Raleigh UK Ltd.

Church Street, Eastwood
Nottinghamshire NG16 3HT
United Kingdom
Telephone: 01773 532 600
Web site: http://www.raleigh.co.uk

Private Company
Incorporated: 1888 as The Raleigh Cycle Company
Employees: 200
Sales: £35 million (2003 est.)
NAIC: 336991 Motorcycle, Bicycle, and Parts Manufacturing

Raleigh UK Ltd. is Britain's leading bike producer. The brand has also been well regarded in the United States and other countries. Raleigh was the world's largest bicycle manufacturer for much of the 20th century. A competitive marketplace led the company to shift all of its manufacturing to Asia by 2002. Entrepreneur Alan Finden-Crofts owns 42 percent of parent company Raleigh Cycles Limited.

Origins

Mechanic R.M. Woodhead, engineering and design expert Paul Angois, and financier William Ellis formed a bicycle shop on Raleigh Street in Nottingham, England, in 1886. The next year, they met Frank Bowden, a British lawyer who had moved to San Francisco after making his fortune in Hong Kong.

Bowden had taken up bicycling for health reasons. He was eager to help Woodhead, Angois, and Ellis promote their improved version of the "safety cycle," an alternative to the "penny farthings" of the day. In 1888 Bowden invested £2,000 in the business, buying out Ellis's share and becoming a half owner of the business. The company was incorporated as a limited company in January 1889, when local businessmen were invited to invest.

Before Bowden joined the firm, its dozen or so employees in three workshops rolled out perhaps 150 bicycles a year. Bowden soon moved the firm to a five-story former lace factory on Nottingham's Russell Street, raised employment to 200 people, and had the company producing 3,000 bikes a year. According to Raleigh and the British Bicycle Industry, another 200 workers and 400 sales agents were added by 1892.

The number of different designs also proliferated, such as a new, lightweight (64 pounds) safety bicycle. Raleigh introduced a number of innovations that would remain part of bicycle design for another hundred years. Participation in the globally popular sport of bicycle racing kept the name in front of spectators around the world.

Raleigh bikes were priced at the top end of the market, from £18 up. The company sold £7,148 worth of products in 1889, resulting in a net profit of £1,862. Annual revenues more than doubled for the next three years; in the fiscal year ended August 1892, the firm had sales of £45,633 and a net profit of £7,072.

Bowden brought in more investors with a small private offering in 1889 and a public flotation in 1891. He bought out the shares of Woodhead and Angois by 1894.

A new factory opened in Lenton a few miles away from the original site in 1896. George Pilkington Mills, formerly works manager at another cycle firm, Humber & Company, was in charge of running Raleigh's operations. Under Mills, Raleigh incorporated automation and other American-style manufacturing practices.

Early 20th-Century Brands

Raleigh accumulated large debts and the existing Raleigh Cycle Company was reorganized around another business, the Gazelle Cycle Company, in 1899. Bowden had set up Gazelle as a budget brand two years earlier. Another low-priced brand, Robin Hood Cycles, was acquired in 1906.

A very important subsidiary, Sturmey Archer Gears Limited, was launched in the early 1900s. This unit would be known for its three-speed internal hub gears throughout the 20th century; they were used exclusively in Raleigh bikes for decades.

Frank Bowden acquired Raleigh outright in 1907. He died in 1921, and his son Sir Harold Bowden took over as managing director. The firm grew to 2,500 employees by 1926, when Harold Bowden introduced a profit-sharing plan at the Raleigh Cycle Company, as it was then known.

Raleigh produced motorcycles in the 1920s; these were priced at about £130 for the most deluxe (5/6 hp) model with a sidecar, with more basic versions running at half that. The company even expanded into automobiles (the three-wheeled variety).

A new holding company, Raleigh Cycle Holdings Company Limited, was incorporated on February 13, 1934. Raleigh had recently built new offices and had more than 4,000 people on the payroll. There were about 300 other makes of bike in Britain in the early part of the 20th century; most of these were eliminated in the interwar years.

In 1938, Raleigh rolled out a line of budget bikes under the re-introduced Gazelle name, adding to the Raleigh and Humber brands. Raleigh sold nearly 400,000 bikes that year. The Gazelle line was renamed Robin Hood to avoid confusion with an unrelated bicycle manufacturer in Holland of the same name. Raleigh's bicycle sales slipped to about 130,000 in 1942.

During World War II, the company produced armaments, particularly artillery fuses and cartridge cases for the 20mm cannon rounds used by some fighter aircraft. Employment swelled to 9,000 during the war. In 1946, the holding company's name was changed to Raleigh Industries Limited.

Postwar Dominance

After extensive postwar retooling, cycle production soon recovered. Production exceeded one million cycles in 1951; up to 70 percent of these were exported (compared to less than 40 percent before World War II). However, notes historian Tony Handland, newly affluent consumers began turning to the automobile in droves, halving British bike sales. To compete, in the late 1950s Raleigh again began producing motorized vehicles: mopeds and motor scooters.

A second, £1.25 million factory was built in 1952, according to The Emergence of the British Bicycle Industry. A £5 million expansion in 1957 brought the size of the Raleigh compound to 64 acres; however, the third factory went unused for several years.

The company was renamed Raleigh Industries Limited after the war. A number of international trading or manufacturing subsidiaries were formed, in the United States (1947), East Africa (1951), South Africa (1952), India (1952), Canada (1954), Holland (1957), and West Germany (1957). Acquisitions included J.B. Brookes (Saddles) Ltd. (1958) and Carlton Cycles Ltd (1959) in the United Kingdom and Irish Bicycle Industries Ltd. (1959) and Consolidated Cycle Industries (1960) abroad.

In addition, Raleigh bought rivals Triumph and Three Spires in 1954 and BSA in 1957. Three years later, in 1960, Raleigh merged with British Bicycle Corporation, a division of Tube Investments (TI). These transactions involving the company's closest rivals brought Raleigh complete dominance of the British bicycle industry, producing 80 percent of the cycles made in Britain. Both deals added brand names to Raleigh's stable. These included New Hudson and Sunbeam from BSA, and Sun, Norman, Phillips, and Hercules from TI.

Production peaked in the late 1970s at four million bikes per year. However, in spite of the popularity of such models as the Chopper, by 1981 market share had slipped to 40 percent.

Straddling an industry trend, Raleigh launched its Maverick mountain bike in 1985. In the same year Huffy Corp. launched Raleigh Cycle Co. of America to build Raleigh bikes under license near Seattle. Derby International bought back the U.S. rights in 1988.

Acquired by Derby in 1987

According to the Financial Times, Raleigh lost money throughout the 1980s until it was acquired by Luxembourg-based Derby International Corp. SA in April 1987. The Derby Cycle Corporation, led by former Dunlop Slazenger chief Alan Finden-Crofts and attorney Ed Gottesman, acquired Raleigh from Tube Investments (TI) for £18 million plus £14 million in assumed debt. At the same time, the investors also bought TI's venerable Royal Worcester tableware group, which was managed under a separate holding company.

Raleigh maintained a one-third share of the £300 million British bike market in the mid-1990s. A group of New York investors including Thayer Capital and Perseus Partners bought the company in 1998 just as the mountain bike craze was winding down.

In December 2000, the famous Sturmey Archer gears company was sold to British management firm Lenark. Soon after, investor George Soros and others brought £21 million in rescue funding to Derby. Alan Finden-Crofts was brought back to lead a turnaround. Derby Cycle sought U.S. bankruptcy protection on August 20, 2001, first selling its Gazelle Rijwielfabriek unit in the Netherlands for EUR 142.5 million (US$122 million).

2001 Management Buyout

On September 28, 2001, a management group led by Alan Finden-Crofts acquired Derby Cycle Corporation in a deal worth about $73 million, including more than $50 million in assumed debt. At the same time, Germany's Wiener Bike Parts and Derby South Africa were sold off. Finden-Crofts then owned 42 percent of Derby Cycle, which was renamed Raleigh Cycle Limited.

Company Perspectives:

For more than 100 years Raleigh bikes have been created and designed in Nottingham. We carry that legacy into the 21st Century.

Raleigh sold its Triumph Road site to the University of Nottingham in 2001. Environmental protection issues complicated a planned move to a nearby location. Management decided to shift manufacturing to lower wage countries in the Far East and Raleigh's British production line closed in November 2002. The Nottingham factory had employed 600 people and was producing 500,000 bikes a year before it was closed, though it had stopped making its own frames in 1999. In addition, the management team was replaced and a new computer system installed. Raleigh's sales and design operations moved from the original location on Triumph Road, Nottingham, to Eastwood in December 2002.

After four years of losses, Raleigh UK managed a small profit on sales of £35 million in 2003. It then had about 200 employees. Raleigh America had sales of about $75 million. In a bit of nostalgia, Raleigh brought back its 1970s-era Chopper in the spring of 2004.

Principal Subsidiaries

Derby Cycle Werke (Germany); Raleigh America (U.S.A.); Raleigh Canada; Raleigh China; Raleigh Taiwan; Raleigh UK Limited.

Key Dates:

1887:

Frank Bowden acquires bike frame shop in Nottingham.

1888:

The Raleigh Cycle Company is founded.

1902:

Sturmey-Archer gears business is acquired.

1932:

Humber Cycles is acquired.

1934:

Raleigh is reorganized as Raleigh Cycle Holdings Limited.

1938:

Budget "Gazelle" brand is relaunched.

1954:

Raleigh acquires Triumph and Three Spires.

1957:

BSA's bike business is acquired.

1960:

Tube Investments (TI) buys Raleigh.

1987:

Raleigh is acquired by Derby International.

2001:

Management acquires Derby Cycle Corporation and renames it Raleigh Cycle Ltd.

2002:

U.K. production ceases as manufacturing is shifted to the Far East.

Principal Competitors

Moore Large & Co. Ltd.; Tandem Group PLC; Universal Cycles.

Further Reading

Ballard, Mark, "Raleigh Gets on Its Bike," Sunday Times (London), Bus. Sec., May 23, 2004, p. 15.

Berke, Jonathan, "Judge OKs Derby Cycle's Liquidation Plan," Daily Deal (New York), February 1, 2002.

Bowden, Sir Harold, "Raleigh Cycle Holdings; Great War Effort; Sir Harold Bowden on the Outlook," Times (London), January 17, 1946, p. 10.

Buckingham, Lisa, "Raleigh—Soros Rides In," Mail on Sunday, December 17, 2000.

Burns, Mairin, "Corporate Restructuring Takes a Transatlantic Turn," High Yield Report, November 5, 2001.

Cope, Nigel, "Raleigh Hears the Wheels of the Pack," Independent, March 7, 1994, p. 25.

Gibbs, Geoff, "Raleigh Reaches End of Assembly Road," Guardian (Manchester), March 16, 2002, p. 28.

Gillis, Cydney, "Kent Firm Rebounds from Bankruptcy," Associated Press Newswires, August 8, 2003.

Handland, Tony, "Raleigh in the Last Quarter of the 20th Century," 11th International Cycle History Conference, Osaka, August 2000.

International Business Machines Corporation, "The Evolutionary Cycle," Vision, Winter 2003, pp. 8–11.

Johnson, Bruce, "Raleigh Pedals Against the Tide," American Shipper, September 1985, pp. 16+.

Lloyd-Jones, Roger, and M.J. Lewis, Raleigh and the British Bicycle Industry: An Economic and Business History, 1870–1960, Aldershot, United Kingdom: Ashgate, 2000.

"Profit-Sharing at Nottingham: Raleigh Cycle Company's Scheme," Times (London), April 26, 1926, p. 9.

"Raleigh Bikes in Major Marketing Department Rejig," Marketing, February 6, 2003, p. 4.

Rosen, Paul, Framing Production: Technology, Culture, and Change in the British Bicycle Industry, Cambridge, Mass. and London: MIT Press, 2002.

Seaton, Matt, "Here Comes the Chopper," Guardian (Manchester), Feature Sec., May 10, 2002, p. 2.

"A Sporting Chance: After His Success in Turning Around Dunlop-Slazenger Alan Finden-Crofts Is All Lined Up to Give Raleigh Cycles the Same Treatment," Management Today, June 29, 1987, p. 11.

"Success Recycled," Financial Times, March 13, 1996, p. 20.

"This Article Looks in Detail at the Unexpected Purchase of This Company by Derby International from London International," Financial Times, June 25, 1988, p. 7.

Tressider, Richard, "Raleigh's on the Road to Stability," Nottingham Evening Post, August 22, 2001.

——, "Raleigh's Owner to Close Offices," Nottingham Evening Post, January 8, 2001.

"Turn of the Last Wheel ...," Nottingham Evening Post, November 29, 2002, p. 6.

Wiebe, Matt, "Management Team Takes Over Derby," Bicycle Retailer, November 1, 2001, p. 1.

——, "Raleigh Cycle Restructures to Compete," Bicycle Retailer, December 1, 2001, p. 1.

Wilhelm, Steve, "Build a Better Bicycle, and Buyers Come to You," Puget Sound Business Journal, September 10, 1990, pp. 4+.

——, "Kent Raleigh Bike Plant Gears Up for Export Sales," Puget Sound Business Journal, October 10, 1988, p. 14.

—Frederick C. Ingram