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SRAM takes ‘wait and see’ stance on currency swings, Day says

Published March 19, 2015
In a sit-down with BRAIN at Taipei Cycle, SRAM’s CEO also discusses the company’s move into electronic shifting and its upcoming move in Chicago.

TAIPEI, Taiwan (BRAIN) — By mid-morning Thursday, SRAM’S booth at the Taipei Cycle Show was bustling with visitors as Stan Day — the company’s co-founder, CEO and president — stood nearby greeting friends and customers.

SRAM, with a major manufacturing facility in Taichung, is a significant market presence in Taiwan, where it supplies a variety of manufacturers with components, wheels, suspension forks and other products on a just-in-time schedule. 

Day, however, took a few minutes out of his busy day to chat about a variety of issues and SRAM’s view of the global market. 

With the steep decline in the value of the euro against the U.S. dollar a heated topic of conversation at the show, Day offered a measured view on how it could affect the industry. “I think at the moment we’re taking a wait-and-see approach,” he said.

With the euro down almost 25 percent against the dollar, there are only a few strategies suppliers could employ in pricing bicycles. However, there will be price increases — primarily in Europe — and bicycle suppliers will down-spec some lines to maintain price points. “You can’t increase prices on entry-level bikes 20 or 30 percent,” Day said. However, there could be more flexibility in pricing for higher-end models, he added, since those customers are more willing to pay for high-value products.

Suppliers could also trim forecasts if they expect demand to slacken at retail if price increases become an issue. “Nobody has come to us to cut production plans at this point in time, but it’s something I think they are evaluating,” he said.

Turning to SRAM’s involvement in this year’s UCI ProTour, the company has cut its sponsorship to one team — Ag2r, a French team. Ag2r is an insurance company and retirement fund group. Day said the decision to trim its tour backing to one team allows SRAM to fully equip the team’s Focus bikes with a full complement of SRAM products — SRAM Red, Zipp wheels and Quarq power meters.

“We made a conscious decision to equip one team with all our products,” Day said. Last year several ProTour teams spec’d some SRAM equipment, but not the entire SRAM line. The company will spend about $500,000 this year equipping Ag2r, Day said.

He was circumspect when discussing SRAM’s move into electronic shifting as part of its road bike group. “We’re testing it really well,” Day said, with riders putting more than 180,000 miles on the group so far including its use in last year’s Tour of California. While SRAM’s move to electronic shifting has been widely reported, details are scarce, and Day kept it that way.

He did confirm, however, that the system will be wireless using Bluetooth technology to shift, and it could be introduced into the market on some late 2016 bikes. “But we’re really not ready to commit to that,” he added.

And the company is moving from its current offices to a new building near downtown Chicago. The company is leaving its old digs and will share the building with Google. “Or should I say Google is sharing the building with us,” Day said.

SRAM had originally locked in space at the old Fulton Cold Storage Building on the eighth floor. Later, Google tried to rent the building and wanted all the top floors, but SRAM had a lock on the space. But it is Google. 

SRAM then negotiated a fee with Google and gave up its high-level perch and will be located on the fourth floor. So any rumor that Google has taken a financial stake in SRAM just isn’t true.

At one time the building had been a cold storage facility for beef. When developers bought it for renovation, it took three months for the building to thaw out before construction could begin, Day said. The company plans to make the move by June. 

 

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