Shimano invests millions to expand production

SAKAI CITY, Japan – Asian financial news services have announced a multi-million-euro investment scheme by Shimano Inc. The Japanese bicycle component supplier will expand both existing factories and build a new one. However, questions remain whether this will be enough to ease the extended lead times of e-bike and bicycle components.
The aged, 1973 built Shimano factory in Singapore. – Photo Shimano

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Shimano will invest JPY20 billion (€153 million) to build a new factory in Singapore. In addition, to meet the rapidly growing demand for e-bike and bicycle components driven by the pandemic, a further JPY13 billion (€99 million) will be spent to expand the production of the company’s two domestic Nippon factories.

The new plant in Singapore was scheduled to begin operations as early as 2020; however, as a result of the pandemic, this has been postponed to the end of 2022.

Shimano criticised for not investing

Shimano has been criticised in recent months for not investing in additional production capacity. It should open the market for small component manufacturers, although they were also unable to meet the massive demand. To manage expectations, Shimano Europe president, Marc van Rooij, stated in January that “long lead times for Shimano would continue into 2021. The impact on disturbed supplies for Shimano components of this Covid-19-driven market situation will not be over this year.”

Focus on high-end components

The new plant replaces the existing and ageing production facility of Shimano (Singapore) Pte, Ltd., which was built in 1973. Both old and new factories are located in the west of Singapore in the Jurong Innovation District. The largest share of the investment will go to the new factory, which Shimano says will be the “factory of the future with a focus on digitalisation”. It will be used primarily for the production of bicycle components for high-end bicycles.

Investments in ‘cutting-edge manufacturing equipment’

Interviewed by the domestic financial news service, Nikkei Asia, the newly-appointed Shimano president, Taizo Shimano, also said that the JPY13 billion (€99 million) would be used to expand production at the company’s two Japanese factories located in Sakai City in Osaka Prefecture, and Shimonoseki in Yamaguchi Prefecture. To improve efficiency at both factories, the investment will be used for “cutting-edge manufacturing equipment and software”.

With the production increase at both domestic factories, Shimano says it intends to “increase this year’s total production by 1.5 times compared to 2019.”