January 24/14 11:49 am - Dorel Restructures Bicycle Division

Posted by Editoress on 01/24/14
 

Dorel Industries has announced that it is restructuring the Recreation/Leisure segment to "enhance its competitiveness".  For the cycling segment - which includes Cannondale, Caloi, Schwinn, GT, Mongoose and Ironhorse, plus Sugoi clothing and Guru Fit - this involves the closing of the Bedford, Pennsylvania, facility that has been the traditional site of Cannondale's manufacturing and assembly.  This will be moved offshore, ending U.S. production of Cannondale bikes.  Manufacturing at the site ended in 2010, but now assembly will end also.  The R&D facility in Bethel Connecticut, will also move, to the nearby headquarters in Wilton, Connecticut.  The moves are expected to be completed by the end of 2014.

The restructure is expected to affect approximately 100 employees.  Dorel estimates that it will incur $14-$16 million (US) in restructuring charges (pre-tax), but will result in $6 million (US) in annualized cost savings.

"The objective is to accelerate operational excellence at our Recreational/Leisure segment by strengthening its working relationships with its global partners," said Peter Woods, Global CFO & Interim Recreational/Leisure President. "In particular, we want to significantly reduce development and supply chain lead times, improve cost structures and operating margins, and enhance quality while lowering warranty costs."

"Today marks the beginning of the next phase in Dorel's evolution as a global bicycle and apparel company. This plan will result in higher quality products and services for our customers and consumers," stated Jeffrey Schwartz, Chief Financial Officer.