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*** Dorel Bikes On Through Tough Times ***

Montreal, Canada -- 04/13/2009



When his day is done, Martin Schwartz sometimes finds his departure
from the Montreal-area Dorel Industries garage is blocked by cyclists
using the local bike path.

You won't hear any complaints from him.

Since 2004, bikes have become the third spoke in Dorel's business,
along with children's products and home furnishings. Despite the
economic upheaval, which has seriously sapped consumer spending,
Schwartz is adamant all three sectors will keep on rolling.

``We're coming off our best year ever,'' he said, so a finish slightly
above or below 2008 will be decent, given the prevailing winds.

Sitting in the president's office, Schwartz readily admits that if he
were in the fashion clothing industry, he wouldn't be so calm. But
he sees Dorel's product line as maybe not recession-proof, but
more recession-resistant than a lot of consumer goods.

Cribs and step-ladders don't go stale when you end up with too much
inventory as retailers scale back their orders. And many of Dorel's
products are in the low to mid-price range, sold at discount stores
like Wal-Mart, which are holding up the best during the slowdown.

Recession or not, babies keep coming and people want to buy the best
they can for them, he said. And the bicycle business, which gained
momentum during the recent days of high gasoline prices, is still strong.

``In today's economy, people are not travelling far distances and
they're not taking vacations as they used to, but we are finding that
they are still buying bicycles,'' Schwartz said. ``They are travelling
in and around their community. In many cases, it is something the
whole family can do.''

But there will be pain. As a company that is based in Canada, but
reports in U.S. dollars and does most of its business in Europe and
the U.S., he is anticipating taking a hit from the strong currency
fluctuations of late - particularly the robust euro. But he expects to
be able to offset some of that through better cost control and
potentially more business, born of the economic uncertainty.

In unstable times, retailers - particularly those dealing in juvenile
products that could face liability issues - want to make sure the
company they are dealing with will still be there, should problems
arise, he said.

So retailers who used to spread their orders around, or who didn't
carry opening price products, are turning more to Dorel. ``We're
getting better listings and more products per retailer.''

The same holds true for Asian suppliers, who also want to make
sure the company they are making all those goods for will still be
around when it's time to to collect them. So Dorel could be in a
position to negotiate better prices, Schwartz said.

But he isn't just counting on outside forces. He expects most of the
growth will be organic, wrought through better cost-control and
creative new products. There are no acquisitions in sight.

In the past, top managers kept an eye on everything, moving en
masse from product segment to product segment as needs arose,
he said. But while they were concentrating on the needy segment,
other segments were on their own.

The company has now named presidents to each of the three product
segments, with a mandate to concentrate on their products only and
adhere to the company's minimum margin requirement program. Simply
put, weak links will not be tolerated. Dorel is watching every product and
won't hesitate to drop the under-performers.

However, not all of the company's reorganizing has been
carried out without drawbacks. Which brings us back to bikes.

Dorel began as a children's-products company, added ready-to-
assemble furniture, then other consumer goods such as step stools
and ladders, and then in 2004 branched out into an entirely new field
when it bought Pacific Cycle, which gave it ownership of key bicycle
brands such as Schwinn, GT and Mongoose.

Schwartz said Dorel went into bicycles because they looked like
a good business with growth and profit potential. They would have
many products in the low- to mid-price range, and would be selling
to mass merchants they already dealt with.

Then in February 2008, Dorel bought the Cannondale Bicycle Co.,
purveyors of premium bikes to elite cyclists. They've travelled the
Tour de France. Now Dorel was dealing with independent bike stores
and the focus of much media attention among the passionate and
vocal cycling community - a number of whom did not take it kindly
earlier this month when Dorel announced that Cannondale would no
longer be handmade in the U.S., but manufactured in Asia like most
other bikes.

Schwartz said the purchase made sense, because Cannondale has
profit potential and could help the company introduce some of its
high-end GT and Schwinn models to the independent retail market,
particularly in Europe.

``In general, it gives us a lot more respect,''
he said.

The shift in manufacturing location was necessary for cost-control,
he added. High-end bikes are shifting from aluminum to carbon,
and working with carbon is labour-intensive. The difference between
North American and Asian salaries was just too great, he said.

Sara O'Brien, a stock analyst with RBC Capital Markets, told clients
there will be some push back from independent retailers on the move,
but the bikes would still be assembled in Bedford, Pa., ``with the same
high-quality standards,'' so she is not expecting there will be a material
impact on earnings.

Dorel stock, like most others, has taken a beating over the past
several months, but has picked up steam in the last few weeks.

Shares moved from a six- month low of $15.25 on Feb. 9 to close
at $22.14 on Thursday. Of the five analysts who track it, three list
it as buy or outperform and two have it as sector-perform.
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