're mixing up rates with totals). But let's say the debt was equal to the GDP, and we payed off the entire national debt over two years time. Out of an annual GDP of $14.6 trillion, we'd pay $7.3 trillion per year to the debt, for a net $7.3 trillion. That's still 24% larger than China's GDP of $5.9 trillion. And on a per capita basis, we'd still be 5 times ahead of China.

The US foreign debt is a serious matter that must be addressed, and if we continue borrowing at the present rate we are eventually in for ruin. But at the present the US is still wealthier than China by any way that you want to measure it.

[vjp]

Mark,

You make $10 but you owe $9 means you netted $1. You make $5 but owe $1 you net $4. Who is wealthier.

Pay off your national debt in 2 years? You can't keep borrowing and pay off anything.

You can produce all you want, it doesn't mean anything unless you end up with profit. You can't say "we are wealthy", when you owe more money than you can pay back.

Wake up.

Your math doesn't add up. As mentioned earlier, you're mixing up production with liabilities (and in addition, you're mixing up rates with totals). But let's say the debt was equal to the GDP, and we payed off the entire national debt over two years time. Out of an annual GDP of $14.6 trillion, we'd pay $7.3 trillion per year to the debt, for a net $7.3 trillion. That's still 24% larger than China's GDP of $5.9 trillion. And on a per capita basis, we'd still be 5 times ahead of China.

The US foreign debt is a serious matter that must be addressed, and if we continue borrowing at the present rate we are eventually in for ruin. But at the present the US is still wealthier than China by any way that you want to measure it.

[Mark McM]

Mark,

You make $10 but you owe $9 means you netted $1. You make $5 but owe $1 you net $4. Who is wealthier.

If I borrowed that $9 to buy an asset worth $9, then my net worth is still $10.

If borrowed $9 and just burned it, but I had $20 in the bank previously, my net worth is $21.

You can not judge wealth with one or two simple numbers.

[Alchemy Rider]

If I borrowed that $9 to buy an asset worth $9, then my net worth is still $10.

If borrowed $9 and just burned it, but I had $20 in the bank previously, my net worth is $21.

You can not judge wealth with one or two simple numbers.

What would your net worth be after you repaid the loan?

[54ny77]

Just default on the loan, restructure the debt, retain control of the asset and let the creditor deal with the mark to market loss 'cause that's not your problem.

It's the 'merican way!


What would your net worth be after you repaid the loan?

[Alchemy Rider]

Just default on the loan, restructure the debt, retain control of the asset and let the creditor deal with the mark to market loss 'cause that's not your problem.

It's the 'merican way!

I like it!

[zap]

You can produce all you want, it doesn't mean anything unless you end up with profit. You can't say "we are wealthy", when you owe more money than you can pay back.

Wake up.

enjoy.

http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf

[oldpotatoe]

Mark,

You make $10 but you owe $9 means you netted $1. You make $5 but owe $1 you net $4. Who is wealthier.

Pay off your national debt in 2 years? You can't keep borrowing and pay off anything.

You can produce all you want, it doesn't mean anything unless you end up with profit. You can't say "we are wealthy", when you owe more money than you can pay back.

Wake up.

Snort, snort, zzzz, snort what, was what was owned owned to Giant?


"you, your"...where are you from? I guess not the USA

[BumbleBeeDave]

. . . Ahneida Ride is gonna see this thread and then the frn's are REALLY gonna start flyin'! :eek:

BBD

[54ny77]

hedge against inflation: buy a colnago 50th anniversary bike, which has real gold on it. ;)

[veloduffer]

Mark,

You make $10 but you owe $9 means you netted $1. You make $5 but owe $1 you net $4. Who is wealthier.

Pay off your national debt in 2 years? You can't keep borrowing and pay off anything.

You can produce all you want, it doesn't mean anything unless you end up with profit. You can't say "we are wealthy", when you owe more money than you can pay back.

Wake up.

Wealth is measured the residual of assets less liabilities. How you value those assets and which are tangible vs intangible (eg. college educated work force) are all subject to debate. Many assets may be undervalued, as their depreciated cost is significantly less than their market value. And then you need to look at the liabilities, especially the contingent. China has a rapidly aging demographic in which more than half their population will be over 60 -- that one-child policy basically halves the demographic, as you have one child/person to support two elderly parents. Also, China is poised to have greater health issues, given the high level of pollution.

Moreover, are you trying to measure wealth at federal level between China and the US, or local level or per capita? By most standard measures, the US is wealthier than China, except at the general govt level. But if you tried to value the contingent liabilities, I think you'd find the comparison more interesting.

[flydhest]

vjp,
what they were pointing out that you were missing can come in the form of an analogy to home ownership. In no way does it say whether the current situation is good or bad, just that some clarification is needed.

For a country, GDP is income. Debt is . . . well, debt.

Suppose you bought a house for $300,000 and your annual salary was $150,000. Most people would think that was not out of line, in fact, downright conservative. But the debt is 200 percent of annual income. So to match your example of (foreign) debt being 99 percent of GDP, it would be like someone having a mortgage outstanding for $150,000 when they have an income of $150,000. Not saying if that is good or bad, but it just is, if you think that foreign debt is "real" debt for a country and domestically held debt is just a reallocation of wealth among citizens.

Debt is a "stock" whereas income is a "flow." It can be appropriate to compare them, but one needs to understand what they mean.

Looking at income and debt alone, however, you cannot infer anything at all about net worth.

In your other example about "you make $10 but you owe $9" . . . If you made $1 million a year and had a debt of $900,000, I'd say you were in pretty good shape, assuming that your income tends to remain fairly constant or potentially increase each year. You could pay off your mortgage rather quickly.

[Dekonick]

How are you using the term "third world". It is commonly used to indicate a poor country, which China is not. The economy of China far surpasses that of the US and they currently hold most of your foreign debt.

I did contract work in an Alabama foundry last year and in two factories in China, the conditions in Alabama were Dickensian while the ones in China were state of the art.

China is developing into a second world country. Third world does not necessarily mean 'poor' but usually has more to do with infrastructure. Most of China is not modernized (but it is headed that way...) and they have a huge population hence the cheap labor pool. I am curious about 'the conditions' you refer to - did the workers in Alabama work more than 40 hours a week without time and a half compensation? Were the workers in AL given the protections from US labor law? Were the conditions unsafe? (AND if that were the case why did you not report that to OSHA so it could be made safe?)

My understanding (which is limited) is that in China workers are not afforded any of those protections. Just because a factory is shiny new does not make it a great place to work...

I stand by my assertion that China is basically a 3rd world country, but evolving quickly. I suppose you could argue it to be a second world country...

[benb]

I think these household budget examples make things look better then they are..

Fine if you make $150K/yr and buy a house for $300K.

The US government does not have annual income (tax revenues) anywhere near the value of the GDP. Tax Receipts are estimated around $2.1 trillion for 2011 versus a GDP of something like $15 trillion.

So it's more like you make $150k/yr and you buy a $1 million dollar house.. most people would think that is pushing it, and while a few years ago you'd get away with it today in our current client you'd have a hard time borrowing that I think.

I'm not sure what this has to do with bikes though...

[oldpotatoe]

I think these household budget examples make things look better then they are..

Fine if you make $150K/yr and buy a house for $300K.

The US government does not have annual income (tax revenues) anywhere near the value of the GDP. Tax Receipts are estimated around $2.1 trillion for 2011 versus a GDP of something like $15 trillion.

So it's more like you make $150k/yr and you buy a $1 million dollar house.. most people would think that is pushing it, and while a few years ago you'd get away with it today in our current client you'd have a hard time borrowing that I think.

I'm not sure what this has to do with bikes though...

No kiddin, sorry I brought it up...just thought it was interesting.

[Chance]

I think these household budget examples make things look better then they are..

Fine if you make $150K/yr and buy a house for $300K.

The US government does not have annual income (tax revenues) anywhere near the value of the GDP. Tax Receipts are estimated around $2.1 trillion for 2011 versus a GDP of something like $15 trillion.

So it's more like you make $150k/yr and you buy a $1 million dollar house.. most people would think that is pushing it, and while a few years ago you'd get away with it today in our current client you'd have a hard time borrowing that I think.

I'm not sure what this has to do with bikes though...
Benb, great point, which accentuates just how bad things really are. We all know it’s unsustainable.

Having stated that, in my opinion tax receipts represent only that part of our collective national income that we allow the government to spend (or “invest”) on our behalf. The rest we spend directly on other things like food, gas, bikes, shelter, and so on. That our national debt is paid directly by the government out of our tax dollars doesn’t mean we don’t collectively earn a lot more (as it relates to the “family buys a house debt” example).

In any case you make a great point that paying off the debt is not going to be easy or quick. If we were serious about paying it off it would still take 30 years or longer, just like paying off a mortgage. And in the process we would have to spend less on other things including bikes.

[Chance]

No kiddin, sorry I brought it up...just thought it was interesting.
It is interesting. And informative too. At the center of what some of us may find interesting is the economics of how cheaper manufacturing in Asia may have allowed greater access to many of these “high-end” bikes that we probably couldn’t buy if made in the US. Obviously we can still buy many nice bikes made in the US for about the same price, but if not for external pricing pressures what would US-made bikes cost?

[veloduffer]

Back to the OP, this model is not surprising and is one the golf industry uses. There are only a few foundries in China, but they make clubs for all the big manufacturers (Taylor Made, Titleist, etc) except Ping, which is still made in the US (may be just irons).

What would be interesting to know is under what manufacturing tolerances do bikes produced in the factories have? In golf, for instance, clubs heads are produced with a 1-2 degree tolerance in the loft of the club. So a 10.5 degree driver could really be a 9 degree or 12 degree driver. Custom clubmakers often handpick club heads (to measure exactly) to ensure the right loft and lie angles are used for their clients.

Also, since no two clubheads are exactly alike (they are welded and glued), I've been told that if you like the demo, then buy that club on the spot.

I would hope bike manufacturing tolerances are much tighter, as the something wrong with a bike is more catastrophic than a sliced/hooked drive. :D