Reputation is everything for the guys making bikes at Felt Racing LLC in Irvine.
The boutique outfit, known as Felt Bicycles, has about 30 workers at its headquarters who design, market and sell high-end bikes to athletes and cycling enthusiasts worldwide.
The Business Journal estimates the company does more than $50 million in yearly sales, catering mostly to executives, doctors and lawyers who can be seen riding on weekends in their club uniforms or the jerseys of their favorite professional riders.
Those customers are drawn to Felt because of its street credibility,literally how well the bikes perform on the road for racers and triathletes, said Bill Duehring, president of the company.
Felt’s riders won two gold medals at the Beijing Olympics in the triathlon: Emma Snowsill of Australia took the women’s event, and Jan Frodeno of Germany posted a surprise victory in the men’s, both riding Felt bikes.
In an industry with profits too small to afford TV commercials, publicized athletes are bicycle makers’ single biggest marketing tool.
“Over the next few years we hope (sponsoring riders) gives us more global brand awareness,” Duehring said. “It ultimately values who we are.”
Felt spends about $2.5 million a year in cash and equipment payouts to a handful of teams and various individuals. That’s as much as it spends on research and development.
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Felt bike: company makes 130 models |
Cyclists Sarah Hammer of Temecula, a world champion and U.S. record holder, and Taylor Phinney, an up-and-coming rider and son of former U.S. champion Davis Phinney and 1984 Olympic gold medalist Connie Carpenter, are highlights on Felt’s roster.
$550 to $10,000
Felt’s bikes run from $550 to $10,000 and are billed as high quality racing bikes. With shipping costs up 15% and aluminum and steel prices up more than 50% in the past year, Felt has passed on its higher costs to its customers, who have been paying 10% to 15% more for bikes than they were a few years ago.
“It’s not cheap to make top quality,” Duehring said.
Racing bikes make up about 65% of Felt’s sales with the rest coming from BMX, mountain bikes and other models.
Felt sells more than 130 types of bikes, nearly all of which are made in Taiwan.
Taiwan has been a leader in bike manufacturing, with the industry’s largest makers Giant Manufacturing Co. and Dorel Industries Inc.’s Schwinn operating there.
There are as many as 15 factories in the country that Duehring considers of high enough quality to make his bikes.
Felt shares its factories with other bike brands, which is the norm throughout the industry.
Most of the parts are made at the shared factories, but Felt reserves its frame manufacturing for a smaller specialist in Taiwan that it feels pays closer attention to the high quality it demands.
Bikes made for its professional athletes are done mostly in the U.S.
Competition comes from larger companies including Morgan Hill-based Specialized Bicycle Components Inc. and Waterloo, Wis.-based Trek Bicycle Corp.
The U.S. bicycle market, estimated at about $6 billion in annual sales, has been flat for the past couple of years.
U.S. sales for Felt make up about 45% of its business, with the rest from overseas buyers.
Felt, like other bike shops, saw a bump in U.S. business after seven-time Tour de France winner Lance Armstrong increased the appeal of the sport a few years back.
“It’s hard to say what he did exactly,” he said. “But his fame had people taking a harder look at cycling.”
The company also benefits from the increasing popularity of triathlon, which started in 1974 with 46 athletes in a San Diego race and now boasts hundreds of races each year across the country.
Felt put out a half dozen new models this year and is ready to launch another half dozen for next year.
Most of its racing bikes are made from carbon fiber, which is used for its light weight and strength.
“You can’t make them lighter, but you can make them faster through aerodynamics,” Duehring said.
The better aerodynamics won’t make a dramatic difference in a rider’s performance, but when races are decided by a hundredth of a second, every bit helps.
“The idea is to get more from the bike with less energy from the rider,” Duehring said. “That difference may be very small, but could mean everything in a race.”
Some of Felt’s engineers come from the defense industry where they honed their skills in aerodynamics by helping design planes.
Most of the workers at Felt are cycling fans,many of whom have raced themselves,and are committed to making bikes faster, Duehring said.
High performance is an obvious perk to racers. But for less serious buyers the paint job can be just as important, according to Doug Martin, vice president of marketing with the company.
“Each model needs a graphic package to complement the frame’s design,” he said.
For 2009, the company is going with a “clean” and “fast” look. European makers usually follow the U.S. lead for designs from year to year, Martin said.
Founder
Jim Felt, a former motocross mechanic turned bike builder, founded the company in 1991.
Felt, who lives near Sacramento, got his start building custom frames for world-class cyclists. Today, that still is the foundation of what the company does.
Felt maintains a minority ownership of the company, with Duehring and Michael M & #252;llmann splitting the greater part of it.
Duehring and M & #252;llmann met each other through Madison, Wis.-based GT Bicycles, where Duehring worked in product development and engineering and M & #252;llmann was a European distributor.
They bought into Felt in 1999 with the intent to build the company into a larger manufacturing operation.
“We’re still a young company,” Duehring said. “Our biggest challenge is to get our name out there.”
M & #252;llmann runs Felt’s European distribution from Germany.
Felt also keeps a warehouse in Ontario and a sales office of 10 people in Buffalo, N.Y.
