Data driven component manufacturing pushes Herrmans forward

As a European component manufacturer, Herrmans Bike Components rode a high wave during the corona years. Now the company has entered a new phase where sustainability and a focus on retaining recent market gains are the key focus. "How long will it last until price point makes a difference?" muses CEO Dan Liljeqvist.

Founded in 1959 as a manufacturer of rim tapes for bicycles, Herrmans has expanded its portfolio over the years to include grips, reflectors, chainguards and lights. The company now manufactures approximately 2,000 different products. With offices in Taiwan and Germany alongside its Finnish headquarters, the company serves mainly European customers producing bikes in Taiwan. 90% of the components are for OEMs and 10% for the aftermarket.

To support future growth and strengthen the company's market position, it was taken over by private equity group Sponsor Capital in 2018. The bicycle and lighting division (Nordic lights) were divided into separate entities to allow both to grow to their potential.

European component manufacturer

This step paid off with the company reporting a turnover of €35 million in 2022. Shaped by the headwinds of the corona years, this was a 12% increase from an already record-breaking year in 2021. "Corona showed the importance of close-to-market production. The industry shifted from single suppliers to several suppliers with a focus on European players. But how long will that last until price point makes a difference?" muses CEO Dan Liljeqvist. "In the long run you have to invest in your new companies."

Addressing the current overstock in industry, Liljeqvist has this to say: "Our industry is not yet as organized as for example the automotive industry. Last summer you could really start to feel that companies were producing more than they were selling, but everybody was still ordering and there wasn't - and is no - system to share data on demands and within the supply chains. Coping with this in the short term is a big challenge. Luckily, more efforts are being made in forecasting to share data and so on."

"Although the bike industry is really friendly, real business collaborations have not been so common until now, but they have started especially in the last two years. It's difficult to compare with the automotive industry, as it's a much bigger industry, but overstocking would never happen to the same extent there, because they are sharing data already."

Investments in automation

In 1969 Herrmans invested in its first molding machine for manufacturing grips. "Automation is key to produce efficiently, but you need volumes to facilitate automation," explains Dan Liljeqvist. Currently the factory in Finland houses 29 robots in a mix of hydraulic, electric and hybrid machines for different molds and products. Herrmans claims to be one of the only bicycle companies in Europe to have a 3K machine where three different materials are used in the molding process. Although lights are the newest business segment for the company, they are already the biggest revenue generator. The company invested in its first fully automated light machine 5 years ago.

‘The newest machine is capable of making 1 light every 18 seconds, or 200-250 products an hour depending on the light.’

Significant sustainability milestone

Sustainability is high on the agenda for Herrmans who has set the ambitious target of being carbon neutral by 2035. "In 2022 we passed a significant milestone, reducing our Scope 1 and 2 emissions to zero. We've also reduced our Scope 3 emissions by 16%," explains Sari Noromies, Operational Excellence & Sustainability Developer. Despite boosting production, the company managed to reduce its CO₂ emissions from 10,944 tonnes to 9,069 tonnes between 2021 and 2022. The major factor being changes to raw materials used and less reliance on air freight.

With careful management, Scope 2 emissions have long been under control. Measures taken include replacing the factory's diesel-powered vehicles and forklifts with electric alternatives contributed to the achievement of zero Scope 1 emissions. The first electric truck is already in use, and the remaining vehicles will gradually be replaced with electric ones.

Impact of raw materials

The biggest challenge for the company is reducing its Scope 3 emissions. The company says that substantial progress is being made and that the long term impact is in raw materials. A team of experts from various departments evaluate the company's raw materials supplies and identify new recycled or non-fossil materials that meet the factory's stringent quality standards.

The company has recognized that sustainability must become clearer and data driven. "The biggest challenge is getting primary data from suppliers," says Noromies. "Concurrently, we are developing our own product scoring system to better analyse material flows and remain at the forefront of pioneering industry standards. It is no longer sufficient to say that our products are superior or more sustainable; we must support such claims with facts.".