They Huffed, and They Puffed, and They….

China’s campaign to buy up ‘known brands’ continues. This time it is the US centenarian bicycle manufacturer Huffy. This bid has an interesting twist: Huffy is in bankruptcy, apparently for problems with a defined benefit pension scheme. IMHO this could be the tip of a looming iceberg. Best known canditates for forthcoming problems here would be Ford and GM. With the pace at which things are moving, you need to ask how long they can hold out?

Chinese suppliers and an agent of China’s government are poised to take control of Huffy Corp. (HUFCQ.PK: Quote, Profile, Research) , a venerable U.S. brand name, as the bicycle maker restructures under bankruptcy protection, it said on Tuesday.

Huffy, making bikes for Americans for more than a century, said it had agreed to a reorganization plan which would allow it to terminate its staff pension plans. The company would turn responsibility for the benefits over to the Pension Benefit Guaranty Corp., a unit of the federal government that insures pension plans.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “They Huffed, and They Puffed, and They….

  1. It would make sense, since, as far as I know, Huffy stopped making bicycles in the US years ago and is now pretty much limited to slapping the “Huffy” label on Chinese-made bikes…

  2. This is a clever buy for China, since bicycles are most important through Asia and the Huffy name is so well known.

  3. “This is a clever buy for China”

    Yes, Anne, I think it is. And it seems that the Chinese are playing their cards pretty well generally. The Pew survey on global attitudes was interesting in relation to China:

    http://pewglobal.org/reports/display.php?ReportID=247

    They seem to be using ‘soft power’ quite well. From time to time they play ‘divide and rule’ with the EU and the US over things like Airbus and Boeing. They make the right noises on terrorism, but don’t get involved so they don’t create issues.

    They buy up a lot of treasuries so they have ‘lock-in’ with the US administration, and now they buy ‘friendly’ brands for a song rather than going for aggresive market entry with new names, and of course new intellectual property issues.

    My point here is that with the growth of what Hans Sinn calls the Bazaar economy many EU and US companies can find themselves in the situation of Huffy and Maytag (Hoover).