"And what am I bid for this lovely multi-robot automatic welding
cell...?" That question, or one very like it, echoed around Raleigh's
factory in Triumph Road, Nottingham, today as the troubled firm sold off its
bicycle manufacturing plant.
As of now, Raleigh would have difficulty arguing that the famous words stamped
on its bike frames - 'Nottingham, England' were true any more.
From now on the company, which is as much a part of Nottingham's history as
Robin Hood and lace manufacturing, will only be painting and assembling cycle
frames imported from abroad.
Mass production of Raleigh-made frames ended yesterday.
Commercial auctioneers DDM Asset Management have been brought in to sell off
Raleigh's expensive automated cycle manufacturing machinery.
For Raleigh, and Britain, it is the end of an era. It means Britain no longer
has any large scale cycle manufacturer. Observers point out that Raleigh's
decision to stop manufacturing was inevitable given the cheapness of foreign
cycles.
The main items of interest at Raleigh - three computer-controlled robotic
welding cells and three laser tube cutters - were installed just three years ago
to make the plant as efficient as possible.
The laser cutters themselves cost more than £1m new. The entire sale is
expected to bring in around half that amount.
Request for auction catalogues came from prospective buyers as widely scattered
as the USA, Poland, India, Iran, China and Taiwan. And ironically, it was the
low production costs of cycle makers in some of these same countries which have
persuaded Raleigh to sell of its steel bike frame manufacturing plant.
Raleigh's American owning group, Derby Cycling Corporation, analysed the cost of
manufacturing bikes on site and the cost of importing frames and found it 60%
cheaper to buy them in from countries in the Far East. The exporters will
include China and Taiwan.
"We invested a lot of money to make Raleigh's manufacturing plant as
efficient as possible," says Simon Goddard, financial controller at Derby
Cycling Corporation, which owns factories in the USA, Canada, Holland and
Germany. "We cut our costs down as low as we could. We gave it our best
shot. But it was a case of lower wages, lower overheads and cheaper raw
materials abroad."
Nottingham South MP Alan Simpson said Raleigh's move was an example of the ills
of world trade arrangements.
He told the Commons yesterday that Raleigh argued it could no longer meet
environmental obligations as well as compete in a price-only market. And he
called for a Commons debate on UK policy on the manufacturing industry.
The group's annual turnover is currently $500m, of which Raleigh's projected
contribution is $80m or £50m.
Mr Goddard said the decision to close down the Nottingham manufacturing plant
originated with the group owners.
"We looked at what was happening at our factory in Seattle and compared the
cost of manufacturing frames and buying them and found that they were far more
efficient over there, where they've been importing frames for about eight
years."
However, when such a dramatic change of direction for a firm which is strongly
identified with British-made industrial quality must prompt questions about the
shape of Raleigh's long term future.
According to Mr Goddard, Raleigh's future in Nottingham is secure. But some shop
floor employees were made redundant two weeks ago and a number of office staff
are expected to go sometime in the year 2000.
There will have been 120 redundancies by next year. This whittling down of
personnel is itself just the latest stage in a pattern of redundancies which has
seen the Raleigh workforce drop from a high of 7,000 in the 1950s to around 800
today.
Although Raleigh cycles are sold in over 70 countries, and are the market leader
in Britain, times have still been very tough in the 1980s and '90s.
Raleigh has struggled to defend itself against not just hundreds of thousands of
cheap Far Eastern cycles being dumped on the market but also expensive mountain
bikes which have a trendier reputation.
Although a EU levy against cheap bike dumping was introduced in 1993, Raleigh
has not been directly supported by various British governments and the company
argued that the levy was introduced too late to prevent the 200 job losses in
1995.
At various times over the years Raleigh has managed to weather the lean periods
by producing innovative bicycles. In 1965, for example, Raleigh hit the jackpot
when it brought out the RSW 16, a familiar unisex cycle beloved of shoppers.
Five years later it was the chopper, the high handlebar machine for kids which
became as synonymous with the 1970s as flares and the Space Hopper.
In the 1990s Raleigh has turned out a wide range of cycles for all ages,
including quality mountain bikes for discerning buyers, but has not produced
that one eye-catching product which could have attracted mainstream success.
These various difficulties may have been compounded by recent changes in the
boardroom. Or perhaps the apparent instability at the top was itself caused by
disagreement over which path the company should take.
In 1997, Howard Knight, who had been at Raleigh for 30 years, announced he was
finally steeping down as managing director. He did not offer any public
explanation for his departure.
In July that year, Knight was replaced in the top job by Mark Todd, a former
executive with Toshiba and Courage, part of the Scottish and Newcastle group.
In some trade circles, Todd was regarded as a breath of fresh air for Raleigh.
However, Todd stayed for just over two years, leaving on November 30 this year
to return to the brewing industry. Marketing director Steve Lowe also left.
Since then the firm has been without an MD proper, although Derby Cycle
Corporation flew in group marketing officer Reggie Fils-Aime from America to
stand in as temporary MD.
A new MD is to be in the hot seat on January 1, but appointment is said to have
been made yet. Indeed, Raleigh's own management is staying remarkably
tight-lipped about what the future holds for the firm.
Will Raleigh stamp 'Nottingham, England' on their imported cycle frames? Its
answer to that - and everything else - is no comment, but Mr Goddard admits that
the matter is under review. There will probably be some insignia on the frames
indicating that the bikes come from Nottingham, but whether the words
"built" or "made in" will be included has yet to be decided.
Raleigh's website - which makes no mention of the closure of the production
plant - states that the firm is seeking to extend the licensing of its name to
items as diverse as vitamins and clothing. The Raleigh logo is already licensed
to appear on a range of scooters and go-karts, sports watches, replica vehicles
and fitness equipment.
"Raleigh wishes to maximise this opportunity through the development of
further proactive licensing programmes in areas such as vitamins, nutrition,
beverages, food, stationary, giftware, clothing...," says the website.
"With a continued commitment to maintain the Raleigh brand as the world's
first choice for bicycles, it is easy to recognise the unique difference the
Raleigh name could provide to many world licensing opportunities."
Simon Goddard said Raleigh licensing agreements were just a small part of
business in the UK. The main business will remain cycles. Yet while a wide range
of cycles, from children's tricycles to high-spec racers, will continue to leave
Triumph Road bearing the Raleigh name, the closure of the manufacturing plant
means there is no large-scale bike maker in Britain.
In this sense, the plant closure represents a blow for Nottingham industry and a
definitive period for Raleigh, whose history dates back to the day when Frank
Bowden bought a small firm of cycle makers in Raleigh Street in 1887.
Carlton Reid, editor of Cycle Industry magazine, comments: "It is a
sad day, but it's not a surprising one. If you look at this from a business
perspective, and not a Nottingham point of view, it's unbelievable how long it's
taken for Raleigh to make this decision. It should have been done a long time
before. It is inevitable when you have a market economy to pay so much when you
can get these bikes from the Far East. But it's still a sad day for
Raleigh."
Simon Goddard adds: "It is sad sign of the times, but it's the way the
world is moving, towards importing more manufactured goods from abroad. You
can't ignore the market place."
The final irony for Raleigh could well be when employees are painting frames
manufactured abroad with machinery which until recently stood on the shop floor
in Triumph Road.
