Compelling Analysis of the Demise of Japanese Lugged Steel Bicycles

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Grant Peterson at Rivendell is a very smart person. In his most recent post on their site, he makes a lucid analysis of why fans of lugged, steel bikes find themselves in a cycling industry ghetto:

“Every now and then I talk about the dollar and Yen. I think about it all the time, because we buy so much expensive Japanese stuff, and how many yen one dollar buys has a tremendous effect on what we pay. Short historical perspective. In 1972 a dollar bought 375 yen. In 1984 it bought 250 yen.

In May 1985, five country’s moneymen got together and came up with a plan to help the balance of trade among their countries (US, Japan, Germany, Italy, and England, as I recall). The way to do that is to re-value their currencies; and so it was de—are any of you still reading this?–cided that a dollar should buy only 150 yen–that would make it easier for Japanese companies to import American-made goods, and that would help balance the trade between Japan and the U.S.–
But the change from 250 in April of 1985 to 150 in May made it way more costly for American companies to import Japanese goods, because it meant almost a doubling of prices for anything Japanese. Doubling retail prices was unacceptable, so the strategy was to cheapen the Japanese stuff, to lower the cost, to keep the retail prices the same. So if you bought a Japanese-made XYX before the re-valuation, it might cost $100, and would be made with hi-grade materials and intensive labor to make it shine. If you bought XYZ after the re-valuation, it would cost about the same $100, but would be made with worse materials and less labor.

To avoid an apples-to-apples comparison, something had to change, so you wouldn’t say, “Hey, wazzup with this? Last year it looked fancy and polished, and now it’s plain and painted and it costs the same.” Lugged bikes almost entirely died in the popular price ranges, and the thrust from finery to technology, and we got indexing. Over the next decade, non-indexed (friction) shifting lugged steel bicycles became associated with classic nostalgia and connoisseurs and tweed and meerschaum pipes and waxed cotton and all That Stuff, which really isn’t fair to any of it, especially the bikes.”

This is a very good example of the relationships between quality of production, and marketing. I’ll leave the issue of global trade behind for now, but when the Japanese government attempted to boost the yen to play more deftly in the global economy, it had important ramifications for manufacturers and cyclists. As Grant writes, in order to keep up, Japanese bicycle manufacturers had to lower their costs by lowering their quality… which lead to the demise of high-quality japanese lugged steel frames, which were far too expensive to sustain the supply/demand/price equilibrium of the bike boom.

If materials and production quality falls, then manufacturers rely on marketing to bridge the gap between product and price. This is about the same time, I would argue, that marketing began to overwhelm product quality in customer appeals to drive sales in the bicycle industry. What worked well would no longer do. There needed to be non-material reasons to buy bicycles — and we saw a parade of new technologies that provided arguments for upgrades and continued spending. It might also be argued that these are reasons why touring and utility cycling took a back seat to racing in the United States. Annually, racing seasons exhibit the newest elite technology, which is ripe for advertising campaigns. Some of the best touring and utility technology has been around for decades. As Grant mentions, those who valued tried-and-true bicycle technology and aesthetics were herded into the retrogrouch corral.

With the emergent custom scene and the fetishization of vintage bikes (by cyclotouristes and fixed gear riders alike), I wonder if things are changing…

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4 comments

  1. Seth Vidal

    I posted this on the rbw list but I’m genuinely curious if there are any places in the US/CA/MX who can produce the parts and frames at the same quality for roughly the same amount of money. I’m not interested in any “buy american” sort of thing just seeing if it is possible to insource some of these things at workable margin.
    I don’t know how much margin there is on the average riv frame but from what I’ve seen they aren’t doing an ridiculously large number of them in the year – what is it about 500 or so per model? Is it completely impossible to find a dozen or so domestic builders who are willing to meet some common standards? Or is everyone here who is a builder turning into their own brand?

  2. Seth Vidal

    Sorry, If curiosity only made it so. I work on projects which distribute a lot of the load out to a disparate set of people so it seems like it should be a do-able problem but coordinating a group of people who are intentionally independent may be too daunting of a task.

    Then again, rivendell seems to be a good bit different than your average company so maybe they can pull something like that off.

  3. dais umi

    Japan did not decide to raise the yen, it was somewhat forced upon them to lower the trade imbalance that other countries thought was unfair (yen was thought to be artifically low by “market manipulation”). Much like how China tries to keep low yuan to keep the export economy growing.

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