Giant Manufacturing Co (巨大機械) is waiting as long as two years for bicycle parts as unprecedented disruptions and lockdowns roil the global supply chain, putting one of the world’s biggest bike makers at risk of missing out on a demand boom.
“It is a hell of job,” Giant chairperson Bonnie Tu (杜綉珍) said in an interview at the company’s Taichung headquarters.
Some bicycle parts have a lead time of two years and even simple components can take six months, she said. That compares with a normal wait time of one to two months.
Photo: Cheng I-hwa, Bloomberg
The global supply chain has been plagued by chaos for more than two years, as sudden shortages, shipping delays and soaring prices hit everything from masks to vehicles and iPhones. Russia’s invasion of Ukraine and China’s hard-line approach to stamping out its worst COVID-19 outbreak in two years has further exacerbated the problems, boosting the risk of a global recession.
Giant has temporarily shut four plants in Kunshan, which borders Shanghai, to comply with local lockdown measures.
The restrictions have also meant components cannot be brought in, Tu said.
The company has five manufacturing centers in China, which account for about 3.5 million bikes — more than half its total capacity.
The disruption has underscored the importance of diversifying sourcing and production locations.
“We understand we can’t put all our eggs in one basket,” Tu said, and Giant is joining many other manufacturers in shifting to producing more goods locally.
The company also has one plant in Taiwan, the Netherlands and Hungary. Giant plans to start production at its new factory in Vietnam by the end of the year, benefiting from the country’s free-trade agreement with the EU, which accounts for almost 40 percent of Giant’s sales.
Competitors have shifted their supply chains away from China to Cambodia, which has zero export duties on goods sent to the US, Tu said.
There are tentative signs that the worst of the supply crunch is easing. Bike inventory has rebounded to about four weeks of demand from almost zero last year, although it is still lower than the normal level of eight weeks, Tu said.
High-end bicycles face the worst shortages of parts, but Tu predicted that is likely to ease by the end of this year.
Some components, like the Shimano Inc derailleur set that is a core part of a bike’s gear mechanism, might still be in short supply into next year.
Tu estimated that Giant would post a high-single digit to low-teens revenue growth this year, after reporting a record NT$81.8 billion (US$2.81 billion) in sales last year, in part due to rising demand for electric bikes.
The sector might account for 40 percent of Giant’s total sales in three years, compared with 31 percent last year.
Still, Tu warned that the company’s outlook would depend on supply conditions, particularly in China.
“No one knows what the China government will do” with its zero COVID-19 policy, Tu said, adding that measures to allow workers to live at factories during lockdown periods would help ease disruptions.
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