Giant Chairperson Tu expects prolonged supply chain problems

TAICHUNG, Taiwan – The temporary closure of Giant’s four factories in Kunshan, close to Shanghai, due to the local lockdown restrictions is giving the company a hard time. “It is a hell of job,” said Giant Group Chairperson Bonnie Tu in an interview with Bloomberg last Tuesday. And she doesn’t expect the situation to improve on the short term.
“As containers can’t reach the factories, we can’t ship the new bicycles,” said Giant Group Chairperson Bonnie Tu. – Photo Bike Europe

Giant Group is taking a rather cautious approach to the current fiscal year 2022 as became clear with the publication of the 2021 annual figures last week. Both inflation and the war in Ukraine make for unpredictable uncertainties. A further increase in operating costs would also put pressure on profitability. However, Giant has stated that it is optimistic about the future as the world transitions into a ‘post-pandemic new normal,’ with people becoming more health conscious.

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Still waiting for better days

After two years of unprecedented disruptions and lockdowns the bicycle industry is eagerly awaiting a more positive outlook on the supply chain situation. Unfortunately that’s not going to come from the Giant Group Chairperson. “It is a hell of job,” said Bonnie Tu in the interview. “Some bicycle parts have a lead time of two years and even simple components can take six months,” she said. That compares with a normal wait time of one-to-two months.”

Although there are signs that the end of the supply crunch is coming, inventory levels are still on an all-time low.

Sourcing around the world

High-end bicycles face the worst shortages of parts, though Tu predicts that will likely ease by the end of this year. “Some components, like a Shimano derailleur set that is a core part of a bike’s gear mechanism, may still be in short supply into 2023. While the cycling industry is used to sourcing around the world, COVID-19 has made it extremely complex.”

Tu explains the difficult situation currently in the Kunshan factories. “As containers can’t reach the factories, we can’t ship the new bicycles. The buildings are fully packed with bicycles and all open floor space is used. We will have serious problems in case the rain comes”

China is still an important production base for Giant as it accounts for half of the company’s capacity. But this situation is changing slowly as the Taiwanese manufacturer has started with the construction of an all new partly robotised facility in Vietnam. Also for Giant, the disruption has underscored the importance of diversifying sourcing and production locations.