DHAKA, Bangladesh (BRAIN) — The company behind a new factory in Bangladesh says business is picking up, with the ink drying on a deal to produce a half-million bicycle frames for a European supplier for the next five years.
GermanBangla Bicycle Ltd. — a partnership between Germany’s Panther Bike and Bangladesh Power Trade Group — has signed a contract worth $90 million in the first three years to manufacture 500,000 aluminum frames for a supplier to the mass market in the European Union, said Sazed Alam, CEO of ZA Group, the California based sales and marketing firm for GermanBangla Bicycle.
Alam would not identify the supplier due to a confidentiality agreement. Production is set to start in February.
The 150,000-square-foot, $7 million factory opened in 2008 outside the city of Dhaka in anticipation of growing demand in the face of rising labor rates and instability in China. Labor rates in Bangladesh are around 23 to 25 cents per hour, roughly one-third the cost in China.
The new order marks a positive turn for the business after a major setback earlier this year when investor Panther pulled its production from the factory. Although still an investor, Panther stopped using the Bangladesh factory for its entry-level bikes just a few months before it shifted its remaining production in Löhne, Germany, to a plant in Lithuania.