Raleigh hears the wheels of the pack: Nigel Cope looks at one of Britain's great survivors, dealing with pursuit by a bunch of lean competitors

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RALEIGH'S premises north of Nottingham are a powerful reminder of the long history of Britain's biggest bicycle maker. Raleigh has been making bicycles here for more than 100 years. On top of an old brick office building are the signs of some of the great names of cycling absorbed by Raleigh over the years, names like BSA, Rudge and Carlton.

That Raleigh is still dominant in a market shrunk by the popularity of the car and cheaper imports makes it one of Britain's great corporate survivors. Other companies are older, of course. But there are few that have managed both to survive and thrive.

'We are trying to be right up there in terms of competitiveness and productivity,' says Howard Knight, the company's softly spoken managing director.

There are grounds for his optimism. At a meeting for the company's top dealers in Nottingham in January, Mr Knight told his audience that in spite of the recession the company had turned in a 'strong and significant profit'.

The latest accounts filed at Companies House show that Raleigh Industries, which is now part of the privately owned Derby International, made a profit of just over pounds 3m on sales of pounds 76m for the year ended 1991.

Raleigh guards its privacy jealously. The company does not seek attention in the financial press and instead cultivates its dealers and the cycling magazines.

But Raleigh's position as market leader is beyond question. Industry estimates suggest that the company accounts for about 34 per cent of the UK's pounds 311m bicycle market, well ahead of its nearest rival, Townsend.

Owned by Casket, a publicly quoted company, Townsend has 20 per cent. It is followed by Moore Large, an importer, with 10 per cent and Peugeot with 5-7 per cent.

'Raleigh is the Ford of the cycle business,' Casket's chief executive, Joe Smith, says. 'But we believe we can take market share above and beneath them.'

Critics say Raleigh cannot innovate and that all the new ideas come either from the Far East or the US, where the BMX bike was developed. Some, like John Moore, managing director of Moore Large, say Raleigh has been shielded from the full force of foreign competition by high European import duties.

Raleigh was founded in Nottingham in 1887 by Frank Bowden, a lawyer who only became interested in cycling when his doctor advised him to take it up for health reasons. It pedalled along quite happily for more than half a century.

This was the pre-car era and before importers had begun to penetrate the market. Meanwhile, Raleigh still had the pick of colonial markets.

But the halcyon days didn't last. Although the company employed 8,000 people at its Nottingham site until as late as the 1950s, it slipped a gear in the early 1960s when the post-war boom in cycling ran out of puff.

UK sales sank from 3.5 million a year in 1955 to 1.6 million 10 years later. In what was billed as a merger but was really a takeover, Raleigh fell into the arms of TI, the manufacturing conglomerate.

The TI regime lasted 25 years and was not an unbounded success for either party. The business was being poorly run, and the market collapsed. Imports from the Far East turned into a flood by the mid- 1980s. The early 1980s boom in BMX bikes began to tail off. Raleigh made substantial losses and became an embarrassment to TI, whose balance sheet was gushing red ink.

In 1987 a relieved TI sold all its bicycle interests to Derby International, a group of American industrialists and financiers, for pounds 18m.

Under Derby, a full-scale rationalisation programme wrenched the business back on course. Half of the 65-acre site was sold off for housing. Staff numbers were cut. Raleigh now operates with 1,200 core staff, rising to 1,800 in the busier seasons.

New technology has been brought in, something of a novelty in a business where many bicycles are still assembled largely by hand. Laser welding equipment was introduced into the main mass-market factory in February.

Other robotic equipment has helped to speed up production on a shop floor that now produces about 800,000 bikes a year. Mr Knight says pounds 14m has been invested in the factory over the past six years.

More emphasis was placed on marketing and the promotional push has thrown its weight behind the brand. While other manufacturers, such as Casket, have preferred to retain individual brands such as Claud Butler and British Eagle in their portfolios, Raleigh has simply bought Carlton and BSA and absorbed them into the Raleigh brand.

Some in the industry say Raleigh is not the force it was. 'I don't think they make the most of their assets,' Mr Moore says. 'Raleigh could sell more bikes if it had bikes made in the Far East and badged them under names like BSA and Hercules.'

Mr Moore believes it is a mistake to sell a pounds 150 bike under the same name as a pounds 600 dream machine. 'If you bought a Gucci bag, you wouldn't expect to get it for pounds 2.50.'

He is also critical of the duties that protect European manufacturers. 'I think that unless Raleigh changes its strategy, it will be under increasing pressure.'

Competition is growing. Last year Moore Large took on 100 extra staff to finish bikes part-assembled in the Far East. The company is making 5,000 bikes a week in Derby.

Raleigh might say it has seen all this before, of course. But it will have to keep pedalling hard to stay ahead of the chasing pack.

(Photograph omitted)