In a turn-around that may seem surprising, bicycle manufacturing is returning Europe. This reverses the previous trend which saw manufacturing move to low-wage economies. Driven by the need for close-to-market operations which can rapidly respond to a dynamic market – automated and distributed production is proving it can compete. This article takes a detailed look at the market drivers and production systems that are allowing manufacturing to thrive where many said it could not. This shows the importance of the lean principles I’ve written about recently.
Bicycle manufacturing can be a low-tech, high-volume and labour intensive business, which is poorly suited to a developed economy. This is the reason that Raleigh stopped UK frame production in 1999 and bike assembly in 2002. However, producing bicycles can be high-value manufacturing, both in terms of financial value added and wider societal benefits. The price per kg of a top-of-the-range bicycle is as high as a commercial aircraft, generating significant value with minimal use of resources and requiring a highly-skilled workforce. Bicycles are also an increasingly important part of the transport mix for modern cities, where bike share and last-mile deliveries are experiencing exponential growth. In this role, bicycles deliver significant impacts for climate objectives, public health and infrastructure utilization. E-bike production in Europe has increased by 75% in the last 2 years, to over 2.3 million bikes a year, and is forecast to exceed 7 million bikes a year by 2025.
The Close to Market Advantage
The most obvious advantage of manufacturing close to the market is that delivery costs are reduced, but for many manufacturers the key consideration is being able to control and maintain a high level of quality. This attention to correcting quality as close to the point of adding value as possible is a central idea of Lean. From brands like Gazelle, producing 250,000 bikes a year in the Netherlands, to UK start-up MiRiDER, producing a few hundred, the key to maintaining quality is performing final assembly in-house. A few companies take this even further, such as Brompton and Pashley, who build their frames in the UK.
In an increasingly fast-moving consumer market, having manufacturing located close to the point of sale also allows rapid response to changing demand. The established business model, with retailers ordering their stock for the year ahead, and then waiting for shipment from Asia, doesn’t fit into this market dynamic.
“With a bicycle frame from Asia the lead-time can easily be 7 months. We currently have a 45 day lead-time on our frame, which is a huge difference in terms of cash-flow, accuracy of sales projection and time-to-market.” Tom Schiller, co-founder of Mokumono Cycles
For bike share operators, rapid design changes are expected in response to operational experience. Whether bikes are sold to consumers or to fleet operators, there is an expectation that warrantee repairs will be carried out quickly. Having manufacturing close to the market makes this much easier. Anti-dumping measures have also played a role in supporting domestic manufacturing.
“In the cargo and hire markets, being close to market is important both before and after sales. Customization is a key requirement with branded colours and partnership design and development. In after sales support, closeness enables rapid repairs and diagnosing issues.” Neil Davis, MD, Pashley Cycles
Low-Wage or High-Productivity?
Traditional bicycle manufacturing makes intensive use of skilled labour for operations such as welding frames and threading spokes into wheels. Labour costs in Europe and North America have, in the past, led to volume producers outsourcing to low-wage economies. However, high-wages are only an issue if productivity is low. Germany has some of the highest paid production workers in the world and yet its automotive industry remains highly competitive. This is possible because those workers are highly productive. Commonly cited reasons for the exceptional productivity of German manufacturing include: strong vocational training; public institutes focused on commercializing research; family owed SME’s that invest in quality for the long-term; and high levels of automation. Many companies looking to improve productivity single out the automation aspect, as it is the easiest to buy in as a turn-key solution, but it can be a mistake to consider it in isolation.
A small number of European bicycle manufacturers have been able to remain competitive with fairly manual processes. They have achieved high productivity by investing in skills and applying Lean principles. For example, Brompton have invested 18 months in training each of their 50 brazers. Both Brompton and Pashley see having an authentic British built bicycle as a key selling point in a global market. They have also capitalized on the opportunity to draw on the skill base made available by contraction in automotive manufacturing. Automating time consuming operations is more important than trying to automate everything. For example, Pashley are relatively low volume and focused on hand-built quality and yet they have automated aspects of wheel building.
“Each brazing cell produces one of the 6 elements of our frames, the factory manager balances load between these cells and a Kanban system is used to pull components into them. We don’t try to automate everything as we would lose agility and flexibility while incurring high capital expenditure, but we focus on automating very labour intensive operations. For example, when parts with significantly different thickness are brazed together it takes a long time to heat the thicker part so we’ve automated that process.” Paul Williams, Chief Operating Officer, Brompton Bicycles
When I visited the Brompton factory I was struck by how efficient the manual brazing processes were. Each brazing station contains a single jig used to fabricate one of the frame sections. Pickers deliver trolleys to the stations containing all the required parts ready to braze. The tubes and other parts are loaded into the jigs, mostly using toggle clamps, and brazing can start immediately. The jigs are mounted on swivels and have counterbalances, allowing easy access from both sides. Brompton only use brazing at their London factory, rather than the TIG welding used for most modern bike frames. An interesting benefit of this is that its relative eye safety means the fabrication area is much more open to promoting greater interaction and team work.
A similar approach is taken in Brompton’s assembly area with assembly stands holding the bikes as they progress along a pulse line. The assembly stands move along a track in the floor and lock into each assembly station. Swivels allow easy access to different parts of the bike at different stations. A Kanban two-bin system provides standard components. Trolley kits provide the components for the different bike configurations, arranged in the work sequence. Throughout the factory, the flow of materials and work in progress is efficient, and the work areas are clean and well laid out with everything easily on hand; time has clearly been spent applying 5S methods. The open layout of the factory, with groups of workers clustered together, is clearly designed to promote teamwork.
Companies such as Brompton and Hope Technologies have found that vertical integration saves them cost and gives increased control over quality. For Hope, this means literally making every part themselves. For Brompton, it’s more about components being designed to their specification. Tubes and other frame components are generally produced in eastern Europe, with the manufacture of brakes and gears mostly carried out in Asia. Groups of companies geographically clustered together tend to work closely but there is somewhat less cooperation within the industry as a whole.
“All our staff have experience in the aerospace industry and we saw that too much focus on Lean methodology can actually waste more time than it saves. We like to take a common sense approach. For example, we expect our workers to keep their work areas tidy and organized but we won’t ask them to spend 2 days doing a 5S exercise.” Alan Weatherill, Head of Sales and Marketing, Hope Technologies
High-Volume or High-Value
Budget and mid-range bicycles cost about the same, per kg, as budget cars and mid-range cars – between $10 and $100 per kg. This is considerably less than aircraft, with a budget Cessna 172R costing about $363 per kg and a mid-range Airbus A318ceo cost about $2,000 per kg. At the very top end of the market, where aerospace grade materials are common, both bicycles and sports cars have decidedly aerospace prices – in the $1,000 to $2,000 range. This is interesting because although very few people can afford a $2M Laferrari, many people are able to spend several thousand dollars on an 8 kg bicycle. There is some evidence that as cycling becomes an accepted form of transport, people become willing to spend more on their bicycles. In 2018 the Dutch purchased one million bicycles with an average value of $1,300. On a $/kg basis, they were more expensive than the Porsche 911 Turbo. As we transition to a low-carbon economy, there is an opportunity for high-value manufacturing to provide mass market mobility solutions.
Hope technology produce 8,000 hubs and 30,000 brakes annually, using CNC machining intensively. Typical machining times are 35 to 40 minutes for a brake caliper main body. For this type qaof production, they see little scope for increased volume to improve the economy of scale.
“We already have 5-10 CNC machines per operator with robot loading systems. If we increased volume we’d just have the same process with multiple lines operating in parallel. We’re not actively trying to improve productivity beyond where we already are, our focus is on quality.” Alan, Hope Technologies
The Importance of Automation
Bicycle manufacturing has seen exceptional growth in Portugal, with exports growing 400% in 2019 and production now approaching 2 million bicycles annually. This is shared between 50 companies accounting for 8,000 direct jobs in total. At the center of this rebirth has been Triangles, the first company in the world to fully automate the production of aluminium bicycle frames, with a capacity of 250,000 frames annually. Automation involves significant expense at the initial setup stage, programming machines and robots, and proving out the routines. This means that it isn’t suited to small batch production, although huge volumes aren’t required to see a benefit: Triangles requires a minimum quantity of 5,000 frames per year in batches of at least 250.
“In Europe, it only makes sense to build an aluminium frame factory, if it is possible to automate all of the process. After some years of researching, Triangles now have the first factory on the world that produces aluminium frames with a 100% automated process. This includes tube cutting and bending, CNC machining, 3D laser cutting, hydroforming, grinding, brazing, welding, heat treatment and paint shop.” Luis Pedro, General Manager, Triangles
Even greater productivity is possible when design for manufacture considers the automated production system. Dutch start-up Mokumono’s approach to this is to build the frame from parts pressed out of sheet aluminium and then robot welded together. Another company that’s really thought about design for assembly and automated production is MiRiDER, a start-up producing quality e-bikes. At the moment they buy high-pressure die cast magnesium frames from East Asia and assemble them in the UK. They have designed their own controller with a CAN bus, enabling wiring assembly to be carried out more efficiently as well as producing a more robust electrical system in wet conditions. High-pressure die casting is a highly automated process, well suited to the European skill base. Although MiRiDER’s current production volume means they need to share tooling with their Asian supplier, as production ramps up they hope to purchase their own tooling and then produce the frames at a UK foundry.
“At a volume of 2,000 pieces a year we could amortize the tooling cost over 24-36 months, which corresponds to the life of a typical frame design. Although tooling costs are high in the UK, we can easily buy-in fully hardened tooling from Asia. I’ve sourced high-pressure die casting for a major Japanese OEM in the past and we found that foundry costs could actually be lower in the UK than in Asia. High-pressure die casting in magnesium not only provides an automated process, this is also an aerospace grade process that really allows us to optimize the strength to weight in a way not possible with a tubular frame.” Andy Birch, Product Development and Procurement Manager, MiRiDER
Developed economies cannot compete on low value products where labour makes up a significant proportion of the cost. However, their skilled workers come into their own when producing high-value products, especially utilizing automation in a lean production system. Additional value is gained from being close to market, such as offering better flexibility and higher service and support levels. Regionalized manufacturing will also be important in decarbonizing the global economy. It therefore makes sense that the high-value products sold in developed economies will also be made in them. Recent global healthcare issues expose the vulnerability of concentrated supply chains for materials, components and finished product, all adding to the case for close-to-market manufacturing. As we transition to a low-carbon economy, bicycles are expected to perform a growing role in urban transport. Premium e-bikes are already seeing sustained growth in sales. The future is looking bright for high-value bicycle manufacturing in developed economies, a promising sign of how the green economy can create local jobs.