SARATOGA SPRINGS, NY (BRAIN) — Serotta has laid off 40 percent of its workforce and is planning to shut down production in the next two weeks, CEO Bill Watkins told BRAIN on Wednesday.
The company was recently merged with Blue Competition Cycles and Mad Fiber Wheels to become part of the Divine Cycling Group. At the time of the merger, DCG said the combined brands would be better able to attract investment and pool resources. However, Watkins said the merger did not result in any immediate increase in funding, forcing him to lay off eight or nine employees on July 19.
DCG officials were not immediately available to comment.
Mad Fiber spokesman Jasen Thorpe told BRAIN on Tuesday that production was continuing at the wheel company and there had been no layoffs there. Blue Competition CEO Steven Harad was not immediately available to comment.
Watkins said Serotta has closed its factory in Poway, California, and laid off all the employees there. Serotta's remaining bike builders in New York were working to complete orders.
"We still have a core group of craftsman still producing bikes, but we are not accepting orders. I'm anticipating a shutdown in two weeks. I do not know if that will be temporary or permanent while the owners figure out what to do," he said. "I'm working to build out the runway and land this airplane gracefully and professionally."
"[DCG] have not invested any capital that was required to consummate the merger, and to fuel the plans that each of the three companies had at time the merger was being discussed. Ben [Serotta] and I disclosed what we were doing, they bought into plan and said, 'Go for it,' and we did the plan ... but the funds never came. We got official notification last week that the funds would not be coming."
Prior to joining Serotta last fall, Watkins was a consultant with Bradway Capital, an investment group that bought an interest in Serotta in May 2012. Watkins said he did not have any equity in Serotta or DCG.