When Mehdi Farsi decided to shift production of State Bicycle Co's niche fi...
CHICAGO - When Mehdi Farsi decided to shift production of State Bicycle Co’s niche fixed-gear urban bikes out of China to escape U.S. tariffs, it took months to find another factory in Asia willing to do business with his Arizona company.
A survey by Cowen & Co. at the end of 2019 found only 28% of North American companies had switched supply chains away from China. Of those firms, just a fraction had managed to shift 75% or more of their supply chain to a different country. From furniture, electronics, apparel, tires, vacuum cleaners, to name a few, companies are moving operations to Taiwan, Thailand, Vietnam and other Asian countries.Farsi’s experience with State Bicycle https://www.statebicycle.com echoes the Cowen & Co. findings. After months of research and several trips, a small Taiwanese factory agreed to make his bikes but he had to triple orders and pay 30% of the cost of goods up front, unlike in China where he paid upon delivery.
In a move to help bicycle companies, the Trump administration has been granting tariff exclusions to some of their imports since September. The relief, however, is only for a year and is meant to give them more time to move production - ideally to the United States. Farsi, meanwhile, said he didn’t even consider moving production to the United States and lingering uncertainty about tariffs has left him no option but to stay invested in Taiwan - despite the 12-month relief.In the 1970s, the United States assembled more than 15 million bicycles a year. Now it makes fewer than 500,000, according to industry data presented to the United States Trade Representative in 2018. By contrast, China made about 95% of the 17 million bikes sold in 2018, U.S.
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