I know alot of ya have no clue there are other sites out there about BMX, but one of the best is VintageBMX, and they are in tune with stuff the average street kid knows nothing about. This is a huge one. As of right now, new laws have been made that affect every part of the BMX industry. These laws deal with lead in products for kids, or toys. As of right now, all bicycles with a wheel diameter of 24 inches and under are considered "toys". This is a quote from Ryan Birk, formerly of Sun Rims, now with Alienation, who just lost his Kuwahara job since they closed up due to these new laws>
What scares me is how little some of the companies that will be most affected by these new requirements actually know about what is going to happen and how unconcerned some seem to be. We've had lawyers on both sides of the pond looking into this for us for a couple months trying to find loopholes and determine exactly what is required of us as BMX companies. We've probably spent enough on lawyers to at least have covered the required testing on at least a couple models of bikes for at least 1 shipment.
Here's the jist of what is going on now for BMX "toy" companies.
As of Nov. 12, nothing shipped after that date can come into the US without proper 3rd party testing for lead, lead content, and phalates and the certified documnents needed to get through customs at port. This includes complete bikes, frames, and all parts with intended us for any bike 24" and under. The fees for testing are expensive unless you're testing a large volume of parts or bikes and can ammortorize those costs across the board. If you offer a part or bike in different color options, each color must legally be tested. Of course all companies can decide if they want to comply and pay for the testing but it will ultimately begin to affect costs and pricing of products unless the company is making a ton of parts that are getting sold, or the company has a really large petty cash stash. It's been my experience that most BMX companies operate on a pretty defined and tight budget to insure longevity and growth. And the kicker is that you have to conduct testing each time you import product from now on, regardless if it's the exact same product you imported 2 months earlier.
You have until Feb. 9th to sell all your untested products to the consumer (enduser), not just to the bike shops, or on Feb. 10th it becomes illegal for shops or distributors to sell these products without the proper certificate. The fines for this and for trying to import goods into the US without the certificates is in the hundred of thousands.
Companies that haven't tested and received the proper certificates legally have to take any untested product back and refund monies to the dealers or distributors as it is illegal for them to be sold after Feb. 9. This is why Feb 10 is being called National Bankruptcy Day because they have to take back ALL untested product from retailers and distributors and supply refunds even if that product is 10 years old. If the retailer (although highly unlikely Joe's Local Bike Shop would get caught) is caught trying to sell untested goods, the shop will be fined by the CPSC (fines in the hundred of thousands. Which obviously the shop will then turn around and sue the manufacturer for failure to test and likely the company is already been fined as well. You can see how it can get ugly real fast if you don't have the proper test certificates. And the rumors I hear about companies ready to rat out others on Feb 10 is really unsettling
What we're likely to see as BMXer's is that the big companies can probably offset the large testing expenses as their volume is large enough to ammortorize. We'll likely see some price increases from them but they'll still be around. It will hit the small bike and part companies the hardest as the test fees are extensive and companies will have to decide for themselves if they can afford to pay and continue to stay in business. Where the money for this testing comes from and if it's effect on pricing will likely push some of those companies out of the market. With Kuwahara, based on our current growth rate in terms of volume, and projected sales for 09, we were looking at 125% price increases. With the economy and all things considered, $1800 to $2000 complete bikes probably aren't going to sell to well. That was our sad reality and our situation will force us to become a frame only distributor for 09.
I hope the other companies in the BMX world don't have to suffer the same fate as Kuwahara and it will be each companies decision if they choose to comply with the new test laws forced on us as "toy" manufactures.
Hope this rambling simplified the "legal mumbo jumbo" that I've been forced to try to learn these past couple of months. Oh, and the same testing will soon be required for bikes and bike parts made in the US as well.
Birk
Kids, this is huge. Alot of small companies, such as FBM, S&M, Sunday, etc. will be affected by this. Lots of companies will fold.
By the way, President-Elect Obama has made these laws a top priority. He is for them.
What scares me is how little some of the companies that will be most affected by these new requirements actually know about what is going to happen and how unconcerned some seem to be. We've had lawyers on both sides of the pond looking into this for us for a couple months trying to find loopholes and determine exactly what is required of us as BMX companies. We've probably spent enough on lawyers to at least have covered the required testing on at least a couple models of bikes for at least 1 shipment.
Here's the jist of what is going on now for BMX "toy" companies.
As of Nov. 12, nothing shipped after that date can come into the US without proper 3rd party testing for lead, lead content, and phalates and the certified documnents needed to get through customs at port. This includes complete bikes, frames, and all parts with intended us for any bike 24" and under. The fees for testing are expensive unless you're testing a large volume of parts or bikes and can ammortorize those costs across the board. If you offer a part or bike in different color options, each color must legally be tested. Of course all companies can decide if they want to comply and pay for the testing but it will ultimately begin to affect costs and pricing of products unless the company is making a ton of parts that are getting sold, or the company has a really large petty cash stash. It's been my experience that most BMX companies operate on a pretty defined and tight budget to insure longevity and growth. And the kicker is that you have to conduct testing each time you import product from now on, regardless if it's the exact same product you imported 2 months earlier.
You have until Feb. 9th to sell all your untested products to the consumer (enduser), not just to the bike shops, or on Feb. 10th it becomes illegal for shops or distributors to sell these products without the proper certificate. The fines for this and for trying to import goods into the US without the certificates is in the hundred of thousands.
Companies that haven't tested and received the proper certificates legally have to take any untested product back and refund monies to the dealers or distributors as it is illegal for them to be sold after Feb. 9. This is why Feb 10 is being called National Bankruptcy Day because they have to take back ALL untested product from retailers and distributors and supply refunds even if that product is 10 years old. If the retailer (although highly unlikely Joe's Local Bike Shop would get caught) is caught trying to sell untested goods, the shop will be fined by the CPSC (fines in the hundred of thousands. Which obviously the shop will then turn around and sue the manufacturer for failure to test and likely the company is already been fined as well. You can see how it can get ugly real fast if you don't have the proper test certificates. And the rumors I hear about companies ready to rat out others on Feb 10 is really unsettling
What we're likely to see as BMXer's is that the big companies can probably offset the large testing expenses as their volume is large enough to ammortorize. We'll likely see some price increases from them but they'll still be around. It will hit the small bike and part companies the hardest as the test fees are extensive and companies will have to decide for themselves if they can afford to pay and continue to stay in business. Where the money for this testing comes from and if it's effect on pricing will likely push some of those companies out of the market. With Kuwahara, based on our current growth rate in terms of volume, and projected sales for 09, we were looking at 125% price increases. With the economy and all things considered, $1800 to $2000 complete bikes probably aren't going to sell to well. That was our sad reality and our situation will force us to become a frame only distributor for 09.
I hope the other companies in the BMX world don't have to suffer the same fate as Kuwahara and it will be each companies decision if they choose to comply with the new test laws forced on us as "toy" manufactures.
Hope this rambling simplified the "legal mumbo jumbo" that I've been forced to try to learn these past couple of months. Oh, and the same testing will soon be required for bikes and bike parts made in the US as well.
Birk
Kids, this is huge. Alot of small companies, such as FBM, S&M, Sunday, etc. will be affected by this. Lots of companies will fold.
By the way, President-Elect Obama has made these laws a top priority. He is for them.
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