The Supply Side: Bicycle supplier sees unprecedented demand amid COVID-19

by Kim Souza ([email protected]) 1,333 views 

Who knew adult bicycles would be one of the hottest selling items as consumers look for ways to entertain themselves amid the COVID-19 pandemic?

Arnold Kamler, CEO of New Jersey-based Kent Bicycles and one of Walmart’s main suppliers, said never in his life has he seen such demand.

Kent Bicycles continues to work to get its products to major retailers, but there are now delays of two to three weeks. Walmart president and CEO Doug McMillon said during the retailer’s recent earnings call that adult bicycle racks in U.S. stores were empty. He said as more consumers received stimulus checks, they purchased bicycles, and the demand has been unprecedented.

Kamler said he is working with Walmart, one of its largest customers, to get the retailer the bikes ordered. He said the company’s offices in New Jersey have been shut since March 10, and everyone in the organization is working remotely. The company imports the majority of its bicycle parts, and some bicycles are painted and assembled in the company’s plant in South Carolina.

“Our partners in China were hit hard following the Chinese New Year, and what would normally be a three or four-day shutdown in production turned into two months or more,” Kamler said. “It wasn’t until mid-April that the bicycle plants in China went back to full strength. In the meantime, we sold through our inventory as so did our retail customers. Now we are working to rebuild the inventory.”

He said with more bicycles being purchased online, Kent has also become a direct-to-consumer business for Walmart.com, and all products coming from China are now being sent through West Coast ports.

“It takes 18 days to get products from Shanghai to Long Beach [Calif.]. From there, a lot of the product gets cross-docked at warehouses, and we are having a time trying to get FedEx or other final carriers make deliveries to consumers,” Kamler said. “The product going to warehouses and on to Walmart stores is being sold before it makes it out on the floor.”

He said typically the product from China ships to East and West Coast docks, then makes its way inland via train and trucks. But the shipping time from Shanghai to Charleston, S.C., is 33 days, which is too long when trying to rebuild inventory and fill current orders.

Kamler expects bicycle sales will continue to increase into the summer months as more families stay local or close to home for summer vacations. He said adults working from home perhaps have more time to bike with their kids, and it’s easy to keep a physical distance while biking together with friends.

Kent Bicycles is the second-largest importer of bicycles from China, despite opening his own shop in South Carolina in 2014 as part of Walmart’s U.S. Manufacturing jobs program. Kent manufactures under the Genesis Brand, which is a private label for Walmart.

Kamler said the South Carolina plant has had setbacks. He said the plant was closed for two weeks and U.S. production halted when two employees tested positive for COVID-19.

He said the business is taking every precaution to keep its 125 employees safe. He said line speeds have slowed and production costs are up, but the company is completing about 20,000 bikes a month, less than its 30,000 capacity.

“We are running two lines and one shift,” Kamler said. “We added a $3.5 million painting installation in this plant that can paint 4,000 bicycles per day, but now we are paying a 25% duty on those frames coming from China.”

Plans were to ramp up production in the U.S. plant, but the trade war with China and steel tariffs meant a welding and frame building that was to be done in the U.S. has been put on hold.

“We invested between $10 million and $12 million in this plant and had hoped to ramp up production in the U.S., but we have been waylaid by this trade war,” Kamler said.

Kamler said the investment in South Carolina was the right thing to do, and it is viewed a long-term play. When the plant opened in 2014, it started with 45 employees with plans to grow to 175 workers over the next four years. Kamler said Kent is staying put and hoping longer-term trade deals with China will allow for growth.

Kamler said if COVID-19 had not closed China and U.S. borders for travel, he would have sought out more manufacturing there in recent weeks to help rebuild inventories. He said Walmart does require plants to be audited, which takes time and also would have been a hurdle. But with no corporate travel allowed, he has waited on products like everyone else.

Kamler said Kent’s manufacturing plant in China is also a 49% owner in the company, having taken an interest when his sister sold her shares in 2010.

“I negotiated a good deal with a major bike supplier in China [that] is not only a manufacturing partner but also a financial partner. We will import 3 million bicycles annually, so the U.S. manufacturing is still a small percentage of the total business,” Kamler said in 2014.

When Kent opened in Manning, S.C., it was the first time since 1998 that bicycles were at least partially made in the U.S. The plant began with assembly only, but frame painting was added as was for a short the welding to make frames, handlebars and rims. Kamler said the plans were to turn out 200,000 bicycles annually that are made in the U.S.

Kamler said adult bicycles will be in short supply at retailers for the next few weeks, but plants are running and shipments are on the way.

“In my 50 years at Kent Bicycles, a few friends have asked me to get them a bicycle. In the past month, I have had about 75 requests from friends and family to get them a bike. I am waiting like everyone else,” he said.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.

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