September 14, 2005 – We were disappointed to read the recommendations of the CITT Global Safeguard Inquiry into the Importation of Bicycles and Finished Painted Bicycle Frames.

Because we assemble most of our own (Opus) bicycles in Canada and can relatively easily transfer assembly of the few we do not to our Canadian facility, we would not be materially affected should the CITT’s recommendations be accepted and put into law by the Federal
Government.

In fact, we would presumably benefit from an increased competitive cost advantage over imported bicycles.

That notwithstanding, we believe the CITT’s recommendations are wrong. There are, currently, Canadian manufacturers and assemblers who are successful without the extraordinary protection of special import duties or surtaxes. This key point does not appear to have been given due weight in the CITT report.

Successful manufacturers and assemblers have focused on the design and production of better-quality bicycles sold by the many specialty retailers throughout the country rather than on the price-driven lower-priced bicycles sold in the mass market. This has been our strategy.

We believe the $225 threshold proposed by the CITT would include bicycles retailing up to approximately $600 in specialty retail shops and not the $400 level suggested by the CITT. The $400 retail the CITT refers to, more likely applies to bicycles purchased directly from Asia by very large mass retailers.

The imposition of the CITT’s recommended surtax would adversely and substantially affect specialty bicycle retailers across Canada and would discourage participation in cycling by making cycling substantially more expensive for many consumers.

At a time when governments are searching for ways to meet Kyoto targets and encourage physical fitness, the CITT recommendations make little sense to the extent that they would make both of these policy goals harder to attain, and for reasons not even justified by the facts.

Again, we point out that, in a narrow sense at least, our company would benefit from the imposition of the CITT recommendations. However, we are opposed to the recommendations because we have a broader interest in the overall health of our industry, its retailers, and in encouraging the greatest possible participation in cycling.

We urge industry members to contact their local media as well as members of parliament and express their views on this issue. We will encourage BTAC (Bicycle Trade Association of Canada) to put together a representative industry delegation to meet with senior officials from the Ministry of Finance at the earliest possible date to make the case against adopting the CITT recommendations.