From Guns to Bicycles

Customers at Thomas Crenshaw’s full-service bike shop, Frame up Bikes in Pleasant Hill, California, know a lot more about Orbea bikes and its global competitors than they do about the legendary bike company’s co-operative business model.

“We know Orbea is a co-operative and worker-owned, but most of our customers don’t” says Crenshaw. “What they care about is that Orbea is an established solid brand worldwide, that they have bunch of pro teams in world road and mountain races.”

That most of its U.S. customers have no clue about the Orbea’s co-operative way of working is less a marketing problem than it is a sign of how co-operatives are able to compete globally in high-tech, dog-eat-dog global markets like the bike industry. Technology and competition gave rise to the Orbea bike legend ever since peace descended on Europe in the interwar years.

In 1842, the Hermanos Orbea (Orbea Brothers) started out as gun manufacturers; once the demand for guns declined, they turned their expertise in manufacturing tubes for guns in Eibar (once the world renowned “City of Guns”) to manufacture finely finished steel tubing for bikes, like those that Maria Retegui and her  family have ridden for almost a century. During the better part of that century, Orbea Bicycle company gained a reputation as a world-class manufacturer, thanks, in no small part to Tour de France champion, Mariano Cañardo and other riders. Then, with the economic crisis of the late 60s, the company’s fortunes plummeted, pushing the Orbea family to the edge.

Facing a loss of their livelihoods as the company prepared to declare bankruptcy in 1969, Orbea’s workers decided to draw on the ancient co-operative tradition of Basque country, forming a workers’ co-op with the help of the Spanish government. Since then, technological, marketing innovation, and co-operativism seem to have created a powerful combination that has made Orbea a serious global competitor.

Orbea’s worker-owners were among the first of the major bike manufacturers to introduce customization. The company’s website, My O(rbea)  allows customers to choose their bike model, color, tires, handlebars, crankset, and other customized features usually found in smaller, local, more artisanal bike manufacturers.

Orbea’s factory, headquartered in the hills of Mallabia, combines a state-of-the-art painting production line with the more traditional manual labor techniques of the bik-making craft. Plain frames are put onto the production line and run through the facility at one end; then robots give them the first coat of paint. Live workers then apply the specific touches requested by customers.  Bikes are put through a strict quality control process and are tested before being assembled and shipped off to retailers around the world.

All this has led to some remarkable success. Orbea’s first quarter sales 2018 saw a 26% increase over the same period in 2017.

“We chose to sell Orbea over other options because they offer a wide selection, including kids bikes, pro bikes and everything in between,” says Crenshaw.  “Their customization allows our customers to customize paint and choose from about 20 colors. We get customization without having a paint booth. This gives us the ability to have a customer get a bike that’s completely different from somebody else’s. For most manufacturers there’s only one type of bike and you get two color combos. That’s one of the reasons Orbea is a cutting-edge company.”

Unbeknownst to Frame Up’s customers, one of the other reasons is the co-operative model that makes their innovation and customization possible.