Will a new Shimano factory help fix the global component shortage?

The global bike boom and the resulting surge in demand has resulted in a major shortage of components, with retailers and bicycle manufacturers around the world struggling to meet the need for new bikes with simply not enough supply available. In an effort to ramp up production, Japanese bicycle component brand Shimano has invested more than 225 million in building a new plant in Singapore.

According to Nikkei Asia the brand will also be expanding the production capacity of its domestic factories—a further $146 million will be invested into the Osaka and Yamaguchi plants.

“Factory of the future”

Shimano currently has a factory in Singapore, but it was built in 1973 and is in poor condition. The company says the new plant will be a “factory of the future” and will emphasize digitalization. Although it was planned to be completed by 2020, pandemic delays mean that the plant is now scheduled to be fully running by 2022.

There is still some time before the new factory comes online, but the Osaka and Yamaguchi factories are ramping up production with improved efficiency due to new “cutting-edge manufacturing equipment and software.”

According to Shimano, the new changes mean that the brand’s total production this year will be 50 per cent more compared to 2019.

The demand for bikes means that, despite the pandemic, the Japanese company generated 63 billion yen of net income in fiscal 2020, up 22.5 per cent from the previous year. Shimano forecasts its net income for 2021 will grow by 25.4 per cent to 79 billion yen.

According to Reuters, Shimano has an estimated two-thirds share of the mid- to high-end groupset market. Bike manufacturers have grappled with increased lead times as the company struggled to keep up with demand. With improved technology at the existing plants and the opening of a new factory on the horizon, an end to the global component shortage could be within reach.