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Turning Portugal into a Major Production Center

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PORTO, Portugal – Portugal is to become a major production center of bicycles, e-bikes and parts in Europe. ‘Bike Value Portugal’ is to meet the demand of the European bike sector for supply chain flexibility and increased speed to market. Portugal’s industry association ABIMOTA secretary general João Medeiros explains here how these goals are to be reached.

Turning Portugal into a Major Production Center
João Medeiros, ABIMOTA/Bike Value Portugal Secretary General: ‘Quantity is not what we are looking for. We aim at flexible production for small series of quality products.’ - Photo ABIMOTA

“Currently there are over 50 bike companies operating in Bike Value Portugal. Of those you could say that 35 of them really count and are working well. With them 2015 bicycle production in Portugal stood at about 1.9 million units. Currently we have about 10 bicycle producers and this is without counting the new ones coming like Fritz Jou.”

Future growth

Next to bike producers there are also a lot of parts makers for bicycles in Portugal. According to João Medeiros there are about ten bicycle component producers in Portugal. “They are Rodi, SRAM, Miranda, Polisport, Miralago, Valver, Ficosa, Ciclo Fapril, and Tabor. And there are more to come like Triangle’s. As you know this is the new producer of aluminium bicycle and e-bike frames.”

By 2020 Bike Valley Portugal should have been grown to a total capacity that will stand at about 3.5 million bicycles and e-bikes. This is including the capacities of the new bike companies like Fritz Jou and Cronu.

New investors needed

To get to the goal of a production capacity that stands at 3.5 million bikes per year and that includes parts manufacturing for that total number of produced bikes Bike Value Portugal has to attract new investments. On that ABIMOTA secretary general João Medeiros says, “We think that such growth will firstly come from Portuguese companies with national investments. Component makers are currently investing in new machines, buildings and land for further expansion of their production capacity – to be able to keep up with the forecasted growth of bicycle and e-bike production in Portugal. Next to investments from Portuguese companies we also want to attract investments from outside Portugal. What we are looking for in particular are investments for the long term with longer pay back times. And we would like such industrial investments to be as vertical as possible which add value to the sector.”

Value Proposition’ to come to Portugal

For new investors a ‘Value Proposition’ to come to Portugal is in in place. These is offered in the form of financial support like loans with lower interest rates. They have an 8-year payback time and when the investment results are good and it creates new jobs then payback of parts of the loan can be cancelled. There are also other incentives for new businesses that add value and they can also come from the EU. On a national level, Portugal has a budget of €25 billion for encouraging investments up to 2020. With that the country aims for stimulating production of tradeable goods and services; increasing exports and stimulating R&D for developing technologies to be used in production and products.

Wages for workers

Another incentive Portugal offers to new investors comes with  wages and labour costs that in Portugal are similar to that of Czech Republic, Hungary, and Poland. Minimum gross wage stood at the end of 2015 close to about € 600. Monthly average wages of workers here stands at about €700.

Supply chain flexibility

One of the reasons for creating Bike Value Portugal is because of enhancing the supply chain flexibility of the European bike industry with short lead times. On the question of how short João Medeiros says, “The lead time for made-in-Portugal bicycles and e-bikes, as well as parts, stands at 2 to 3 weeks. This means placing the order at the producer and have the goods in store. And I reckon that it can be less than 3 weeks. Portugal made products can reach Germany in one-and-a-half day by truck. I am sure that such lead times meet all speed to market criteria.”

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