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Japanese bicycle parts maker Shimano is investing about ¥20bn ($180m) to build a new plant in Singapore amid a surge in demand during the coronavirus pandemic, its newly appointed president, Taizo Shimano, has told Nikkei Asia.
As consumers have gravitated towards bicycles as a relatively low-risk mode of transport in terms of catching or passing on coronavirus, the demand for bikes and related products has soared globally.
Shimano, which has a high global share in bicycle transmissions and other components, is facing a shortage in production capacity. The decision to create a new plant comes as the company’s existing Singapore factory, which was built in 1973, is deteriorating.
Despite the pandemic wreaking economic havoc around the globe, the Japanese company generated ¥63bn in net income in the 2020 fiscal year, up 22.5 per cent from the previous year. For the 2021 fiscal year, Shimano forecasts that its net income will grow by 25.4 per cent to ¥79bn.
The bulk of the funds are being invested in the Jurong Innovation District on the west side of Singapore, where the existing plant is also located. The new unit will produce parts such as transmissions for high-end bicycles.
Shimano has positioned the new plant as a “factory of the future†that emphasises digitalisation.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
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The factory is scheduled to come online by the end of 2022. It was originally intended to be completed by 2020 but was delayed after its large number of construction workers was cut to curb the spread of the virus.
Shimano has also decided to invest another ¥13bn in its two domestic factories in Osaka and Yamaguchi to expand production capacity. The company intends to improve efficiency at these two factories by adding cutting-edge manufacturing equipment and software.
With the two domestic plants increasing production, Shimano has said that “this year the total production will be 1.5 times more, compared [with] that of 2019â€.
With new waves of Covid-19 infections hitting the world, consumers have been using bikes to keep healthy while physical training facilities have been closed during lockdowns. One bike shop owner in Tokyo told Nikkei Asia that the industry was facing difficulties in procuring bike parts, especially transmissions.
As of the 2020 fiscal year, bicycle parts sales made up about 80 per cent of Shimano’s total sales. Fishing equipment made up about one-fifth of its sales and also helped to boost its profits.
A version of this article was first published by Nikkei Asia on July 11 2021. ©2021 Nikkei Inc. All rights reserved.
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