UK folding bicycle company Brompton has citied supply chain issues for a turn in its fortunes, as it plans to reduce its dependence on Taiwan for parts.
The London-based manufacturer had been a pandemic success story however it reported on Thursday [05 January 2023] a fall in profits – with rising prices, labour issues and the cost of living crisis weighing on its margins.
Brompton’s pre-tax profits have been slashed to £7.3m as a result of a 49% increase in costs to £99.6m. The group did stress that the number of bikes sold last year had increased more than a third to 93,460.
The bike seller will now aim to source parts from countries other than Taiwan, a key supplier to the bike industry, amid fears of a growing military threat.
Will Butler-Adams, Brompton’s chief executive, said: “I think it’s pretty prudent because there are risks in the region.” He added that while the threat was “relatively low” it did exist.
Brompton also reported increased costs due to Russia’s invasion of Ukraine. Butler-Adams told the Financial Times in December that “restriction in supply out of Russia and Ukraine means that more people are going to China, the price of titanium is going up. That is a risk.”
The bike firm will now deploy a “dual supply” strategy, where it sources parts from two different locations.
“It comes at a cost. And you need to have a certain amount of scale to do that – when you’re smaller, you just don’t have the scale,” Butler-Adams explained.
Brompton will be looking to achieve such a scale as it aims to produce 200,000 bikes a year, about double the current production levels. It has also announced a brand new production facility near Ashford, Kent which will be constructed on stilts on a floodplain. It will become Brompton’s new headquarters by 2027.