An American entrepreneur reaches for China

[spuwho]

Another thread had me looking up motorcycle brands and I came across this brand by 2 guys in Cleveland.

No one would work with them even though they had a small amount of start up capital.  They decided to go to China to get started and the reaction was much different.  Now they are moving forward in Cleveland but had to go to China first.

An interesting story in entrepreneurship in the US. I might just buy one even though the closest dealer is in Daytona.

Per Crains Cleveland Business:

http://www.crainscleveland.com/article/20120510/FREE/305109999/cleveland-motorcycle-designer-brings-production-back-home

Cleveland motorcycle designer brings production back home

Cleveland entrepreneur, originally shunned stateside, started in China — but now plans to produce bikes back home



Scott Colosimo says people who hate him for making motorcycles in China can stop sending him nasty emails like the one that read, "I hope your bike blows up and kills you," because later this year he's going to start making motorcycles in Cleveland at his company, Cleveland CycleWerks.

But to build inexpensive bikes the way he wanted — most of his models cost about $3,200 — he needed to start in China, he said.

"I've always wanted to make bikes here," Mr. Colosimo insists.

Since it began shipping bikes in 2009, CycleWerks has sold 9,000 of them, all designed by Mr. Colosimo and his company but built by contract manufacturers in China.

He tried to build bikes in Cleveland, he said, but he was not able to do it. Now he's going to try again.

He has bought a closed, 60,000-square-foot factory on West 65th Street in Cleveland to serve as the company's U.S. headquarters and plant. It's an uncharacteristic investment for Mr. Colosimo.

Cleveland CycleWerks does not make a lot of motorcycles compared to, say, Harley-Davidson, which sold 40,000 motorcycles in the fourth quarter of 2011 alone. But then, Mr. Colosimo's company doesn't have many of the things Harley has, like a large dealer network, an engineering department, a legal staff, a marketing department and so on. Indeed, Cleve-land CycleWerks didn't hire its first full-time employee until this year.

So, 9,000 bikes is significant.

"That's fantastic," said Dan Moore, a Cleveland entrepreneur who owns several companies serving the automotive industry and who himself is an avid motorcyclist. "I had no idea he was that big. ... Ducati is being purchased for $1 billion, and they only make 40,000 bikes a year."

Mr. Moore said he has seen Cleveland CycleWerks' bikes and likes the look enough that he's considering buying a couple to teach kids to ride. The bikes are small, simple machines that seem perfect for new riders, Mr. Moore said.

Take my business, please

The company's growth to date has been the result of Mr. Colosimo and partner Jarrod Streng doing the design and administrative work themselves, using only $30,000 they scrimped together with a silent investor. The company has grown by using only the money it has made from selling its bikes, Mr. Colosimo said — no loans, no private equity.

So why hasn't he made bikes in Cleveland? No one wanted to work with a motorcycle startup, he said.

Mr. Colosimo looked long and hard for a local company to make his handlebars — a simple task for many manufacturers. He finally found one in HMF Engineering of Cleveland, an aftermarket parts company, but only after many others turned him down.

"They'd say, "How many are you going to order?' I'd say, "Probably 150 of them at a time.' and then they'd say, "Ehh ... we don't want to do it,'" Mr. Colosimo said.

He said it was that way for handlebars, brake calipers, frames — basically all the components that make up a motorcycle. No one wanted to deal with small volumes, even in the hope that Cleveland CycleWerks would become a big customer.

The reception was better in China.

"In China, it was, "How many do you need, how fast do you need them and what do you want to pay?'" Mr. Colosimo said. "My first trip to China, I visited 75 factories that wanted to work with me."

It's little wonder Mr. Colosimo is not going to end China production.

"People like to rag on China and say China sucks — China has made my company possible," Mr. Colosimo said. "The Chinese manufacturing has allowed me to buy a factory in Cleveland that was vacant."

Preparing for his run

Now he's got to find a way to make that Cleveland factory profitable.

Mr. Colosimo said he'll use it as a parts distribution center and then do limited production later this year. He'll probably put together bikes using parts made in China, he said, but then, so does Harley-Davidson.

He has hired a full-time engineer and designer and probably will hire a handful of mechanics and assemblers to put the bikes together. The first bikes made in Cleveland probably will be larger than the 250cc models he makes now, but how much larger is a secret.

Chris Warren, economic development director for the city of Cleveland, said the city is looking for a way to help Cleveland CycleWerks rehab its building. He called it an "exciting development, one that would build upon the tremendous positive momentum now being experienced in the Detroit Shoreway neighborhood."

Mr. Moore is rooting for Cleveland CycleWerks to succeed, but he knows the challenges it will face. His MBA thesis at Harvard University was about why it would be difficult or impossible to start a U.S. motorcycle company.

"He's better off engineering it here and sending it to China for production," Mr. Moore said.

Perhaps, Mr. Colosimo said — and if things don't work out, he'll still have his Chinese-made bikes to fall back on.

"I have American pride. I want to make it in the U.S.," he said.