By James Arnold BBC News business reporter

Biking may be dying elsewhere, but Londoners still cycle

An obscure corner of an obscure factory in an obscure Bedfordshire town is one of the last outposts of Britain's moribund bicycle industry.

Head away from the shop floor at Silkmead Tubular, modestly abustle with the clang of machinery, into the near-empty tool room and up the stairs, and you'll see a row of peculiarly futuristic pushbikes.

The Dunstable company is hoping that an apparent boom in commuters' folding bicycles will rescue it from a terminal decline in its core metalbashing business.

But is there really a cycle boom, or just a bump in the road?

The tubular bell tolls

Silkmead's sudden interest in bicycles was an invention born of necessity.

Over 30 years, the company built a reputation in the business of bending metal, producing specialised tubes for everything from domestic appliances to the aerospace industry.

But the sector, fragmented and only moderately hi-tech, has come in for a battering from cheaper competitors in the Far East and other low-cost economies, says sales director Colin Jarrett.

"Deals are being done at prices lower than what we pay for materials alone."

The company made an effort to diversify, turning its hand to consumer items such as towel rails and - less successfully - to metal-bending machines.

But the writing seemed to be on the wall five years ago, when Silkmead lost an order that alone accounted for one-quarter of its £2m turnover.

Man with a plan

Enter Grahame Herbert. Three decades ago, Mr Herbert - then working as an architect - came up with a design for a folding bicycle.

Unlike another idea being developed at the time - the now market-leading Brompton folding cycle - Mr Herbert's lightweight Airframe bike folds without fiddly clamps.

And its ingenious structure collapses in on itself like a child's pushchair, leaving a package that's tall and slim.

A deal to produce the Airframe for a while during the 1980s did not last long; the design languished on Mr Herbert's drawing board until Business Link matched his desire for a manufacturer with Silkmead's desperate need for a new product.

On your bike

The fit seems neat: Silkmead specialises in precision bending, shaping and joining of tubes, and has the expertise to match the millimetre-perfect geometry of Mr Herbert's design.

Mr Herbert has been working on the Airframe for 30 years

Aside from its need for fresh revenues, the company has plenty of spare room on its shop floor, and can ramp up bicycle production without significant fresh investment in staff or machinery.

Preparation took far longer than the firm thought, thanks to interminable complications over the bike's gear mechanism, which was to be bought in from outside suppliers.

Teething troubles have, the company says, been ironed out.

Yet, production is scarcely surging ahead - there was no one on Airframe assembly when BBC News dropped by - but Mr Jarrett is signing up customers. The first batch has gone to Germany, and a Japanese deal is in the offing.

Top dollar

For Silkmead, the Airframe could make the difference between extinction and survival. The company is hoping for at least a 10% share of the UK folding bike market - worth, Mr Jarrett reckons, a total of about 7,000 units a year - which would more than make up for the lost order.

But will the gamble pay off? Consumers have responded well to the Airframe's looks, and to its slick folding mechanism - but far less well to its hefty price tag, starting at £690.

Brompton's models start from about half that sum, and are rapidly being overhauled to match the Airframe in terms of weight.

According to Silkmead, the complexities of the Airframe's folding mechanism, coupled with the fact that a third of its cost reflects bought-in components, mean the price cannot be reduced by much.

Cyclic decline

A more serious worry, though, is the apparent prostration of the UK bicycle industry.

More than 3 million bicycles are sold every year in Britain; almost all are imported.

Raleigh, by far the country's best-known industry name, moved production in the UK six years ago.

Silkmead joins a tiny coterie of domestic manufacturers led by folding-bike firm Brompton and Pashley, a traditional manufacturer best known for selling to the Post Office.

Sturmey-Archer, a once-legendary brake and gear manufacturer, sold up five years ago and has since been shipped to Taiwan.

Price problems

Price is the key, says Carlton Reid of Bicycle Business magazine.

Although the number of bikes sold has trebled since the 1970s, the average price has plunged thanks to the increasing domination of supermarkets.

At the same time, public hand-wringing over obesity and road congestion has not helped stem a secular decline in cycling.

The average British adult now cycles 34 miles a year, compared with 51 in the mid-1970s.

Capital gain

So is Silkmead joining a doomed industry?

Can a folding bike help Silkmead ride out the slump?

Not necessarily. Although Mr Jarrett talks brightly about selling the Airframe to everyone from barge-owners to airline pilots, the core demand will certainly come from commuters, especially the 1.5 million people who travel to work in central London every day.

And that market is growing extremely fast. According to Transport for London, bicycle use in the capital has increased by 67% in the past five years, not least because of the introduction of congestion charging for drivers.

Brompton, buoyed by this boom, has just overtaken Pashley as Britain's top producer.