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Bike maker on a roll seeks investment to help it diversify
By MARNI LEFF,   SEATTLE POST-INTELLIGENCER   Date: Tuesday, June 19, 2001
source: https://www.seattlepi.com/business/article/Bike-maker-on-a-roll-seeks-investment-to-help-it-1057648.php

Since its first recumbent bike rolled off the line in 1993, Advanced Transportation Products, the maker of Vision recumbent bicycles, has seen tremendous growth -- the Mountlake Terrace company brought in about $2.5 million in sales last year. Now, as Advanced Transportation Products expands into new areas -- including a line of specialty bikes slated to hit the market this fall -- the company is looking to raise about $1 million to fund the growth, said Joel Smith, co-founder and president.

"We've reached a point where we have a successful business going along at a certain rate," said co-owner Greg Bower. "We'd like to expand it and get into other markets where we see demand. We could continue on as we are, with small growth every year, but we'd really like to build on the successes that we've had."

The company is seeking money from an individual investor or a company, preferably one with skills that could contribute to expanding the business, Smith said. Smith, Bower and Bower's brother, Grant Bower, founded the company in 1992 with just $45,000. Jim Sternberg joined the company in 1994 and became a partner two years later.

The group thought there was a largely unsatisfied demand for recumbent bikes -- bikes on which riders sit in chairlike seats and pedal from a reclined rather than an upright position. Vision bikes are aimed at the middle to high end of the recumbent bike market and retail for between $1,100 and $5,000. "From a business standpoint, this was an underserved market that was starting to grow," Smith said. "My personal interest was wanting to have a manufacturing business, and as I started exploring this looked like a good opportunity."

Over the past 10 years the recumbent bike market has grown by about 35 percent each year, Smith said. It's a trend that's been noticed by industry trade publications. "For years, riding a recumbent was like wearing a DayGlo T-shirt with GEEK written on it, front and back," Bicycling magazine noted in its 2001 buyer's guide. "But just as Palm Pilots and headset cell phones were total geekware not so long ago, recumbents are now fairly commonplace."

But despite its origins as a recumbent-bike maker, Smith said that he expects recumbent bikes to account for just two-thirds of the company's sales in 2001. The rest, he said, will come from contract bike-building and assembly for other companies and from Advanced Transportation Products' newly acquired wheel-manufacturing business. The company bought Kent-based Winkel Wheels, a wheel assembly company, in 1999 as part of an effort to keep busy during the winter, when recumbent bike sales lag.

"The wheel market has huge potential and really only one legitimate competitor," Smith said, referring to Montana-based Wheelsmith Fabrications, Inc. "We have terrific opportunities at the manufacturing level, at the dealer level and through e-commerce channels that offer the opportunity to buy online, at the consumer level." The company has also benefited from contract work for other manufacturers, including K2, Shimano and Diatech USA.

"The contract work started last summer," Smith said. "We were at a point where the overhead had grown large enough that the seasonality of the market started to become painful." Although Smith anticipates that the recumbent market will continue to grow, he said Advanced Transportation Products is looking to diversify.

The company, which employs 30 people, plans to introduce so-called comfort bikes later this year. "These bikes are designed for recreational riding, touring and commuting," Smith said. "Our recumbent line of bikes has always fit into this category. Our new design will address many of the problems associated with the traditional bicycle configuration without being as different-looking as a recumbent bike."

Smith also said the company plans to build custom wheelchairs. "With our design expertise in mobility products and seating systems, we have designs that will dramatically improve on the utility of existing wheelchairs," he said. As the company enters the usually busy summer season, Smith said that so far this year sales have been off slightly. Advanced Transportation Products does not sell directly to customers, though its bikes are available at dealers in all 50 states and parts of Canada.

A cold spring in the Midwest contributed to sagging sales, Smith said. "The bike market in general is flat and we have suffered a little bit," he said. "We anticipated flattening, and it's one of the reasons that we have been so aggressive in looking at other things and sources of additional revenue."