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Known Unknowns: Part 4

March 05, 2021 0 Comments

What’s the future of the bike industry post-Covid?

Words by Shane Stokes

Photos by Trek, Shimano, Balint Hamvas (Cyclephotos) for SRAM

 

It’s been a weird twelve months for cycling, with a rollercoaster of demand and supply for bikes, components and accessories. Shane Stokes talks to several within the industry about the current situation. They explain the challenges and what they believe will happen longer term.

 

SRAM is one of the companies which has had to cope with uncertainty during the current pandemic

SRAM is one of the companies which has had to cope with uncertainty during the current pandemic. © Jacob Kennison (Trek Factory Racing)

 

The explosion in online sessions in the past year has been one of the biggest changes to cycling in a long, long time. Rather than clashing on the roads of Europe, the world’s top pros were instead squaring up in the virtual world. Thanks to Covid-19, e-racing replaced stage racing for a chunk of spring 2020.

The transformation in the sport was similarly echoed by many amateurs. Full and partial lockdowns did away with group rides and forced many to ride indoors. However despite the surge in demand, there was a major shortage of home trainers for much of the year. That shortage continues to persist into 2021.

The same can be said for more general cycling equipment. Two examples: In recent weeks Conquista spoke to a US-based manufacturer waiting to launch new bikes. They said they are facing delays because of severe shortages affecting a component manufacturer. “We can get groupsets, but parts are missing from those groupsets,” they said. “As a result we can’t build up the bikes and are running way behind.”

The second example comes from Great Britain’s lead academy coach Matt Brammeier. He was left without a ride after thieves broke into his house over Christmas and stole mountainbikes. “I am trying to buy a bike at the minute myself as mine got robbed over Christmas. I just can’t find one,” he said recently. “There are just no bikes in the UK.”

The problem affects far more than just Brammeier. The GB academy has also encountered shortages. “The situation is as bad as I have ever known it, to be honest,” he continued. “We can’t get any Shimano parts at all. That seems to be the main crux of the problem. We are struggling a little bit, but we are working hard with [GB official sponsor] Cervélo. They are trying to help us out.”

 

Industry giant Shimano was put under pressure by factory shutdowns, then an unexpected surge in demand. Photo copyright Shimano

Industry giant Shimano was put under pressure by factory shutdowns, then an unexpected surge in demand. (c) Shimano

 

 
“All the other Cervélo-sponsored teams are getting together and trying to share resources. They are trying to get us up and running before all the new bits and bobs arrive. It is a nightmare.”

As Brammeier notes, last year saw supply challenges compounded by an unexpected upsurge in demand.

Shimano was affected by a factory fire in recent years. It was then forced to scale back production for a period of last year due to Covid-19. “It was operating far below its usual capacity,” he explained. “Then obviously at the same time there was a worldwide bike boom, bigger than we had ever seen before. Everyone went out and bought a bike when Shimano was on its knees. I think the current lead time for groupsets is 540 days…it is normally something like 100.

“I was talking to Tim Harris yesterday,” Brammeier continued, referring to the  former British pro living in Belgium and with links to many teams there. “One of the teams had to change to Campag this season because they can’t get groupsets. That goes for everything, really…it is the whole bike industry.

“Obviously all the factories are closed, the ships have stopped sailing, and everyone went out and bought a bloody bike. There is nothing left.”

However the difficulty is not limited to Shimano alone. Conquista spoke to a mechanic working with a shop in Dublin, Ireland. He said that all component manufacturers are having difficulties in meeting demand.

“There is a near two-year delay in getting one groupset in,” he said. He was unwilling to specify the manufacturer in question, but stated it was not Shimano. “And the delay is across the industry. There are huge delays in getting full bikes in. A lot of suppliers are saying people have to wait until 2022 for many bikes.

"There are major problems in getting turbo trainers...most won’t be available until December, or even next year. And Brexit also complicated things. Giant had bikes in England that they couldn’t get over here to Ireland, although they are starting to sort that out now.”

Like Brammeier, he said that the problem is a combination of a lack of supply and also an explosion in demand. “There is at least a 40 percent increase in bike sales, maybe more. People don’t want to use public transport, it is safer to use bikes instead.

“And they are also entertaining their kids as well during the lockdown. More kids’ bikes are being sold as they want to bring them out. That means more demand. It also means more demand for things like helmets and other accessories.”

 

“We really held our breath…we didn’t know what was going to happen”

 

The demand is clearly there for product: how about supply? Conquista spoke to three companies within the industry. They gave their perspective on what has been a very unusual and challenging time.

Shimano is based in Asia and so was affected early on by the outbreak of Covid-19 there. A spokesperson said its east-Asian production centres were affected by local government recommendations. “In Europe the effect came later with the closure of bicycle stores at various points. This affected consumer demand and, subsequently, factory orders from bicycle manufacturers.”

However that was followed by a surge in demand. “One of the unprecedented and unexpected challenges of Covid-19 has been the huge positive upswing that consumers across the world have made towards cycling during the summer,” they continued. “People have been turning to their bicycles to avoid public transport and crowded public spaces, or due to changing fitness/leisure habits. This lead to many bike shops and global bicycle manufacturers to sell out of bicycles sooner than expected.

“For Shimano this led to a huge upsurge in demand, which is continuing to the present day.”

 

Shimano had to take a more hands-on approach than usual in order to cope with fluctuating demand and supply. Photo copyright Shimano
Shimano had to take a more hands-on approach than usual in order to cope with fluctuating supply and demand © Shimano

 

 
That account is borne out by Shimano’s own numbers. As noted by Japan Times last May, the company reported a 15 percent year-on-year drop in sales of components in the first three months of the year. However, after mid-March, shares in the company surged to record highs as demand soared. The share price remains significantly higher this year than it was twelve months ago.

Fellow component manufacturer SRAM also experienced a jump in demand for its products. It told Conquista that it was able to respond quickly to those changes.

“Protecting our employees remains our priority through COVID. We have followed suggested medical protocols, everyone has adjusted well, and we were able to maintain a very high level of production,” said a spokesperson. “Because we have been doing most of these activities for some time, they have become normalized."

They said that one of the few positives of this period has been the spike in bike sales. "It’s exciting and encouraging to see so many people getting on bikes. To satisfy demand we have added shifts, staff, production lines, and are running at 100% capacity.”

As was the case with others in the industry, the company also experienced a surge in orders approximately three months into Covid-19. It said that it ramped up every aspect of its production, in some cases doubling it. “And while we face daily challenges with shipping and some raw materials, we have been consistently working through those."

SRAM said it was the surge in demand aligned 'perfectly' with the introductions of several new products and new technology. In fact, it said that much of its increased production pre-dated the pandemic.

Looking beyond components to a mainstream bike manufacturer, US company Trek described the pattern of supply and demand as something that was “entirely unexpected.”

Eric Bjorling, Trek’s Director of Brand Marketing and Public Relations, spoke to Conquista about the company's experience.

“We started seeing shutdowns in our southeast Asian manufacturing and supply chain in December 2019, then January, February of 2020,” he said. “We knew that there would be some disruption to the supply chain. And then in February, March, the virus started coming into the US. We had to have a full-scale shutdown in March across retail and across our own offices. Things went to zero.

“We really held our breath because we didn’t know what was going to happen. Then April comes along and it just takes off in the other direction. April and May looked really good. June and July is where we really took a quick breath and thought we might have some challenges in actually meeting this demand.

“We thought, okay, maybe it is just the season across the northern hemisphere. March, April, May is always good for the bike industry in those months. But then it went into June and July and August, and it was not slowing down into September.. Usually then things tail off and you are just holding on until the end of the year. Well, things were still sliding along, even going up in some of the later months.

“Then you are taking a look at your backorders… Again, it is not a Trek thing, it is an everybody thing... We knew we were going to be behind on some delivery of product.”

 

Trek-Segafredo's 2021 men's and women's teams. Photo copyright Jacob Kennison (Trek Factory Racing)

Trek said that the Trek-Segafredo's 2021 men's and women's teams were unaffected by equipment shortages due to forward planning

© Jacob Kennison (Trek Factory Racing)

 

Coping with heightened demand:

In retrospect, it is easy to work out what happened. The jump in demand coincided with lockdown and the increased amount of time people were spending at home. Some were working from there; others saw their jobs put on hold or were even laid off. The closure of schools was also a factor in some cases. Families started exercising more due to feeling isolated, having more time on hand and needing to get out of the house due to restlessness. As gyms were closed and many group activities were on hold, cycling became very popular.

Bjorling said that from Trek’s perspective, demand initially jumped up in children’s bikes. This was followed by a surge relating to entry-level hybrids and mountain bikes. When they ran short, the interest transferred to other bikes. “Once those bikes were through, we really saw a next bike up scenario. You saw retailers telling us, ‘hey, my customers are going to be more flexible. Maybe I will sell the turquoise bike this year.’ And then it just became a case of ‘whatever bike you have and however I can get out and ride.’

“People had this sense that they were really cooped up…they were in some need of mental and physical release. And the outdoors were really deemed a safe space.”

He said two alternatives happened when Trek retailers found themselves under real pressure to meet demand. The first was servicing previously purchased bikes. Some of these may have been sitting unused for months or years, but were then brought to centres to be repaired. The second course of action was the loaning out or renting out of bikes by those retailers until ordered stock could be delivered.

“We have retailers that are being very creative in doing everything that they can to figure out some kind of solution,” he said. Bjorling noted that those retailers are still trying to find the best outcome for the customers.

Shimano’s spokesperson said that the company is also doing what it can to address the market requirements. “As the market-leading company for cycling components, we are working with bicycle manufacturers to offer solutions so they can bring complete bicycles to the market as soon as possible.”

They also said that the company is rearranging production capacity to address supply chain demand. The goal is “to ensure existing cyclists plus new and returning cyclists can continue to enjoy movement by bicycle.”

SRAM states that drivetrain and suspension lead times have been the most impacted by the increased demand. It said that over the past year it “hired a significant number of qualified staff, increased the number of shifts at every production facility, and maximized production efficiency.”

The company sounds bullish about its ability to cope. “We’ve always been an industry leader with our shorter lead times. We are absolutely focused on managing short and long term demand for all of our key customers.”

 

SRAM Red chainset, photo by Balint Hamvas, Cyclephotos

SRAM has expressed confidence about meeting the requirements of its customers. © Balint Hamvas, Cyclephotos

 


So what’s the future?

 

With a clearer picture of what the past year meant for cycling, what’s the likely future for the industry? Will the boost in sales continue? Could it disappear once the current demand is satisfied, or when Covid-19 is finally a thing of the past? Shimano and Trek both commented on what might happen.

Shimano describes incoming orders for product as being “extremely positive,". However it says that the current climate means that it is difficult to predict future demand. That said, it is upbeat about what lies ahead, and also about its ability to cope.

“We strongly believe in the future growth of the bicycle market. Company-wide efforts have been made to establish a structure to enable increased production and control of the situation,” the spokesperson said. “Production output in the second half of 2020 exceeded that of previous periods. In 2021 we are increasing supply capability by 1.5 times last year’s capability.”

Bjorling doesn’t make long term predictions. However he expects the buoyant sales figures to continue in the immediate future. “We think the demand is going to be pretty strong for a little while. That is another thing the industry needs to be aware of. It is something that we talk about all the time. When do you know the party is over? How are you scaling for this growth?”

He said it is important to be mindful that things could change again. There is, he says, little point in ramping things up now if the industry could contract again and demand could fall.

“We could probably open up more factories or partner with more suppliers. But we also want to make sure that we are doing so in a way that we are not going to have to leave those partnerships or shut something down in the future,” he said. “We want to make sure that whatever we are doing is something sustainable...something that we can grow with in the future.”

Fortunately, he believes that companies such as Trek can take measures to boost the chances of future growth. While unforeseen circumstances such as Covid-19 are beyond any individual company’s control, there are other things that can positively impact cycling.

“The cycling industry has a great opportunity,” he said. “Right now, we have more people riding bikes now than maybe at any other time in the earth’s history. It is important that we as an industry come together and find a way to welcome these people, not make them feel like they are doing something weird, doing something wrong, or that they are doing something that in a way that they shouldn’t be doing. Instead, making them feel welcome, making them feel that this is for them, that they are wanted, that they are celebrated, and giving them the knowledge [they need].

That friendly approach applies to individual companies too. He recognises that if Trek can help new cyclists learn how to fix flat tyres, chose the right shorts, pick the right shoes and, in his words, understand ‘it is okay to clip in and fall down,’ that that is both good for those newcomers and also for Trek as a brand too. Feeling part of a family builds trust and loyalty. What company wouldn’t want to do that?

“If we can be a welcoming voice and if we can help people feel comfortable with this, that is a big focus for us. That is where we need to be. I would love to see the industry adopt much more of a welcome mat for these new cyclists.”

 

 

The Madone is one of the bikes used by the Trek-Segafredo women's team. Photo by Jojo Harper for Trek

Trek's Madone is used by its pro teams, but Eric Bjorling sees the company as catering for cyclists of all levels. © Jojo Harper for Trek

 


And yet there is a bigger, broader picture too. Working with organisations such as the advocacy group People for Bikes helps increase the numbers of those on bikes. It also helps make conditions better, safer and more enjoyable for them. The same applies to adopting a lobbying role. One such role is to encourage global municipalities, local civic designers and others to plan for more space for cyclists and for pedestrians.

“I think the future post-covid is a much more public-health aware society. That is my hope,” he said. “If we can continue to push those communities to do that, if we can help guide them, if we can show them the opportunity and show them the need for this, if communities can plan for that, then I think it is going to be a healthier future, a more resilient future, a more environmentally sustainable future.”

There is an additional reason for hope. Former US President Donal Trump was famously dismissive of environmental concerns. For example, he announced in June 2017 that the US was withdrawing from the Paris Climate Accord. He also made things generally easier rather than harder for fossil fuel companies. Trump was defeated in the November 4th election and left office on January 20th.

Since then Joe Biden has signed up again for the Paris agreement. He warned recently that climate change “is a global existential crisis, and all of us will suffer if we fail.”

Bjorling anticipates a lot more pro-cycling measures ahead. “I would say we have a much friendlier administration coming in. The new secretary of transportation Pete Buttigieg has already given us a couple of signs,” he said. “I think he is going to be much more open to discussing and planning for more pedestrian and cycling-friendly infrastructure. This makes us incredibly enthusiastic.

“We are really hopeful for how things are going to go. It has been a really tough four years for us. Not just in the industry, but for so many people. So coming into this new administration, we have representatives that are pitching tax credits for e-bike purchases. That is a fantastic thing, and not something that could have been discussed even a couple of weeks or months ago.

“E-bikes are one of the great things that can help close a lot of the gaps that people have. But those people still need to feel safe. They still need to space to be able to do ride safely.

“Again, I think the transportation secretary has taken a really strong look at sustainable infrastructure. There is so much need in the US. Our infrastructure is really in a tough spot. But I think if we can have sustainable design and planning for that, that is where we feel like the bicycle has an incredible future.”

 

 

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