THE SIGNIFICANCE OF BENTONVILLE

Last month I wrote about my planned trip to Bentonville, Arkansas, for the SHIFT’22 Conference October 18-20. The original plan was for me to attend with one of my Human Powered Solutions partners, Mike Fritz. However, Mike e-mailed the weekend before our departure that he, and his whole immediate family, had come down with COVID. So, I would be traveling on my own, but would be meeting up with Heather Mason, president of the National Bicycle Dealers Association (NBDA), and several of her board members after arrival.

I was impressed with the Northwest Arkansas regional airport, and utilized Uber for the first time to meet up with the NBDA tour of bike shops at the scheduled last stop, Mojo Cycling, owned by David Neal, and located on North Walton Blvd.

My Uber driver was born and raised in Bentonville, and he was knowledgeable about the history of the area and the Walton family. What I observed, and what I heard from my driver, filled in some of the gaps that were missing from my preliminary research.

By way of background, my family purchased a commercial campground in the Wisconsin Dells market area in 1980, and owned and operated it until about 2005. The Wisconsin Dells Visitors & Convention Bureau is an economic and political force in the region. As members we got to know and understand how Wisconsin Dells has four sequential exits off the Interstate, and pre-pandemic, hosted 2.5 million visitors annually.

My point is that I have some appreciation for economic and political clout, the infrastructure it attracts, and what it looks like. What I saw, and what was described to me, was certainly on a par with what I see every day.

According to my local Uber driver, Bentonville is an economic island in Northwestern Arkansas. He confirmed the driving force is Walmart and the Walton family.

I mentally filed this away as we arrived at Mojo Cycling and I joined the NBDA dealer tour of this wonderful full-service bike shop and rental business. Mojo is in the final stages of opening a second rental-only location. After touring it, the NBDA served refreshments and conducted a round-table discussion that afforded the local bike shop owners the opportunity to ask the NBDA president and board members questions about the association, Profitability Project (P2) groups, and the current state of the bicycle business.

From this discussion I gathered more insights into the local market, specifically the influence of the Walton family on bicycling in the region, and the economic impact of both the Walton family and the Walmart business.

The SHIFT’22 Conference opened on Tuesday. Registration was at the Momentary Contemporary Art Museum and 21C Museum Hotel. During the afternoon several of the PeopleForBikes (PFB) subcommittees met at the 21C Museum Hotel, including the electric bicycle subcommittee that I attended, along with Heather Mason. I will cover the topic of electric bicycles and lithium-ion battery safety in detail in another article, but will share that I remain disappointed at the American bicycle business attitude of treating the safety of consumers as someone else’s problem.

Wednesday got underway at the Record Event Space. The overall theme of the Conference was “creating the bike industry we want to see.” The focus was on three core topics and presentation tracks.

  • Diversity, equity and inclusion, building a “welcoming culture within the bike industry and community,” and having the “tough conversations that get us there.”
  • The post-pandemic reimagining of “manufacturing and assembly based in the U.S.” including fostering breakthrough innovation.
  • Sustainable cycling and sustainable climate initiatives with a circular ecosystem, and what they really mean to the American bicycle business, including “what it takes to create a greener and healthier future.”

As I have noted, the second and, third-day presentations were about five blocks from the 21C Museum Hotel, at the renovated Record Event Space with two halls, both capable of seating the SHIFT’22 approximately 250 attendees.

AV, staging, and lighting were all first-class, as was the program. Speakers and panelists were also first-class. Walmart managers and executives, and the Walton family, were well represented throughout.

At this point I think it appropriate to mention the “aspirational” nature of this conference, and what it represented relative to a potential change in direction for the bicycle business.

One of our clients attended the conference, and about half-way through we talked. He said the topics and presentations were very “aspirational,” but not grounded in the reality of the current situation the American bicycle business faced. We met again toward the end of the conference. He said he had asked a member of the PFB staff about this and, was told it was on purpose.

The plan going forward is for the SHIFT Conference to be held in Bentonville in the Fall, focusing on the “aspirational” issues of creating the bike industry we want to see, with the Dana Point conference in the Spring focusing on the current issues facing the bicycle business.

This tied into another observation we discussed related to the change in leadership. No senior PFB board members or top-tier company CEOs were present in Bentonville. Again, when asked the PFB staff said this was by design.

My thought process went along these same lines, as we are witnessing a change in leadership in this country and the world, but wonder if we are also witnessing the emergence of the Walton family as growing influencers and perhaps leaders in the American bicycle business.

As a long-time advocate for the bike shop channel of trade, I do not necessarily see this as all bad for American bike shops going forward, but I do think the bike shop channel of trade will need to stand up for why it is an essential part of the bicycle business, and define what role it will play in the economics of profitability going forward.

We have heard of the investments made by brothers Thomas and Steuart Walton, two grandsons of Walmart founder Sam Walton, in the bicycle business and the bicycling infrastructure in Northwest Arkansas.

Steuart Walton was a speaker on the second day of the conference, and sat for a Q&A session. His brother Thomas was also present in the audience. Together they operate RZC Investments, with 90% ownership of Rapha and ownership of Allied Cycle Works.

Although not discussed at the conference, I think it appropriate to mention Walmart started Viathon Cycles, a DTC carbon fiber brand founded in April 2019, that imports its range of bicycles and does not source from Allied.

Steuart is, in my opinion, a very good public speaker. He made a compelling case for the importance of bicycling to the environment, the future culture of Walmart, and the community of Northwest Arkansas. His presentation included the Ledger, the world’s first cyclable building that is a Walton investment, and will be completed in about a month.

The Ledger will house a Specialized Experience Center and the PeopleForBikes office that is moving from another location in Bentonville, along with other business entities that we are assuming will be tied to Walmart, the Walton foundation and Bentonville.

This leads to Bentonville itself. Here is what the PFB SHIFT’22 agenda said about the host town:

“Towns are the heart of America, and there’s a new American town on the map. It’s a town with a big heart and even bigger ambition. A town where modern progress meets rich history, where the arts meet innovation, and where companies meet communities. A town to visit, to see, to breathe and to discover. Visit Bentonville – a new American town.”

Bentonville is the posterchild for the Walton Foundation’s vision for Northwest Arkansas, and it is the focal point of a regional community from Fayetteville to Bentonville connected by an Interstate, embracing 15,000 Walmart headquarters employees and the world through the regional airport.

All of the Walmart executives and members of the Walton family that spoke at the conference referenced the new Walmart headquarters campus that is under construction on the edge of Bentonville. The goal is a completely sustainable office campus that is open and accessible to the public, who can walk and bike on bike trails that run through the campus.

Part of the objective is for 10% of all Walmart employees to commute to work by bicycle every day. The Walmart campus, like a collage campus, is designed to blend with the community so you will not be able to tell where one stops and the other begins.

Walmart is the largest retailer, employer, and seller of bicycles in the United States. The Walton Family Foundation has been a financial supporter of PFB and bicycling’s role in economic development for well over a decade, but until the SHIFT’22 Conference has been in the background.

COVID-19 accelerated changing the world and the bicycle business. One of those changes is in leadership, another is in supply chains, and still another is in retailing. All are trying to keep up with the changing wants, needs, habits and demographics of consumers.

I do believe that PFB and the American bicycle business will migrate from Boulder to Bentonville over the coming decade because of the combination of support for bicycling, equity, inclusiveness, sustainability, innovation and reshoring.  None of this will be easy, but the third generation of the Walton family has expressed the desire to invest in what must be done to grow the bicycle business in America.

Early in the conference I took exception to the way PFB framed In America, and the post-pandemic reimagining of “manufacturing and assembly based in the U.S.” including fostering breakthrough innovation. Post-conference, I still do.

The session featuring “Innovators Driving Change Through Manufacturing” included Drew Medlock, CEO of Allied Cycle Works, Josh Richards, COO of Game Composites, and Arnold Kamler, Chairman & CEO of Kent International.

I know Arnold Kamler, and have the greatest respect for him and his company, which includes Bicycle Corporation of America (BCA), the largest American bicycle assembly plant located in Manning, SC. Walmart is BCA’s largest customer.

Allied Cycle Works is a DTC, high-end carbon fiber brand that has an excellent reputation and product that is in demand because it is hand-built in Bentonville Arkansas. Allied is owned by RZC Investments, a Walton company.

Game Composites manufactures carbon fiber sport airplanes located at the Northwest Arkansas regional airport. These are top-of-the-line, and expensive even by the standards of the stunt flying aficionados who line up to purchase them. Game Composites is owned in whole or part by the Walton family.

I first want to wish Arnold Kamler congratulations on his 50th year in the bicycle business!

Next I will point out the obvious: BCA is assembling 250,000 to 300,000 bicycles for Walmart annually in a modern facility that is capable of complete manufacturing, which means fabricating frames and forks, in addition to wheels and finishing, as well as assembling and packaging them in multiple shifts with capacity that could total 1 million units per year.

There are multiple reasons for not ramping up production, including frame and fork fabrication. While each can be overcome, particularly with the help of a retailer of Walmart’s size, Arnold will be the first to tell you that none of the solutions are easy, none were discussed at the conference, and all are years away.

The gap between the portion of the American bicycle market that Allied Cycles serves, and the portion that BCA serves, is where the business lives. It is also where it will have to adapt to change if it is going to survive.

The total lack of discussion of the innovations and creative thinking (the “aspirations”) that will be needed to actually achieve a combination of decoupling from Asian sourcing, near-shoring and reshoring, sums up why I still take exception to the way PFB framed In America and the post-pandemic reimagining of “manufacturing and assembly based in the U.S.”

As to my prediction that PFB will migrate from Boulder to Bentonville, I think it is inevitable given the financial momentum. The bike shop channel of trade needs to rethink its relationship with all the other channels of trade for bicycles, and change with consumer wants and needs to adapt to Walton Foundation and Walmart leadership.

This includes the bike shop channel of trade standing up for why it is an essential part of the bicycle business, and what role it will play in the economics of profitability going forward.

Contact Jay Townley, jay@humanpoweredsolutions.com.

WHAT’S HAPPENING WITH E-BIKE FIRES IN NEW YORK CITY?

Human Powered Solutions (HPS) analysis points to e-bikes and micromobility, including e-scooters, as the future of sustainable transportation. We are committed advocates. This also means HPS is dedicated to the safe use and management of lithium-ion battery propulsion systems.

HPS Chief Technology Officer Mike Fritz has written protocols for bike shops about safe charging and storage of the lithium-ion batteries that are the power source for e-bikes, the emerging product category that has taken the American bicycle market and business by storm since the pandemic started in March of 2020.

Mike wrote these protocols for the National Bicycle Dealers Association (NBDA) because he and Heather Mason, president of the NBDA, recognized the potential hazard lithium-Ion batteries represent if they are not handled, charged and stored with care.

You can access the protocols for bike shops and consumers on the HPS and NBDA websites: www.humanpoweredsolutions.com / www.nbda.com

As Mike has pointed out on numerous occasions, society has learned to safely manage gasoline, and we need to educate retailers and the consuming public about safely managing lithium-ion batteries. The majority of lithium-ion battery propulsion systems are well designed and configured. If managed properly they are perfectly safe. The added factor is the manufacturing of lithium-ion batteries, the quality standards applied to the process, and the testing and certification after manufacturing.

Heather Mason has reached out to HPS and Mike Fritz to provide technical expertise and input on the need bike shops have to properly manage lithium-ion batteries beyond the Call2Recycle initiative introduced by PeopleForBikes, including a series of informational and educational NBDA webinars providing the technical detail behind the protocols and best practices for bike shops.

One such webinar is scheduled for Friday, November 4. For more information and to register, visit this page on nbda.com.

Over the last 30 months, the subject of micromobility lithium-ion battery fires has popped up from time to time in the media, on trade websites, and in trade publications. The latest that prompted this article was published by NPR October 30 with the headline “Fires from exploding e-bike batteries multiply in NYC – sometimes fatally.”

HPS analysis indicates there is a safety problem emanating from a breakdown in U.S. regulatory and testing of lithium-ion power systems for e-bikes, and a lack of interest in the whole market and the complete community of interest by not educating beyond specified channels of trade. I will do my best to explain further.  

The caption to this picture from the subject article states: “New York City is on track to experience twice as many e-bike-related fires this year compared to last.”

HPS and the NBDA have been and are currently actively engaged with the New York Fire Department, New York City Council, UL, and Energy Storage Safety Products International, in researching and getting educated about the micromobility lithium-ion battery situation in New York City. HPS suggests the rest of the bicycle business should also be actively engaged.

We found early on that the consumer demand for take-out food orders and home delivery has created a gig work force estimated by Los Deliveristas Unidos (LDU), the representative association (https://losdeliveristasunidos.org/), to be in excess of 65,000 self-employed workers who ride either an e-bike or an e-scooter.

HPS also found that the self-employed delivery workers are poorly compensated, and often live in high-rise tenements and subsidized NYC housing, often in crowded, extended-family situations. Fear of vandalism and theft force storage and charging of e-bikes and e-scooters into bedrooms and hallways that too often block exits.

These conditions are too often exacerbated by the self-employed gig workers seeking out the lowest cost e-bikes or e-scooters they can purchase, often consumer-direct on the Internet. Replacement batteries and chargers are also too often purchased online because of the low prices offered.

While this hasn’t been proven yet, HPS has a strong belief based on the facts we have found that low-cost (US$800 and below) e-bikes, and low-cost lithium-ion replacement batteries (US$500 and below), are suspect, and can have inherent quality issues. Introducing a battery or charger to a lithium-ion power system that is not properly integrated to that specific system is also inherently dangerous. In addition, refurbished and home-made lithium-ion batteries should never be used.

NBDA has started to publish a series of best practices for bike shops that integrate the protocols mentioned previously with practical business practices, such as asking all suppliers of merchandise and parts for certificates of insurance.

The October 30 NPR article opens with, “Four times a week on average, an e-bike or e-scooter battery catches fire in New York City.” It goes on to report, “Sometimes it does so on the street, but more often it happens when the owner is recharging the lithium ion battery. A mismatched charger won’t always turn off automatically when the battery’s fully charged, and keeps heating up. Or, the highly flammable electrolyte inside the battery’s cells leaks out of its casing and ignites, setting off a chain reaction.”

A lithium-ion battery fire literally destroys the battery, and this picture from the FDNY is captioned: “E-bike batteries are made up of numerous ‘cells,’ each a bit larger than an AA battery. If they are damaged and leak fluid, they can easily combust.” Advocating for testing and certifying to voluntary standards like UL 2849 would be a huge step in establishing a bright line between good and suspect lithium-ion battery propulsion systems.

As of Friday, October 28, the FDNY investigated 174 battery fires, positioning 2022 to double the 104 fires that occurred in 2021, and quadrupling the 44 from 2020.

This important data generated by the FDNY underscores the immediate problem, but does not tell the story behind the data, nor does it recommend lasting solutions. HPS and the NBDA will continue to work for and advocate for fair and equitable answers that guarantee all citizens of New York City will be able to continue safe use of e-bikes and e-scooters for transportation and to make a living.

We are asking the rest of the American bicycle business to join us!

Contact Jay Townley at jay@humanpoweredsolutions.com

RANSOMWARE ATTACKS ARE ON THE RISE

Nine bicycle shop owners or managers were interviewed in a recent issue of Bicycle Retailer and Industry News. The topic was how they protect their inventory and information. It was interesting for me to read these nine perspectives on security.  I was especially intrigued by one of the respondents saying that anyone stealing from them would have some bad karma coming their way.

You may recall that I’ve written a number of articles for The Micromobility Reporter addressing security, most protecting information and data. Those articles discussed different ways to secure and protect systems and data to help ward off hacks and ransomware attacks. Admittedly, I overlooked the karma defense.

Data is critical to the operations of nearly every business. When data is corrupted or lost, the impact on business can be devastating. Data loss can be the result of a hack, ransomware attack, system failure, natural disaster or other causes. Because a data loss can be so devastating, your business should be working with your IT advisors to proactively protect your data and ensure speedy resumption of operations.

Ransomware as a cause of data loss is particularly concerning. The constant threat of new and creative attacks makes being breached more likely all the time. The encryption of your business’s data if you become a victim of ransomware could become a defining moment. Some businesses will survive mostly intact, but others will succumb and be crippled. Many times it’s the businesses that continue to rely on legacy processes that have the greatest difficulty recovering because of the amount of work and resources needed to identify what data was compromised, and how to recover. This can take days or weeks, and the business has to work around the missing and/or corrupted data.      

According to Enterprise Strategy Group (ESG) research, ransomware preparedness is the most important business priority for 26 percent of survey respondents, and is among the top five business priorities for another 53 percent. Where does ransomware protection rank in your business?    

Ransomware attacks are never-ending. According to ESG’s research, 79 percent of businesses have experienced at least one attempted ransomware attack (successful or not) within the past year. Ransomware attacks happen in the cyber world, though the impacts can potentially extend across all facets of your business, especially data protection.

Regardless, companies must recognize one important fact about ransomware: ransomware payments do not guarantee full data recovery. ESG research shows that 87% of companies that have been victimized by a ransomware attack in the last year failed to recover all their data after paying a ransom. In addition, the possibility also exists that some malware may still reside in your systems that will initiate another attack in the future.

Ransomware puts a tremendous amount of pressure on your business. It is something that requires constant vigilance because once the ransom demand is made, it’s too late to try and fix the problem. Make sure you’re talking to and working with your IT professional now.

Above I mentioned I’ve written articles that covered data protection, data storage, hacking and ransomware. If you haven’t read them I would like to encourage you to do so. If you didn’t save the articles, contact Human Powered Solutions for copies or check the articles archives at humanpoweredsolutions.com.

Hoping you don’t get attacked is not the best strategy.

Contact Steve Bina at steve@humanpoweredsolutions.com