Portugal’s Bike Boom: How the Country Is Meeting the Demand

To meet a jump in demand, the country’s bike-making industry is building new factories, hiring workers and dealing with parts shortages.,

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VOUZELA, Portugal — Inside a factory set among eucalyptus trees in the Portuguese countryside, workers carefully cut thin strips of sticky carbon fiber and press them into molds. It is slow and painstaking labor.

But after each mold is cooked in an oven heated to 200 degrees Celsius (about 390 degrees Fahrenheit), out comes an incredibly light frame for a bicycle that may sell for about $7,000, helping accelerate Portugal’s growth as the largest bike manufacturing nation in the European Union.

Demand for bikes is soaring, thanks in part to the coronavirus pandemic. More people have decided to pedal to stay fit after long lockdowns, or to avoid crowded trains and buses on the way to work. Politicians, aware of the climate benefits of cycling, are adding more bike lanes to their cities, including in Paris, Berlin, Lisbon and Barcelona, Spain.

And it has been a boon to northern Portugal, home to a heavy concentration of manufacturers with ties to bicycles. About 60 companies in the region assemble bikes or make their parts and accessories, including handlebars, brake pads and helmets.

The country of 10 million people — a little more than 2 percent of the European Union’s population — produces nearly a quarter of the bloc’s bicycles. The industry has turned into one of Portugal’s fastest-growing employers, its work force expanding 65 percent in the past five years to 7,800 employees, according to Abimota, a bicycle industry group.

The growth is partly the result of protectionist trade laws that prevent low-cost Chinese-made bicycles from entering the European Union. The domestic bike companies have hired skilled workers left behind when other manufacturers have shut down or moved elsewhere seeking cheaper labor.

But as demand has escalated, the bicycle makers have run into the same supply-chain issues that have hurt so many other industries, holding up production because parts from Asia are missing. That has spurred additional investment in the region, including what is believed to be Europe’s first factory to make carbon-fiber bike frames. It started operating in January.

ImageMolds for carbon-fiber bicycle frames, made by Carbon Team, are heated for three hours in a 200 degree Celsius (390 degrees Fahrenheit) oven.
Molds for carbon-fiber bicycle frames, made by Carbon Team, are heated for three hours in a 200 degree Celsius (390 degrees Fahrenheit) oven.Credit…Rodrigo Cardoso for The New York Times
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Emre Ozgunes, the general manager of Carbon Team, with one of the company’s carbon fiber frames.Credit…Rodrigo Cardoso for The New York Times

“One lesson from the pandemic is that you need to be nearer to your production,” said Emre Ozgunes, general manager of Carbon Team, the factory’s owner, “because if everything shuts down, you can probably still drive to Portugal to pick up frames, but not to China.”

The company, a joint venture of three Portuguese companies and two partners from Germany and Taiwan, is initially planning to make 25,000 frames a year, but it has the floor space to double that amount. About 30 percent of the 8.4 million-euro ($10.2 million) construction cost was covered by European Union subsidies. Until now, nearly all carbon frames sold in Europe had been imported from Asia, with only a few made in smaller European workshops, Mr. Ozgunes said.

Across Portugal’s bicycle industry, companies are rushing to bolster production and help reduce Europe’s reliance on imports from Asia.

“I think this pandemic has made it clear to everybody that it is a big advantage to be able to produce in Europe,” said Pedro Araujo, the chief executive and owner of one of the companies, Polisport.

Mr. Araujo was a 19-year-old motorbike aficionado when he founded his company in 1978, producing mudguards for off-road motorcycles. Polisport still makes the mudguards, but it generated most of last year’s EUR52 million in revenue from child seats, helmets and other biking accessories.

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Polisport generated most of last year’s revenue from child seats, helmets and other biking accessories.Credit…Rodrigo Cardoso for The New York Times
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The pandemic has demonstrated “that it is a big advantage to be able to produce in Europe,” said Polisport’s owner, Pedro Araujo.Credit…Rodrigo Cardoso for The New York Times

RTE, which operates Portugal’s largest bike factory, covering about 430,000 square feet, is preparing to open another factory next door to make electric bikes. It recently introduced its own e-bike brand.

But RTE will also open another factory next year in Poland, to supply its main customer, the giant sports retailer Decathlon, a French company with stores worldwide.

Bruno Salgado, the executive director of RTE and scion of the family that owns the company, said the bicycle frenzy created opportunities for several countries to increase production. His factory in Portugal uses workers and automated machinery to churn out about 5,500 bicycles a day, but it would produce at least 7,000 to meet demand if it could receive parts faster, he said. A bicycle can have more than 100 parts.

Europe faces “big sourcing problems” that will take two to three years to resolve, leaving some customers facing lengthy waits, Mr. Salgado said. For some parts, he said, factory orders placed now are guaranteed to be delivered only in early 2023. Stocks have dried up after months of closures prompted by lockdowns, worldwide shipments are only slowly resuming, and it takes time to raise production in response to soaring demand from cyclists.

Still, it makes sense to invest in a factory in Poland, he said, a country better situated for many European markets and one where Decathlon has stores. “I believe we cannot sit back and relax just because Portugal is now making a lot of bikes,” Mr. Salgado said, “because all the other countries are learning and some also have better geographic positioning.”

Portugal’s example is inspiring others elsewhere. Arnold Kamler, the chairman of Kent International, an American bicycle company, said in a phone interview that he had discovered at RTE “the finest factory I have ever seen in my entire life.”

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Bruno Salgado, the executive director of RTE, said the bicycle frenzy created opportunities for several countries to increase production.Credit…Rodrigo Cardoso for The New York Times
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Checking a recently assembled bicycle at RTE before being shipped to its destination.Credit…Rodrigo Cardoso for The New York Times

Mr. Kamler said that he sought to replicate some of the lean manufacturing processes that he had seen in Portugal inside Kent’s factory in South Carolina but that “we are not there yet.” (The United States is, so far, a secondary market for Portuguese bikes and components, accounting for about $1.2 million in exports in 2019.)

In their need for more employees, Portugal’s bike makers have been able to re-employ people laid off by other industries, including engineers and assembly line workers. RTE hired dozens of people from a nearby automotive components factory that closed. At Polisport, Mr. Araujo hired several engineers from Philips, the Dutch electronics company, after it moved part of its production to Asia from Portugal. Polisport now has more than 650 employees, up from 100 a decade ago.

At Carbon Team, some of the workers came from a nearby shuttered carpet factory, part of a textiles industry that was traditionally a pillar of Portugal’s economy. “If somebody knows how to knit,” said Mr. Ozgunes, the general manager, “they certainly have the manual skills needed to put carbon fiber into a mold.”

One of the former carpet weavers, Pureza Silva, 50, came knocking on the door of Carbon Team’s factory after struggling through two years of unemployment. “When you have reached my age,” she said, “you are certainly not going to get many opportunities to find a new job like this, and I’m enjoying making something new.”

After Portugal joined the European Union in 1986, it received billions in subsidies to help modernize its economy. But it also found itself more exposed to the free trade promoted by the bloc, which helped Asian manufacturers flood Europe with bicycles and other goods that they could make more cheaply.

But in 1993, the lawmakers in Brussels introduced tariffs that now go up to 48.5 percent on Chinese bikes, giving Portugal and other E.U. nations a chance to develop a homegrown industry. Tariffs have now been extended to electric bicycles, too.

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RTE operates Portugal’s largest bike factory. It is preparing to open another factory next door to make electric bikes.Credit…Rodrigo Cardoso for The New York Times

Portugal’s cycling industry relies on those anti-dumping tariffs to keep less expensive bikes out, said Gil Nadais, the general secretary of Abimota, the Portuguese bike association.

Without tariff protection against China, “unemployment would shoot up here,” he said.

Still, Portuguese executives insist that their manufacturing hub has also been quick to adjust to growing demand for higher-end bikes, including hybrid and electric models. Technological innovation has also trickled down to makers of components. Frames first shifted to lighter aluminum from steel, and now to more expensive carbon fiber. For electric bikes, the lighter frames extend the travel range of the motor.

“This is no longer just a race to produce at the cheapest price,” Mr. Ozgunes said, “but also to adapt to a fast-changing market in which the bike no longer is like the kind our grandparents used.”

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