Strong bike industry inspires component makers
Buoyed by the federal government policy targeted at developing the motorcycle industry, local companies are slowly but surely making a foray into the component manufacturing segment with a view to cutting the country's reliance on imports.
The motorcycle industry needs more than 700 parts to manufacture a bike. The neighborhood light engineering industry could make four components, namely drive chain, seat, stand, and battery.
Initially, the achievement might seem like nothing when compared to vast requirement. But making the pieces locally is a major stride compared to ten years ago when the industry had completely relied on imports to meet the demand.
At least four companies manufacture elements in Bangladesh, and one of these is QVC Bangladesh.
Located in Sundarban union in Dinajpur sadar upazila, the business produces around 2.5 lakh drive chains annually against the capacity of about 5 lakh.
ATM Shamsuzzaman, managing director of QVC Bangladesh, started making drive chains in 2014 after seeing the potential of the bike market. He invested around Tk 35 crore to create the factory, which employs around 200 people.
"My company struggles to fulfil the demand despite running the factory at any hour. Users appreciate the grade of our product," he noted.
QVC Bangladesh supplies drive chains to Grameen Motors, Runner Automobiles, and state-run Atlas Bangladesh.
It meets around 60 % of the demand for drive chains of Runner Automobiles.
Officials from Honda, TVS, and Hero have visited his factory and inspected the caliber of the merchandise, Shamsuzzaman said, adding that he was optimistic about learning to be a supplier of the companies.
Md Tazul Islam, president of the Automobile Components & Accessories Manufacturers Association, said Bangladesh could manufacture all motorcycle elements as local vendors had all the resources.
Islam may be the managing director of Run Industries, which manufactures motorcycle seats.
Setup at Sibrampur in Faridpur in '09 2009, the company may be the sole seating solution provider to Runner Automobiles and Hero Motorcycle.
It sells a lot more than two lakh seats to Runner and Hero combined. The factory comes with an gross annual production capacity of 18 lakh seats.
Local firms cannot provide any official data on the gross annual market size of bike pieces or spare parts.
The annual demand will probably be worth a minimum of Tk 500 crore and the market has been growing around 15 % per annum for the last 10 years, they said.
The growing demand for the two-wheelers and the Motorcycle Industry Development Policy 2018 has inspired local firms to set up manufacturing facilities or assembly plants to keep prices lower and capture the marketplace share.
Currently, 96 % of motorcycles running in the united states have either been locally created or assembled.
Around 5 lakh units of motorcycles were sold in 2019. The sales declined to 3.11 lakh units in 2020 as demand fell as a result of the impacts of the economic slowdown caused by the coronavirus pandemic.
"Local component makers want to cater to the motorcycle industry amid challenges," said Hafizur Rahman Khan, chairman of Runner Automobiles, the pioneer in motorcycle manufacturing in Bangladesh.
OBSTACLE FOR LOCAL VENDOR DEVELOPMENT
The government has extended tax facilities to motivate the bike industry to develop local vendors to create world-class products for the neighborhood and export markets and to create jobs.
But not a single motorcycle company is attempting to develop local vendors to produce parts and components. Motorcycle assemblers import finished and semi-finished goods.
WHAT MOTORCYCLE MANUFACTURERS SAY
Khan of Runner Automobiles said policy support was had a need to develop local vendors. "Runner is trying to develop local vendors."
Abdul Matlub Ahmad, chairman of Nitol Niloy Group, which assembles Hero-branded motorcycles, said all manufacturers should cooperate with local vendors in the greater interest of the industry.
Shah Muhammad Ashequr Rahman, head of finance and commercial at Bangladesh Honda Pvt Ltd, said manufacturing generated the most robust backward linkages industry through vendors across all sectors of the economy.
He noted the expansion of the motorcycle industry might encourage the growth of the parts component and supporting industries and technical consulting services.
He said the technology transfer was highly necessary to develop local suppliers. Sound policies and facilities were necessary for local suppliers and vendors to produce parts.
"Local manufacturers may be able to offer good quality products at an acceptable price," Rahman added.
