Specialized Executive Vice President: It Will Take More Than a Year For Cycling Inventory to Recover
A slide taken from Margevicius' talk showing the lead times of certain components.
If you've been struggling to get hold of bike parts recently, don't hold your breath that anything will change any time soon. In a talk given as part of the Tapei Cycle Online Show yesterday, Robert Margevicius, Specialized's Executive Vice President, predicted it could take "a year or more for the industry to fully recover and build back up the inventory so we have the product available for the market".
Margevicius noted that bike sales remained stable for the past 25 years but a surge of more than 38% this year has caused serious disruption. With demand now far outstripping supply, lead times have ballooned on components from 30-60 days up to more than 300-400 days for some parts such as suspension, contact points and wheels. He warned that inventory levels are currently dangerously low and with customers now unwilling to wait, any sale that isn't made on the spot seems to lead to a lost sale for the industry rather than a delayed one.
One solution might be to increase the supply of components, however, it seems the manufacturers are unwilling. Margevicius is predicting that the industry will record a 43% growth by 2030 but his confidence doesn't seem to be shared by the factories in Taiwan. In a separate talk at the Show, Bicycle Retailer and Industry News reports that both Margevicius and Ton Anbeek, CEO of Accell Group, urged Taiwan's components manufacturers to upgrade their capacity with new factories but for now, they are choosing to be more conservative.
While the factories have apparently increased efficiency by around 10-15%, Margevicius believes this will not be enough to keep up with a growing market. He said, "That isn't really helping us much, to be honest with ya. The future is now, and industry leaders... need a sense of urgency and a mandate to believe and invest... There are billions of dollars to be made and profits for those who believe and invest in a healthier and a stronger business."
Anbeek echoed his thoughts, saying, "To meet the growing demand in the coming years we need component suppliers to invest in extra capacity to produce more critical components and products as soon as possible. And this needs, more than ever before, to be based on a long-term commitment and partnership between branded bike manufactures and component suppliers. Accell and its brands look forward to working with you to profit enormously from this very green and favorable market circumstance and trends."
Taiwan's manufacturers seem unwilling to upgrade their capacity for the time being.
However, in the few years it takes to get a factory online, the boom period may have passed and this would leave manufacturers with more capacity than orders. Other industry trends, such as the growth in local manufacturing and factories opening in other Southeast Asian countries may also be playing into their lack of confidence.
All of this, paired with a shortage of shipping, the ongoing situation in the Suez and the rising price of raw materials, doesn't paint a pretty picture for those riders waiting to get their hands on some new kit anytime soon. To watch the full talk given by Margevicius, click here.
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When the 'dust settles' as you put it and I'm guessing you mean supply/demand returning to more normal levels do still see the capital expenditure as justified for a short term spike? Do you plan to get more OEM contracts to maintain higher levels of production once the "dust settles"?
We've been very fortunate to be on an upward growth trajectory for a number of consecutive seasons, and OEM business has certainly been part of that. Ultimately, we'd love to keep expanding the OEM channel, but also continue to keep our nascent Spain-based EU operation growing. Ultimately, growth is the plan, but the pandemic has served as a crucible to force that acceleration.
Thankfully in the UK we have Hope!!
And yeah, I’ve talked to y’all directly about this before. You’ve been pretty non-responsive, although on at least a few occasions you’ve provided a bearing kit...of more of the same, but still, it’s the right gesture.
Totally and utterly worth it. The more we support our brands here, the more we get to grow our own industrial base. Keep rockin', I9!
Creaky cranks? Buy new ones
Fork needs serviced? Buy a new one
Brakes feel squishy? Buy new ones
I think the majority here look for quality parts and generally can fix their own stuff. But for the way bigger majority of people in the wide world who only feel, or can only afford, a Canadian Tire or Walmart bike the world is much tougher. Older standards, harder to find parts, repairs worth more than the bike is. We've gone through a dozen wheel sales after some kid curbs his bike or people back into their bike in the garage just this week because it's easier/faster to get the whole thing rather than rebuilding a crappy wheel or hub after waiting for those parts. And when our wheel supply dries up, well....
You hafta not break things this season. Its the only way to guarantee you're not sidelined. Whether a shop does it or you do it, you can't fix stuff without a new part.
Glad you're having a good time in the shop! Some of the best memories I have come from workplace shenanigans hahaha
New CNC machines / machining capacity however is something that could be increased quickly and not for too much outlay, I doubt its that simple.
However - what if they are wrong and they do miss the business opportunity of a lifetime?
Time to scrap together all the old frames in my garage and sell them with all the old parts I have laying around.
We are enquiring about a third machine now, lead time on this one a bit longer at 10 weeks.
Maybe you are purchasing more exotic kit than we are?
The car industry too. I bought a 2015 Tacoma two years ago for $28k.
I have put 80,000kms on it and now I can probably get $30,000.
A subset of manufacturers (particularly smaller/high end ones) may be able to sustain increased production volume by taking market share from others, but this won't work for the major OEMs selling generic product.
I think with e-bikes becoming better and better things may just keep going for some time, I have never spoken to so many people who rode when younger or before kids etc that are researching / purchasing (or trying to) E-bikes, the fact they are expensive is to some an even bigger lure, it’s a fancy toy that’s nice to own too.
As an example, a supplier of ours talks bikes to me regularly and their whole sales dept have all bought ebikes recently, 6-8 guys, nothing to do with the pandemic, one bought one and the rest followed suit over a few months - they literally love them, none have the time to get fit enough to smash the trail centre twice on a Sunday morning but they can now.
www.youtube.com/watch?v=stqG2ihMvP0
"better/cleaner/more inclusive/etc" are just things companies say so people will buy their stuff.
The sole purpose of a company is to generate profit.
That said, I'm not in the bike industry so most of this is a guess.
I targeted what I was after and signed up for email notifications when the item came back in stock and immediately pulled the trigger.
These bike execs think the industry is going to the moon with pandemic bike boom and the ebike revolution, the factories don't. You're a billion dollar bike brand and think there's billions more to made but you're losing sales because of long lead times? Sounds like you need to control the factory, not the other way around.
...That being said. Everyone wants US made until they see the price tag...
There are brands like Guerrilla Gravity that are really shaking things up with innovate (and green) ways to produce bikes. The issue is scaling some of these idea up and the fact that you have to pay your workers a livable wage. Plus, biking is still seen as a hobby here in the US. There isn't as much demand for bikes in the US as there is in other countries where they are a mode of travel. So, it really may not be worth the investment to manufacture in the US when a lot of your demand is across the ocean anyway.
It's not impossible, and I want to see it happen. But that's *maybe* a 5 year plan if companies pour money into it.
I am loving what GG is doing and they will most likely get my money when I am ready for my next FS frame.
Now I am day dreaming about a trans blue S&M hardtail frame with black profile hubs, raw cranks, polished velocity rims.
FBM briefly made and sold a gravel frameset for $1300. Not bad for a US made frame and fork. I wish I had the means to snag one back when I could.
Side note: Have you seen prices on some of the old and even mid school bmx stuff? prices are insane.
anyway
continue support made in china and slave labour.
why not suport own eu or us manufacturers??
Supply chain is crazy just now in mass manufacturing. I have never seen it like this before. It is causing so many headaches just now and it's only getting worse!
I am not a dentist waiting for my santacruz, but I am one of the engineers who faces the issues caused by 2020/2021 supply chain issues daily.
It's a crazy world out there just now!
"There are billions of dollars to be made"
Sad to see the bizarro world of pricing we accept as normal these days.
Shipping delays and increased costs, yes ... but something seems amiss. We deal with Chinese machine shops–I'll ask the folks involved if they're noticing delays from Asian suppliers.
minining and process, as thats where I'm located : )
Ideally countrys should have a basic level of own self sufficiency on things if possible,
as current situation is highlighting many issues.
This one will have its effects, container ship blocking Egypt's Suez Canal.
1. Taiwan has limited space compared the US.
2. After this surge plateaus once everyone got their bicycle, the factories will need downsize to save on operating cost. And guess will be footing bill?
3. Lastly, bicycling for is just fad like riding fixies. My take is they weren't riding before the pandemic it's likely won't continue. There'll be a few that truly fell in love that got comfortable with regular bicycling. This is mostly coming from my pre pandemic general observation.
The Specialized spokesperson is merely interested making a quick profit, while not caring about the long term cost others would have to shelf out.
Pretty much the whole industry (Big brands of course, not boutique stuff) uses Taiwan as its assembly base, as most frames are made it helps that the parts are too, its all sent to one place, assembled and shipped out to the brand, sometimes directly to the brands distributors.
Its pretty hard to convince them in that situation that a parts going to be travelling thousands of miles to be recieved for assembly, when it can be sourced (or at least could!) locally and purchased in numbers that give favourable pricing.
Things can change, but it isnt going to happen quickly - doesnt mean manufacturers cant capitalise on the aftermaket scene though.
So viva la Taiwan
Frames from people like Starling and Orange are not really that much more now either - sure the direct sellers like YT etc have them on price but compared to Taiwanese carbon they are the same if not cheaper.
Don't get me wrong I would love to support UK companies (and I do. But, as mentioned most of those parts are off shore/far east) just cos its a UK company doesn't meant the parts are UK made as we've seen recently with the brexshit/cotic bike fiasco....
Renthal, stem is uk at least alloy bars uk
Works - headset uk, rings uk
Unite - pedals uk, rings uk, stem uk, guide uk.
Burgtec - pretty much as above
Superstar - Hubs, rings, headsets, jockeys, seat clamps, etc all uk
What am I missing?
As for the uk frames being ‘pogo sticks’ - well that doesn’t validate your point about cost, does it?
First you say prices haven’t gone up due to Brexit, then you say it has because the stuff coming from Europe is made in China.
Make your mind up you xenophobic turd.
I run renthal bars
Burgtech, cool
Unite, works, hardly affordable
Superstar, what all the other Taiwan made stuff pedals wheel parts etc?
As for the floppy/pogo sticks, why pay boutique money for those when I can get high performance for WAY less ?
99% of the bikes and parts we ride are made in the Far East wether they're from UK, Euro or US companies. Fact
Sounds like you formed an opinion and you are sticking to it, back to alibaba for your parts I suppose.....
I may be wrong but i think superstar use rebranded Novotech hubs an Alex rims? Welgo for pedals?
I honestly think you'd be surprised how many companies from around the world get parts made by the Same few large far eastern manufactueres. It really opened my eyes when I worked in the BMX industry.
The current covid/brexshit situation is also a lage factor in me not caring where my parts are marketed from as long as my bike is running. With this news I think I'll stock upon KMC chains, again super performance for litlle £, so good that shimano have KMC make thier chains.....
Brexit was the cause for the free trade agreement, no?
Was this an issue before Brexit - no
How can you therefore not understand that it’s due to Brexit? The bike brands in the EU haven’t changed their business model since Jan 1st and that’s when the prices rose, no?
Did you know it also works the other way - e.g. nukeproof are now much more expensive to purchase in the EU, damaging nukeproofs trade.
You seem to have absolutely no understanding of what you speak or you are just completely blinded by your Brexit tribal loyalty.
Do you has a brain?
Sure, the odd bit like axles, rims and stuff are overseas parts but by majority it’s UK stuff.
Even truth in plain fact can’t alter the opinion of some of the absolutely brainwashed.
slow hand clap
I will try once more, and simply for you to explain as it seems you are struggling, right:
- Bike brand ‘pandamoniabrexitcretinbikes’ is based in Germany - pre Brexit it imports bikes from Taiwan and pays the required import duty and charges upon import (this company isn’t huge like specialized so doesn’t have the ability to have dealers in every country)
- It sells a bike to a UK customer and due to being part of the single market, absolutely no charges are paid, no customs, no VAT, no duty, bike costs customer £2000.00
- Roll on Jan 1st and Brexit - customer in the UK buys bike but now the UK isn’t part of the single market so under the new arrangement the customer is liable to pay import duty at 14% - so the customer now pays £2280 for the bike - assuming no handling fees.
Do you understand now? Surely you do, it’s very, very basic.
What can’t you understand? The CUSTOMER pays the import DUTY at 14% not the business selling it, it’s due to rules of origin.
It’s very, very, very simple - the whole industry is talking about it, everybody else understands it, except you.
www.export.org.uk/news/549784/Booming-biking-sector-tries-to-work-through-new-Rules-of-Origin-and-VAT-regulations.htm
Are you a troll or just incredibly hard of thinking?
+ 2 for the “xenophobic turd”.
Ignore the articles, ignore the actual business telling you what is happening, just go with what you want to believe in the sunlit uplands that exist only in your own brain.
I’m sure either won’t read it, won’t understand it or just plain won’t believe it though.
This comment doesn’t pertain to any of us here and on other bike Forums.
to quote hemmingway.. it happens slowly at first, and then all at once.
I can actually see this situation causing many smaller guys to go bankrupt.
Whats happening is well beyond the realms of extra demand, it seems most likely to be some hoarding on a grand scale creating a viscous circle - lead times go up, everyone has to order more in advance, that forces lead times up, people order even more. It almost needs suppliers to tear up the order book and start again at this point, it's become crazy and companies are going to get burned.
And then there is the aspect of being forced into a two year forecast, and with the way the parts come and go in yearly cycles wont some of it be completely out of date by the time its available?
Sounds like you have one hell of a headache to deal with, hopefully you can capitalise on the financial side of it at least.
you're literally the kind of person plaguing our sport.
i hope covid bikers seeing understand only a small fraction of us are like this.
As much as I like making new friends to ride with and wouldn't discourage anybody from learning to ride, I feel that the massive growth of the sport may serve to damage it at least in the short term, especially when you consider that some of the growth is being driven by populist YouTubers such as sam pilgrim, who is encouraging some pretty negative behaviour when it comes to things such as trail building. (yes I know he's just having fun and is a much better rider than I am, I have nothing against him personally I just worry that some younger riders may be influenced in a negative way, I would love to see him doing a few videos about trail maintenance and looking after the environment, although it's his channel and he doesn't owe me anything, also he might have done and I haven't seen it so I might be talking out my ass...)
The way I see it is that originally a lot of people got into mountain biking because of a friend or a family member, who taught the newbies some elements of the unspoken trail etiquette. Alongside this many of the mountain bikers I know and rode with before the pandemic, had a genuine appreciation for the natural world and mountain biking was a way to get out in nature. Most people who ride partially, for this reason, would never dream of littering, or creating a large fire on moorland because they have an understanding of the environmental and social impacts that this type of behaviour can have, I worry that this may be lost with the new youtube generation of mountain bikers.
Although, modern problems require modern solutions, and organisations like trash free trails make me hopeful that we can reach these new riders and encourage good, productive behaviour that doesn't get our access rights taken away. That is my main concern because landowners often can't distinguish between new and experienced riders so the bad behaviour of a few could impact all of us negatively.
I think the best way to deal with the influx of new riders is to welcome them with open arms, let them know the do's and don'ts of the sport, encourage them to come to dig days and learn good trail building practice (so the shonky jumps made out of rotting logs stop popping up at the local) and make them feel accepted! Because at the end of the day, how can we encourage good behaviour is were not willing to talk to people?! You never know, you might make some new friends, you might get some more people on the tools helping with trail maintenance and the increased presence of mountain bikers in your town might even make your local council realise there is a need for some legal trails to be created!
I guess what I'm trying to say with this stupidly long comment is that new riders can be a good thing or it can be a bad thing, but it's up to us to decide!