BEDFORD, PA (BRAIN)—It wasn’t too long ago that Cannondale actually added 7,000 square feet solely for carbon fiber production to its 225,000 square foot Bedford, Pennsylvania, manufacturing facility “to speed up time to market.”
But those manufacturing days in Bedford (pictured) are slowly coming to an end as Dorel Industries announced yesterday its shifting Bedford’s operations away from bicycle frame manufacturing by 2010, and to Taichung, Taiwan. All Cannondale 2011 model year bikes will be sourced from Asia, according to Dorel.
Anyone listening to Dorel’s March meeting with investors knew this writing was on the wall. Dorel recreation and leisure segment president Robert Baird alluded to the fact it takes 45 hours to manufacture a carbon fiber frame, and that labor costs $1 an hour in China and $35 an hour in the U.S.
“As I’ve told Bedford, they’re going to have an exciting future,” Baird said in that meeting. “It’s probably going to be a bit of a different future over time.”
That “different future” Baird alluded to was spelled out yesterday.
Bedford will now be focused on final bicycle and Headshok assembly (strictly for the U.S. market), CNC machining, testing and quality control, bicycle warranty repair, inside sales/service, distribution and customer support/administration (including a new call center on-site). Bedford’s 300 employees will dwindle to 100 by the end of 2010.
Even before Dorel bought Cannondale in early 2008, Bedford’s days of manufacturing seemed numbered. Two years prior, Cannondale turned to Asia for the first time to source entry-level aluminum bikes. It had been that Cannondale sourced its all-carbon fiber bikes from China, but produced its aluminum, and aluminum-carbon bikes in Bedford. That’s the way it had been done since Cannondale first began making bikes in 1983.
Dorel’s announcement yesterday didn’t just involve Bedford. Three remote offices located in Lake Forest, California, Longmont, Colorado, and an IBD-focused office in Madison, Wisconsin, will be closing, as the Bethel, Connecticut, facility sees an expansion. Dorel owns Cannondale, GT, Schwinn, Mongoose and Sugoi, an apparel brand.
Some longtime GT employees work out of the Lake Forest and Longmont offices including GT director of product development Mark Peterman and GT vice president of engineering Forest Yelverton.
Baird told Bicycle Retailer that Dorel is in the "process of relocating" key individuals" to Bethel with "very critical players having already committed." The offices will stay open for least another "15 months" while this relocation process takes place, Baird added.
New CSG NA (now called Cycling Sports Group instead of Cannondale Sports Group) president Jeff McGuane said that Dorel is making a “big investment” into Bethel, both “physically and with people.”
Baird said it was an “important step” to put the best talent under one roof, citing reasons like being able to “innovate quicker.” In essence, Bethel now becomes Dorel’s defacto home to its high-end or “IBD” brands, while Madison officially becomes the designated home to the mass market.
“This further demonstrates that [IBD] commitment to dealers,” McGuane told Bicycle Retailer yesterday.
The total cost of the overall re-organization plan is expected to be no more than $4.5 million, the majority of which will be related to employee relocation and severance. These costs will be incurred over the course of 2009 and 2010. Once completed, the company expects to realize annualized cost savings of up to $4 million.
“For us to continue on our quest to remain competitive and to become the world’s premier provider in delivering the top recreation and leisure brands and products that consumers trust and want, we must continue to simplify and streamline our operations to help us drive forward,” McGuane said.
For more on this story, be sure to the read the April 15 issue of Bicycle Retailer and Industry News.