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Shimano: Delivery Problems and Price Increases

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An unexpected high demand in China, Indonesia and South-America for quality bicycles is the main reason for the world’s leading bicycle component maker current delivery problems in Europe. According to Shimano Europe’s managing director Frank Peiffer (photo), in particular….

Shimano: Delivery Problems and Price Increases

 

NUNSPEET, The Netherlands – An unexpected high demand in China, Indonesia and South-America for quality bicycles is the main reason for the world’s leading bicycle component maker current delivery problems in Europe. According to Shimano Europe’s managing director Frank Peiffer (photo), in particular entry to mid level mountainbike components (Acera and Alivio groupsets) as well as Nexus 7-internal hub gear sets are affected. Moreover, the weak euro against the strong US dollar and the Japanese Yen is causing extra problems.

Shimano Europe MD Peiffer also points out that the industry’s ordering cycle is changing: “More suppliers move forward placing their orders in September and start production for the upcoming season in April/May. They clash with those suppliers relying on the traditional product cycle.”

Higher ordering level

“To provide the picture on the current situation,” continued Peiffer: “In October 2011 we received an extreme high number of orders. Since then our production is running at full-capacity. The ordering level in Europe is notably higher compared to the number of bikes being sold in Europe. We can’t explain why this is happening and I can only say that this situation makes it very, very difficult to plan our production.”

Delays up to 4 months

Next to entry to mid level MTB components, Shimano’s 7 speed internal hub gear is also greatly affected by delivery delays. These delays occur despite the fact that production at the Shimano’s factory in the Czech Republic, where the 7-speed is made, has been increased by 30% last year.

Some bike makers have been faced with the delivery of such components in week 22 to 23 instead of the earlier by Shimano forecasted week 6 to 8. There are also some reports on delays of other components such as for example chainrings and hubs.

Supply chain consequences

Many bike makers aren’t that interested in the reasons behind Shimano’s delivery problems. They merely point to consequences it has on the complete supply chain; “From us as suppliers to dealers and to consumers”. What should they say their dealers, they ask.

Pressure on prices

Next to the delivery problems, there are price increases for Shimano components as a result of changing currency rates. The named Acera and Alivio components are made at Shimano facilities in China and Singapore and are paid in US dollars. Nexus hub gears are made in Japan and paid for in yens. The hub gears made in the Czech Republic are paid of in euros. The weak euro against a harder dollar and the high priced yen is putting a lot of pressure on prices.

Higher costs

However, according to Shimano Europe MD Peiffer, currency fluctuations are not the only reason for the price increases. By the way, they range ‘between 0 to 9%’. “We communicated these price increases already at the beginning of the fourth quarter 2011. They are primarily based on higher raw material and shipping costs.”

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