TAIPEI, Taiwan (BRAIN)—Merida, Taiwan’s No. 2 bike manufacturer and primary supplier to Specialized, will invest $3 million to expand capacity at its Changhua factory, Merida president Michael Tseng said on Thursday.
The company will build three additional levels by the end of 2010, which will boost production capacity by 15 percent, Tseng said, following the annual A-team meeting of 22 Taiwanese manufacturers.
Merida also runs two factories in China, but aims to shift more middle to high-end production back to Taiwan due to rising wages in China combined with a labor shortage and environmental issues.
“We feel we can control all the production much better than in China,” Tseng said.
Merida finished 2009 down 6 percent in Taiwan, with revenue of about NT$11.5 billion. The company started 2010 on a positive note with sales up 26 percent in January, but revenue in February fell 25 percent. As of the end of February, sales were off 5.43 percent compared to the same period last year.
But, Tseng said 2011 orders are stronger than 2010, and he’s hopeful that business will turn around, particularly based on reports from Specialized and SRAM.
Stan Day, chief executive officer of SRAM, fresh off a trip to visit European dealers, said optimism there is strong and he left with a sense that dealers have become more professional. He said that sales are trending away from the mass market toward specialty dealers, all of which bodes well for the industry. But, he said the biggest wild card would be spring weather.
“It’s not the economy. It’s really going to be if we can get some sunshine because I really think consumers in the U.S. and Europe are in a different place than they were at the start of the season,” Day said, speaking at Thursday’s A-team meeting.
SRAM is up 40 percent for the quarter ending in March, but because SRAM does 80 percent of its business with OEMs, the numbers are not so impressive since performance was so poor during the same quarter in 2009, Day said.
That increase puts SRAM about even with where it was at the same point in 2008, he added. “I consider that to be a good accomplishment at this point,” he said.
For more daily coverage on Taipei Cycle, click on PDF link above.