body{background-attachment: fixed ! important; }

Tuesday, May 24, 2011

Moving Your Bikes To Taiwan... All Of Them.

I often come across forum threads and other opinionated info that treats Made in Taiwan as a pejorative. Even when I was writing copy about CNC machines over a decade ago we would give the Very Well Made In Taiwan label a knowing guffaw. Customers would insist that I highlight their purchased accolades for Taiwan manufacturing.

Opinions have changed.

Taiwan no longer carries the stigma of low production value and poor QC. That is not saying that there is no room for improvement, but there are obvious reasons why so many bike companies prefer to have their brand manufactured in Taiwan.

When the Cannondale plant closed in Bethel CT in 2009, the slamming of the doors echoed throughout the industry. The economy of scale was working against America as a producer of bikes.

Why do bike manufacturers move to Taiwan?

A recent article in Bike BIZ interviews Sam Schulte regarding the decision of his Tree Bikes brand to move production to Taiwan.

Operating the business on a wafer thin margin, Schulte answers back to those accusing his firm of 'selling out', explaining that in the current economy his 'dream' of domestic manufacturing simply isn't viable.

Schulte explains how missed deadlines were causing major financial strains, telling the website:
"It’s hard to find a machinist to do what you need for the prices and make it work. A lot of times you need to get machinists to give you a special price and they are really not making any money, and that causes product not getting done on time, and that’s why a lot of brands have been moving over to Taiwan. Taiwan factories can afford to give us the price we need and get it done in time to help the customer in the end. So that’s why we have decided to move over there."
On the other hand, in the case of Cannondale and Tree Bikes, the US economy could have used a few more jobs between 2007 and 2011.

For companies that decide to relocate their operations to Taiwan, it is wise to employ full time representatives to stay in Taiwan to monitor manufacturing as much of the manufacturing can be outsourced to other fabricators and there may be hidden networks of material supply that are not part of the original production agreement. This is quite common as factories have their own suppliers and seek ways to maximize their own profits from a manufacturing agreement.

I was recently made aware of a renowned Taiwanese company that agreed to certain terms of production with a very powerful American company, with terms that included some very high-end CNC machining centers. When the client's representatives left, the company purchased cheaper, much less precise machining centers. Word on the street says that Taiwan can make the finest equipment, but you need to build good relationships, remain vigilant and know your partners. The American company is currently looking into opening their own production facility.

No comments:

Post a Comment