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On the road to success.

Byline: Sherri Buri McDonald The Register-Guard

For the first time in years, Burley Design, a Eugene-based maker of bike trailers, has been arriving at industry trade shows with crates full of new products.

The company's '08 innovations include two sleek trailers for hauling pets; a kit that swaps skis for wheels, enabling owners of Burley's high-end trailers to hit the ski trails; and a limited edition "d'lite" - the company's top-end kids' trailer, sporting a cover with a black-and-orange-striped tiger motif.

It's all making quite a splash for a company that was financially adrift until local businessman Michael Coughlin bought it for about $2 million in September 2006 and invested another $1 million to revive it. The company has lost money every year since 2003.

"People were happy to see we made a bunch of improvements," he said. Some said they weren't sure last year that Burley would be around this year, Coughlin said. "Now, they're saying, `You're here to stay and you're coming out with innovations in your product.'?"

In the past year, Burley has undergone huge changes. After 28 years as a worker-owned cooperative, the business converted to a privately owned corporation. Coughlin bought the company in early September 2006 with a plan to focus on trailers, and stop producing bicycles and rain wear. He trimmed the 97-employee work force to 42 workers. Now the company has 49 employees, including a new management team with two executives who had worked for Burley years ago. About 22 workers from the cooperative still work at Burley, Coughlin said.

On Nov. 15, Burley will add 12 employees, for a total of 61 workers, he said. The company laid off a number of production workers in mid-September for two months while the company switches from '07 to '08 product lines, Coughlin said.

Burley continued the employees' health insurance coverage during the shutdown, he said. Production workers make from $11 to $15.50 an hour, he said.

Burley continues to assemble its high-end trailers in Eugene but, for the first time in its 30-year history, some of the company's products are being manufactured in Asia. Its pet trailers and a less expensive line of kids' trailers (the "Bee" at $250 and "Honey Bee" at $350) now are produced in China.

"The bike industry has been in Asia for 30 years," said Brian Roddy, Burley's vice president of engineering and product development. "We were one of the few who weren't participating at all, which was hurting us, frankly."

But Coughlin said he's not going to jeopardize Burley's reputation for quality by moving all manufacturing to China, or by rushing products to market. Quality begins with design and product development, which will remain in Eugene, Coughlin said.

Burley now has a prototype lab at its headquarters at 4020 Stewart Road in west Eugene.

During a recent visit to the lab, pattern pieces lay on tables near an industrial sewing machine, and hand-drawn sketches of pet trailer ideas hung on the wall.

Nearby, in the product development shop area, Roddy showed off the company's "torture chamber" where products are subjected to stress tests, such as "accelerated lifetime testing."

Trailers weighted with dummies are thrown onto a drum and forced to run over bumps until they fall apart.

In the past 30 years, Burley has helped develop the American Society for Testing and Materials safety standards, and Burley's products exceed those standards, Roddy said..

The company also tests components when it buys materials, he said. "We evaluate every buckle, every snap, every grommet," Roddy said.

Dealers and others in the bicycle industry said they don't think consumers will be put off by Burley's shift to Asian manufacturing.

"Outside of Eugene, I don't think anyone's going to blink an eye," said Len Schvaneveldt, manager of Hutch's bike shop in Eugene. "And I don't think it's going to be an issue here. It's an international economy, and you've got to go where you can stay competitive."

Matt Ritzow, general manager of Paul's Bicycle Way of Life in Eugene, said that in some cases, Asian factories can produce higher quality goods than American plants.

"America has moved away from manufacturing," he said, "whereas in Asia, their economies are growing around manufacturing. They do a great job of fabrication."

When Coughlin bought Burley in September 2006, he predicted that it could be profitable by March. Coughlin was previously CEO of Percon Inc., a Eugene bar-code scanner maker, which sold to a rival for $57 million in 1999. Since then, Coughlin has invested in real estate - he co-owns the Citizens Building downtown - and businesses such as Summit Bank and Tactics Boardshop.

"I never thought in my wildest dreams this would take this much time," he said. "Honestly, I thought this was a one-year deal."

The turnaround has taken longer than expected, Coughlin said, because the business was in worse shape than he initially thought.

"I've been feeding it like crazy," he said, referring to the money he has invested in the company.

"I know it's such a good product that I know we're going to be successful, but it's one of those things you can't do quickly."

Now, Coughlin said he's looking to turn a profit next year and aiming for 30 percent growth in '08.

Dealers and industry experts said the changes under Coughlin appear to make sense.

"They're moving in the right direction," said Schvaneveldt, Hutch's manager. "They were headed in the right direction the day that Mike Coughlin bought the company. I think Burley is in really good hands."

Jay Townley, a partner in a Wisconsin-based consultancy focused on outdoor industries, said he hasn't analyzed Burley in-depth, or compared it against its competitors. But, he said, in general, Burley's strategy to broaden its trailer line makes sense in light of the stiffer competition it faces now compared with when it introduced trailers decades ago. "They're building on a well-recognized brand name and trying to fight into some of the other markets, Townley said.

New for '08 is Burley's $400 "Tail Wagon" pet trailer, which includes a kit to convert it to a stroller, and the scaled down $295 "Rover," which offers the stroller kit as an option.

Burley introduced a pet trailer last model year that Coughlin admits "wasn't ready for prime time."

"It was a little awkward because it looked like a Conestoga wagon," said Schvaneveldt, the Hutch's dealer. "People tend to like things pretty streamlined."

Burley delivered for 2008, he said, with the redesigned Tail Wagon. It has a lower center of gravity than the kids' trailer, a floor that can be removed for easy cleaning, and options, such as a "critter compartment" divider, which enables two small dogs to ride, or for Bowser to comfortably share his berth with, say, a bag of groceries.

Based on the number of customers who had been buying Burley's child trailers to transport dogs, demand for the pet trailers should be good, said local bike dealers Schvaneveldt and Ritzow.

"We've probably sold as many trailers to people to use for their pets as we have to people to use with their kids, so it's really starting to catch fire," Schvaneveldt said.

Trailers specifically designed to carry pets started to appear in the market about five years ago, said Townley, the industry analyst. "This is a lot safer way to have a pet go with you, rather than have them run along on a leash, which is like an accident waiting to happen."

Burley's main competitors are Pet Ego, an Italian company with a U.S. subsidiary, and Croozer, a Canadian company.

Some dealers are less enthusiastic about the ski package, which they say doesn't have as widespread appeal as the pet trailer.

The ski kit, which fits Burley's '07 and '08 high-end trailers, is a "very nichey product," said Ritzow, of Paul's Bicycle Way of Life. "That's going to be low volume," he said.

But it could be popular in cold-weather regions, industry experts said.

"A family that jogs together and rides a bike together, would naturally want to cross-country ski together," said Townley, the outdoor industry analyst.

"For people who ski, I guess that it's a big deal to be able to bring your kids or your pets," Hutch's Schvaneveldt said. "I think our Bend stores will do really well with those."

When Coughlin bought Burley last year, he zeroed in on trailers. One of those products has returned for '08: the "Piccolo," a trailercycle that uses a sturdy, patented rack attachment to connect to the adult's bike. The seven-speed Piccolo costs $290, down from $380 in model year '06. The difference? Now, it's made in China and "we can make a nice margin on it," Coughlin said. Burley also introduced a single-speed version for '08, called the "Kazoo," which costs $239.

"I'm glad that they've brought that back because there's nothing else like it in the marketplace," said Schvaneveldt, of Hutch's. "For recreational rides, it's a little overkill, but for people dropping their kids off every day at school, you can't beat it."

Ritzow, of Paul's Bicycle Way of Life," called the Piccolo a "quality piece" but said he probably won't stock it because it's a bit expensive for people who don't use a trailercycle every day.

"We sell hundreds of $150 units," he said, adding that probably 90 percent of customers with trailercycles use them just on the weekends.

The vast majority of cyclists (94.5 percent) ride for recreation or fitness, according to figures cited by the National Bicycle Dealers Association. A small - but growing - percentage (5.2 percent) of cyclists ride for transportation.

That trend isn't lost on Schvaneveldt, who attributes steady business at Hutch's to high fuel prices, a desire for fitness and people's attempts to lessen their ecological impact.

Above all, cycling is "a fun thing to do," he said, "and there's just a great amount of really great products, like the Burley stuff, that makes you want to ride, and allows you to ride, if you can't get out without taking your kids."

Burley Design

Business: Bicycle trailers and trailercycles

Employees: 60

Owner: Michael Coughlin

Latest developments: Introducing new products for '08, including a pet trailer and ski kit. Shifting some production to factories in China.
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Title Annotation:Business; Reviving a financially adrift former Eugene bike cooperative has taken extra time and many changes, says its new owner
Publication:The Register-Guard (Eugene, OR)
Date:Oct 21, 2007
Previous Article:Letters Editorial.
Next Article:Burley signs on three distributors to focus on customers, expansion.

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