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Ideal: Downturn Is Ideal Time to Build

Published December 8, 2009

TAICHUNG, Taiwan (BRAIN)—Ideal’s Michael Chen speaks for many in the industry when he calls the U.S. market a challenge. (Click on headline for PDF newsletter.)

“It’s been a tough year for everybody,” said Chen, Ideal’s vice-president of marketing for North America.

Chen, sitting in a conference room at Ideal’s Taichung factory, said the company is taking advantage of the downturn to re-think its management strategies and to plan for an eventual upturn in the economy.

Ideal, which builds bikes for dozens of companies, including its own brands—Fuji, SE and Breezer—won’t be ramping up production of high-end bikes any time soon, Chen said. “We see high inventory and slow sales, but as a supplier we can play a key role in a recovery,” he said.

As the 2011 model year looms, Chen said production inquiries are primarily for low and mid-range price-point bikes. And the company has seen a dramatic increase in orders for steel frames, driven primarily by the urban commuter market. Ideal builds those frames in China.

For 2010, Chen forecasts relatively flat production. Ideal is one of three publicly traded bike companies in Taiwan, with Giant and Merida. Ideal has an annual turnover of approximately $250 million.

Chen said the downturn has given Ideal’s new executive management an opportunity to focus on cost reductions, quality improvements and capital investment. The slow economy won’t last forever, he added.

The company recently added a paint facility at its Taichung factory, now coming on-line. Once that operation is running smoothly, Ideal plans to add a new paint facility at its Dongguan, China, plant.

“We want to get it right here in Taiwan and then take that experience to China,” he said.

Download our complete coverage from Taichung Bike Week by clicking on the upper right link for the Bike Week PDF newsletter.

—Marc Sani

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