Shimano has invested $179 million (20 billion yen) in a new plant in Singapore and $118 million (13 billion yen) in its existing Japanese facilities that will help it meet the increased demand for cycling parts brought on by the pandemic, Bicycle Retailer
reports, citing asia.nikkei
During the pandemic, cycling allowed people to avoid public transport and undertake socially distanced exercise which, in combination with government infrastructure policy, meant that demand for cycling parts skyrocketed. This has been a fruitful time for the industry and Shimano itself ended the year with a 2.7% net sales increase
in its bicycle department despite a 15% sales slump in Q1.
However, the pandemic has been a double-edged sword as bike brands have struggled to keep up with the increased demand due to factory shutdowns
, a shortage of shipping containers and even the grounding of the Evergiven
in the Suez Canal. Brands are now reporting lead times of more than a year for some products and it seems unlikely that this will change through the rest of 2021.
We've previously reported that manufacturers have been reluctant to increase their capacity
as they were wary of the sustainability of the current boom. If the bubble were to burst, a manufacturer could be left with excess capacity and not enough orders to fill its slots however, Shimano's investment may be a sign of confidence that the growth from the pandemic is more sustainable than previously believed.
Shimano already has a facility in Singapore however that plant was built in 1973, whereas this new plant is said to be the "factory of the future" with an emphasis on digitization. The new plant is expected to come online by the end of 2022 and will manufacture high-end transmission parts. Shimano is also investing another $118 million (13 billion yen) in its two Japanese factories in Osaka and Yamaguchi. These investments will go towards new machinery and software that will reportedly allow it to increase capacity by 1.5 times by the end of the year compared to 2019.
Shimano isn't alone in betting on the continued success of the cycling industry. This Reuters piece
cites "industry insiders" who believe that, "the increase in ridership will endure after the outbreak eases, citing governments’ interest in improving health and easing city congestion, as well as expectations that people will stick with leisure and exercise habits formed during lockdowns, especially if they continue working from home".