Hello Salsa fans, friends and industry spies. Thought I'd spend a little time and share my thoughts on a few things going on in the bicycle industry and beyond. I'll also update everyone on Salsa's plan for moving forward.
First, a little back ground. There are two things going on right now in the bicycle industry. Our beloved industry is experiencing a raw material cost increase and then there is the controversial US economy recession and it's impact on the value of the US dollar.
Recently, I travelled to China and then I went to the Taipei trade show. In both places, we were continually "Warned" of the looming material crisis. We actually met with the president of China Steel and he said that due to the mass construction going on in China over the last year, that raw steel prices surged 79% in 2007! Additionally, some vendors also indicated that the cost of aluminum and other materials are going up as well.
Regarding the economy, I won't spend much time discussing this. I will only state the one fact that matters to many bicycle manufacturers, the exchange rate. The fact is that the US dollar is weakening. This means it takes more US dollar(s) to buy the same product, labor or service.
So...What does this mean for Salsa? Good question.
The good news here is that due to the way our products are manufactured, sourced and secured, only a good handful of our products are going to be impacted in the short term. Many products will not change until the 2009 model year. Additionally, we have taken other measures to maintain our prices. In some cases, we aren't changing prices right now and will simply reduce our margin a bit. On others, we got lucky and timed our productions right so we won't have to raise prices until 2009. In other cases, we will have no choice but to raise some prices.
So what's our plan?
Well, starting May 1st (tomorrow), we will be raising a good handful of our prices. Depending on the product, one of the two issues cited above made enough of an impact on our margins that we must raise our prices to remain sustainable. Hey, Salsa is a business right?
Here are the details. Effective May 1st, the following products will be adjusted.
Size O Matic Stem - Up a few dollars
Salsa rims - Up a few dollars.
Shaft seat posts - Up a few dollars
Moto Ace stems - Up a few dollars
All carbon bars - Up a few dollars
What are likely the next products to be impacted in the coming months? The short answer is anything made with a considerable amount of steel.
- CroMoto stems - We got a little lucky here and should have inventory for some time at the current price.
- Steel Frames - We are still negotiating prices here. They will be going up, but that shouldn't happen until the next production. This could be on a model by model basis as we don't produce all frames at the same time.
- Complete bikes - We launched 5 steel bikes this year and they are going EXTREMELY well. Our next shipment is scheduled to arrive late May. This shipment should not be impacted by the price hikes from our steel suppliers or the component manufacturers. We are still negotiating pricing beyond the May arrival. I'll prep you though and say that after June, our prices will likely be adjusted up.
Beyond that, who knows. We can only control the things we can control. Our focus is on great product and great service. We are committed to produce fine products at fair prices. We are committed to serve and support our dealers and our customers. Those parts don't change.
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Growing up as a Minnesota farm boy, I developed an appreciation and love for land and open space. This appreciation has fostered two passions, cycling and photography. Both of these passions provide freedom, encourage me to explore and foster creativity. More importantly though, my journey with a bike and a camera reminds me that the world is big and I am small.