Portugal’s bike boom: how the country is meeting demand

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VUZELA, Portugal – Inside a factory nestled among eucalyptus trees in the Portuguese countryside, workers carefully cut thin strips of sticky carbon fiber and press them into molds. This is slow and painstaking work.

But after each mold has been cooked in an oven heated to 200 degrees Celsius (about 390 degrees Fahrenheit), an incredibly light bike frame is created that can sell for around $ 7,000, helping to accelerate Portugal’s growth as countries. largest bicycle manufacturing country in the European Union.

The demand for bicycles is skyrocketing, thanks in part to coronavirus pandemic… More and more people are choosing to pedal to stay fit after prolonged blockages or to avoid crowded trains and buses on their way to work. Politicians aware climatic benefits of cyclingadd more bike paths to their cities, including Paris, Berlin, Lisbon and Barcelona, Spain.

And it was a boon for northern Portugal, where a large number of bike-bound manufacturers are concentrated. About 60 companies in the region assemble bicycles or manufacture bicycle parts and accessories, including handlebars, brake pads and helmets.

The country of 10 million – just over 2 percent of the European Union’s population – produces nearly a quarter of the block’s bicycles. According to Abimota, a bicycle industry group, the industry has grown to become one of the fastest growing employers in Portugal. Its workforce has increased 65 percent over the past five years to 7,800.

This growth is partly the result of protectionist trade laws that prevent cheap Chinese-made bicycles from entering the European Union. Domestic bicycle companies are hiring skilled workers left over after other manufacturers have closed or moved elsewhere in search of cheaper labor.

But as demand grew, bicycle manufacturers faced the same supply chain challenges that plagued many other industries, delaying production due to a lack of parts from Asia. This has spurred additional investment in the region, including what is considered to be Europe’s first carbon fiber bike frame factory. It started working in January.

“One lesson from the pandemic is that you need to be closer to your production,” said Emre Ozgunes, general manager of the Carbon Team, the owner of the plant, “because if everything turns off, you can probably still travel to Portugal to pick up frames. but not to China. “

The company, a joint venture between three Portuguese companies and two partners from Germany and Taiwan, initially plans to produce 25,000 frames a year, but has production space to double that. About 30 percent of the construction cost, worth € 8.4 million ($ 10.2 million), was covered by subsidies from the European Union. Until now, almost all carbon frames sold in Europe have been imported from Asia, Ozgunes said, with only a few made in small European workshops.

In the Portuguese bicycle industry, companies aim to increase production and help reduce Europe’s dependence on imports from Asia.

“I think this pandemic has made it clear to everyone that being able to manufacture in Europe is a great advantage,” said Pedro Araujo, CEO and owner of Polisport.

Mr. Araujo was a 19-year-old motorcycle fan when he founded his company in 1978 to make mudguards for off-road motorcycles. Polisport still makes mud flaps, but the majority of last year’s € 52 million in revenue came from child seats, helmets and other bicycle accessories.

RTE, which operates the largest bicycle factory in Portugal with an area of ​​approximately 430,000 square feet, is preparing to open another electric bicycle factory in its neighborhood. He recently introduced his own e-bike brand.

But RTE will also open another plant in Poland next year to supply its main client, the giant sports retailer Decathlon, a French company with stores around the world.

Bruno Salgado, RTE’s chief executive and scion of the family that owns the company, said the cycling frenzy has created opportunities for several countries to increase production. His factory in Portugal uses workers and automated equipment to produce about 5,500 bicycles a day, but he would say he would produce at least 7,000 bicycles to meet demand if he could get parts faster. A bicycle can have over 100 parts.

Europe is facing “big supplier problems” that will take two to three years to resolve, according to Mr Salgado, leaving some customers with long wait times. For some spare parts, factory orders currently placed are guaranteed to be delivered only in early 2023, he said. Stocks run dry after months of lockdown triggered shutdowns, supplies around the world are slowly resuming and it takes time to boost production in response to growing demand from cyclists.

However, he said it makes sense to invest in a plant in Poland, a country better located for many European markets and the one with Decathlon stores. “I believe that we cannot sit back and relax just because Portugal now produces a lot of bicycles,” said Mr Salgado, “because all other countries are learning, and some also have better geographic locations.”

Portugal’s example inspires others everywhere. Arnold Kamler, chairman of Kent International, an American bicycle company, said in a telephone interview that he discovered at RTE “the best factory I’ve ever seen in my entire life.”

Mr. Kamler said that he was keen to replicate some of the Lean processes he saw in Portugal at the Kent plant in South Carolina, but that “we have not achieved that yet.” (The United States is still a secondary market for Portuguese bicycles and components, which accounted for about $ 1.2 million in exports in 2019.)

Due to the need for more employees, Portuguese bicycle manufacturers were able to re-hire people laid off from other industries, including engineers and assembly line workers. RTE has hired dozens of people from a nearby auto components plant, which has closed. At Polisport, Mr. Araujo hired several engineers from Dutch electronics company Philips after it moved part of its production from Portugal to Asia. Polisport now has over 650 employees, up from 100 ten years ago.

At the Carbon Team, some of the workers came from a nearby shuttered carpet factory, which is part of the textile industry that has traditionally been a pillar of Portugal’s economy. “If someone knows how to knit,” said Mr. Ozgunes, CEO, “they probably have the hand skills needed to mold carbon fiber.”

One of the former carpet weavers, Pureza Silva, 50, knocked on the door of the Carbon Team factory after two years of unemployment. “When you reach my age,” she said, “you definitely won’t have many opportunities to find a new job like this, and I enjoy creating something new.”

After Portugal joined the European Union in 1986, it received billions in subsidies to help modernize its economy. But it also proved to be more vulnerable to free trade promoted by the bloc, which helped Asian manufacturers flood Europe with bicycles and other goods they could produce more cheaply.

But in 1993, legislators in Brussels introduced tariffs, which now rise to 48.5% for Chinese bicycles, giving Portugal and other EU countries a chance to develop domestic industries. Rates are now extended to electric bicycles.

Portugal’s bicycle industry relies on these anti-dumping rates to keep more expensive bikes out of the way, said Gil Nadays, general secretary of the Portuguese cycling association Abimota.

Without tariff protection from China, “unemployment will rise sharply here,” he said.

However, Portuguese executives insist their manufacturing center has also quickly adapted to the growing demand for high-end bicycles, including hybrid and electric models. Technological innovation has also reached the component manufacturers. The frames first switched to lighter aluminum made of steel and now to more expensive carbon fiber. On e-bikes, lighter frames increase the engine’s range of travel.

“This is no longer just a race to produce at the lowest price,” said Mr. Ozgunes, “but also an adaptation to a rapidly changing market in which the bike is no longer the same as the one our grandparents used.”

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