Axles and Allied

Allied Cycleworks’ Tony Karklins is regearing the bicycle manufacturing industry, one carbon-fiber frame at a time
TONY KARKLINS BELIEVES IN America. Or more specifically, he believes in the importance of American manufacturing, particularly in the bicycle industry. Just listen to Tony break down the mission of Allied Cycleworks, his Little Rock-based carbon-fiber bike company, and you’ll hear the passion in his voice. Having spent the majority of his life working in the cycling business, Tony became disillusioned with the trajectory the industry had taken to moving production almost entirely overseas. So after selling the highly successful Orbea USA back to its Spanish parent company in 2014, Tony shifted gears to begin work on Allied. His goal? To not only reshore bicycle manufacturing to the United States but to craft a product capable of competing with anything coming out of the factories in Asia, both in terms of quality and price point.

“We’re industrializing artisan craftsmanship,” Tony tells me after a tour of Allied’s facility, which went into operation last year. “That’s what this play really is. … Making it, making it better, selling it directly to the end user, making it as efficient as possible—that’s been a very fun challenge of this, trying to find all the fat in an industry that outsources damn-near everything.”

And by establishing Allied in his hometown of Little Rock, Tony is not only bringing economic development and jobs back stateside, but he hopes to stimulate growth in Arkansas’ manufacturing industry as well. So while high-performance bicycles were being crafted from a humble sheet of carbon fiber to beautifully painted finished products just a few rooms away, we sat down with Tony to find out how Allied Cycleworks came about and where it’s going next.

How did you get your start?

I started working at the local bike shop, [Chainwheel], when I was 11 years old. I was changing flat tires in the back of that thing. I became a partner in that when I was 16. I just kind of fell in love with bikes, and actually, I fell in love more with selling people bikes and turning people into cyclists. I ran Chainwheel until I was 30 years old, and at that point, we had a couple locations. We’d moved into the Colony West shopping center, where it is now, and I’d almost been in retail for 20 years. I wanted to grow outside of bike retail, but I was in Little Rock, so you couldn’t open another store. It didn’t make sense. We’re not a big enough market for that. So I started flying back and forth to Europe and going to different trade shows and trying to look for an opportunity for a brand that we could bring into Chainwheel and distribute, and that’s when I found Orbea.

And they’re based out of Spain?

They’re based out of Spain. So I departed Chainwheel, started Orbea USA, ran that independently for about three of four years before we did a joint venture to build [up] Orbea USA, because I built it to the point where it was going to need a whole lot of money to keep going from there. So I did a 10-year contract with them, and I sold Orbea back to the Spanish guys in 2014. They’re in North Little Rock still today, and they’re one of the biggest European bike brands in America still. But when I sold that, that’s what I knew how to do. I knew how to go import brands and sell them to dealers and kind of build distribution networks in the cycling industry.

I started going back to Europe and various trade shows, looking for the next brand that I could bring over here, and in that time of talking to all these other brands and taking all these tours of companies, I saw firsthand that none of these brands manufactures anything. And in fact, no one in the bike industry really manufactures anything, except for the artisan guys. And there’s really kick-ass artisan guys around. But those are $10,000 bikes or $6,000 frames, and every big bike brand had closed its factories and shipped everything over to Asia, and now they were really just kind of playing some finance game with buying bikes out of China and financing them to bike stores.

I’ve said in a couple of these interviews that my epiphany was that the bike industry had lost its soul. It wasn’t about bikes anymore. So through that, I’d decided if I was ever going to get back into the bike industry, we were going to be the one brand that built these things ourselves, and we were going to be so honest and so transparent, and we were going to kind of have the American comeback of bicycle manufacturing.

I’m curious what it was like for you to go from working in your local bike shop to running Chainwheel and then eventually developing Orbea USA. That seems like a pretty huge leap.

I come from an entrepreneurial family, and I don’t mind risk or personal risk for stuff like that if I really believe in it. I’m usually able to convince the people around me and the people who are financing it to kind of go with me. So a lot of hard meetings, a lot of hard selling, but I aligned the people necessary to make that Orbea thing happen. I mean, it did. It blew up immediately. Just like [Allied]—this blew up immediately.

However, this is different. When Orbea blew up immediately, we could call China, and they’d send more ocean containers. It would come in, and the next day, we’d turn it into revenue. Here, when we need 10 times as much, we look outside, and we go, Holy shit. This is going to be hard. Because it’s jobs, it’s training. You know, there is no workforce for this stuff in Arkansas. Anybody who’s going to come in here at all has to start at zero. We almost want them with hardly any skills so we can train them in exactly what we want them to do. So that’s the difference with this one. But in watching some of these workers who are back here that came in as temporary workers from a labor-sourcing agency that are now training other workers in composite layup in, like, a year—when you see that, it makes your heart kind of swell. That’s cool.

What happened after that?

So I started working with a group in San Diego that had a similar dream and was manufacturing composite golf clubs. I worked out there for all of 2015 and really dove into the numbers and dove into a deeper understanding of what machinery and technologies and talent it took to build something like this. It ultimately didn’t work out in San Diego for many reasons. One of the most important reasons is, it’s too expensive of a place to do something like this because when you’re having to compete against a Chinese workforce, those people can’t be based in beautiful San Diego. So when I wrapped up my time with those guys in San Diego, about a month later, I was sitting at home in Little Rock thinking about the rest of my life when, suddenly, the second largest composite bike factory in North America went into bankruptcy. So I’m like, Hmm. This is interesting. I now know what to do with that machinery, and I know how to build it. So I went up there, and I won that auction. I got roughly about $3 million of machinery for a little less than $200,000. … So overnight, I had a factory. The problem was, it was in Montreal.

What was the name of that company?

That company was called Guru, and they had a beautiful factory. Their factory was always a lot bigger than their company was, and they were doing a very high-end product—too high-end—so high-end that they couldn’t really grow a business from it.

But in that moment, when we had such a good deal on buying all the equipment to do this—you know, it cost quite a bit of money to get it here—but then all of a sudden, the investment and the talent, they all surfaced because now somebody had a factory. Piece by piece over a six-month period, all of a sudden, we now had the talent to do a world-class product out of Little Rock, Arkansas. And the investors followed. I got with the right group of people who believed in what we were doing, not only in the bike industry, but it was well-timed with the American manufacturing story. Although we are not political people in here—we want to stay clear of that—we definitely believe in American manufacturing.

So we bought that factory on Feb. 9 of last year. We didn’t get operational in this building until, really, July of last year. We launched our first brand in January, and now we’re back-ordered for as far out as I can see. So the big dream is to bring more of this type of manufacturing to Central Arkansas and have something in the bike industry that employs 250 to 500 people. Because what you saw back there in that layup room, there’s a lot of jobs. When you scale composite bicycle production, man, that becomes a couple of buildings of employees there. So that’s the 5-minute version of the story (laughs).

So, it just doesn’t make sense financially to do this business in a place like San Diego?

Yeah, just the cost of doing business, the cost of renting a facility out there in San Diego versus here—the people cost, the taxes, the government restrictions—you know, you can’t paint in California, so you have to outsource that to somewhere else, and the back-and-forth cost of all these things. I was working in these Excel spreadsheets, and they were just red forever. But here that wasn’t the case, and here the government is very interested in more advanced manufacturing. So the Economic Development Commission, those people were here to help because they know that once something is successful doing what we’re doing here, the next one’s coming, and soon we’ll have a little cottage industry of composite manufacturing in Little Rock. And that’s cool shit for Little Rock. That’s when we’re making plane wings and satellites and bicycles. It’s all coming back because it’s only getting more and more and more expensive to do it in Asia. So it would be really awesome to see a bunch of that back in Arkansas.

So is that something that was important to you as far as being an Arkansan?

Yeah, I mean, being an Arkansan is important to me, and job creation in Arkansas is important to me, and staying home and raising kids in Arkansas. For the past 17, 18 years of my life, I’ve been on a plane every freakin’ week and had a great time doing it— don’t get me wrong—but I’m ready to be home, sleep in my own bed every night, not miss a soccer game for my son and stuff like that.

What are you most excited about going forward?

Upping production (laughs). It’s all I can think about. I wake up at 2:30 in the morning going, OK, how are we going to go from 24 to 25? It’s that. That is it. That, and we did something first in the world, and we know how hard it was. So we know that anyone else who is going to do this is at least a year or two behind us, so we have to put the gas on. This is fast. We have to be the company that owns the story because if we have a chance of turning into a brand as legendary as a Schwinn or a Trek or as those things, we better do it right now. We can’t lollygag at all, and we can’t throw up our hands and celebrate and say, We’ve done something great. Or somebody’s going to come around us. So that’s the biggest fear that I have, that we open the door, and a bunch of people run through it.