Serotta lays off 40% of workforce, planning shutdown

[laupsi]

Originally Posted by CunegoFan

Serotta went from BMW to Ferrari. They went from an aspirational product that lots of enthusiasts (and people who wanted to look like enthusiasts) could afford (even if they had to stretch a bit financially) to a product that was insanely expensive (when comparison shopped against similar products) and beyond the reach of most people. The fake-it-till-you-make-it market is much much larger than the made-it market.

most posts are similar to the one above in that they preach about the exorbitant amount that Serotta charges/charged for their frames. similar products? what exactly is the reference or comparison? have these same folks ever priced custom Ti and Carbon frames? not to mention the cost of super light carbon wonder bikes made in Taiwanese or Chinese production facilities. no way to filter the nonsense

not claiming to know the causes that brought Serotta to this point, I'm certain however they are numerous. considering what folks spend today on high end bicycles/kits/accessories I don't think cost of product is reason numero uno for the demise.

[slidey]

I've already thought about making these comparisons, but the fact of the matter is that even Ferrari is owned by Fiat who also manufacture the Panda! So for Fiat, it does make sense; a twisted corporate sense but sense nonetheless, to indulge in a brand of pointless, over-priced, pinnacle of technical achievement masterpieces, at times in limited quantities as their parent company's revenues aren't dependent solely on the sale of these. Add to that the resources they've spent in cultivating and maintaining their brand name in a hallowed light and their ability to allow almost anyone to buy into their brand via colognes, keychains, cufflinks, etc and you have a brand that is much more accessible than Serotta ever was! How the blazes did that ever happen??!!

Originally Posted by CunegoFan

Serotta went from BMW to Ferrari. They went from an aspirational product that lots of enthusiasts (and people who wanted to look like enthusiasts) could afford (even if they had to stretch a bit financially) to a product that was insanely expensive (when comparison shopped against similar products) and beyond the reach of most people. The fake-it-till-you-make-it market is much much larger than the made-it market.

[Ken Robb]

I don't think having price-is-no-object bikes was a problem but not offering some less expensive but still high quality non-custom frames/forks was. Maybe that seemed impossible or an unwise use of production capacity but in the end it seems there was excess capacity galore. I can't get into B'School analyses of production strategy for lack of info but I wonder what would have happened if Serotta had promoted racing bikes in standard sizes priced like Fiertes. If young racers were successful on those bikes would they "graduate" to custom Serottas later? Would the image of those racers winning have induced a middle-aged guy with some fit problems to step up to a custom Serotta?

It seems that this lack of bikes that young people wanted and could afford led to the shift in perception of a Serotta as a high-performance racing bike to a bike for old geezers with/without fit problems.

Having written that I have to say I have never been a racer and I don't care what racers ride. OTOH I have to admit that earlier in life I probably thought that a successfully raced bike was indicative of qualities that might also be a benefit to me too.

[pbarry]

Originally Posted by slidey

...you have a brand that is much more accessible than Serotta ever was! How the blazes did that ever happen??!!

The meaphor had a a little merit, but you ran it right off the track with your conclusion.

[BumbleBeeDave]

Originally Posted by Ken Robb

I don't think having price-is-no-object bikes was a problem but not offering some less expensive but still high quality non-custom frames/forks was.

Ford has their Fiesta-Focus-Fusion-Taurus-Lincoln progression of price points and models so less affluent owners can start with the Fiesta or Focus and move up as they get older and gain wealth.

Serotta has never done this successfully, IMO. They were getting a good start on it with the Pronto/Fondo, but perhaps way too late. I was originally optimistic about the merger with Blue, who I understood have Asian carbon experience. A $2000-2500 carbon Serotta, designed by Ben here and built in Taiwan, might not have been a bad thing to supply a lower end price-point.

BBD

[slidey]

Quite possible. I'm guessing you're referring to the vastly differing markets that both these co's operate in, I presume? My point was that its easier to own Ferrari something than Serotta anything.

Originally Posted by pbarry

The meaphor had a a little merit, but you ran it right off the track with your conclusion.

[ultraman6970]

Guys, it depends a lot of what Serotta as company had in mind and in their business plans. Maybe they never wanted to alienate the brand producing in asia, second if they were going to produce like zillions of 900 bucks steel frames they were going to compete with trek and other massive established brands, thing that makes no sense (Serotta had a chain of distributors? never saw a single serotta in this area for example) . They tried to be top tier and sadly did not work, the merger did not work either because the thing that was going to happen was that the string was going to snap at their side. No idea how much blue or mad wheels sells but since they are still in business probably was a lot more than what serotta as a brand was able to sell? Since $ moves everything... it happened the obvious thing... they cut them off.

In south america for example you can't go custom because all the master builders could not compete with asia importers and the custom bikes industry died like 15 years ago, in spain from what a friend told me if you want custom you have to go somewhere else but at the same time prices are so high that pretty much people just go with what ever is at the shelves that obviously wont be like 2 cents either. Between you and me the american cycling market is just weird.

[bironi]

So..... How much longer will experience matter?

[rnhood]

Originally Posted by BumbleBeeDave

I was originally optimistic about the merger with Blue, who I understood have Asian carbon experience. A $2000-2500 carbon Serotta, designed by Ben here and built in Taiwan, might not have been a bad thing to supply a lower end price-point.

BBD

I was hoping for this also, and I believe it may have worked. And, I guess depending on how things move ahead from here, it could still happen. Probably doubtful though, as Ben appears to be set on making an exquisitely well made bike - cost be damned. Problem is this type market is very small.

I never understood the negative comments on Taiwan built frames. The US and Europe pretty much designed the factories, so its only the labor...and Taiwan labor is every bit as good as labor from any other country. People are the same, equal so to speak. Taiwan sailboats are a shining example of the quality Taiwan factories are capable of (and of course, so is my Tarmac).

Ben seems to have good design and conceptual abilities. The Meivici aero frame was ahead of its time, but at $8K a pop it garnered little interest. Then Spec, Cervelo and a host of others came along and cranked out their versions at $3K a pop and took the market. Fashion aside, very few really need a custom built frame given the components and adjustability of modern bikes.

[slidey]

I agree! I don't understand the bad rap Taiwan-made frames get either. The fact is that they're the standard now!

To add to your example of sailboats, which I know little about, there used to be a time when snooker tables were being manufactured in Europe. Come globalisation, and now they're for the most part being manufactured in China. The tables used at the Crucible (annual venue of the World Snooker Championship) this year were manufactured in China, including the cloth stitched on. There were absolutely no complaints whatsoever, and no untoward trajectories taken. If one were to follow the game, it'd become very clear as to the level of expertise and precision that was required to execute this task, and now the Chinese have mastered it.

Originally Posted by rnhood

I never understood the negative comments on Taiwan built frames. The US and Europe pretty much designed the factories, so its only the labor...and Taiwan labor is every bit as good as labor from any other country. People are the same, equal so to speak. Taiwan sailboats are a shining example of the quality Taiwan factories are capable of (and of course, so is my Tarmac).

[victoryfactory]

Mr Serotta's tradition of manufacturing everything in USA, even
his carbon stuff could have been a big reason they are where they are now.
Also, how many custom makers mill their own Ti parts? Or paint? or make
carbon forks?
Going vertical ala Standard oil may have worked 100 years ago, but
everybody (nearly) outsources today to remain competitive.

Even with all the above mentioned quirks, Well heeled folks were still
willing to shell out for a Serotta until the recession hit 5 years ago.
That tipped the scale. The prices and the quirks now outweighed the
benefits and combined with unsuccessful marketing, viola.
I hope Ben gets his name back again (again) and he can then do with it what
he wants. Maybe he and the rusty lion can make a new plan.
They always made great bikes.
VF

[Pete Mckeon]

The world always is moving foward!

[sitzmark]

Originally Posted by rnhood

I was hoping for this also, and I believe it may have worked. And, I guess depending on how things move ahead from here, it could still happen. Probably doubtful though, as Ben appears to be set on making an exquisitely well made bike - cost be damned. Problem is this type market is very small.

It is and it isn't. 10% of the US population controls 90% of its wealth. That means about 30 million people have a LOT of money to spend. What matters is how many are interested in bicycles, or can be enticed to want bicycles. Top tier is one strategic play among many.

Originally Posted by rnhood

I never understood the negative comments on Taiwan built frames. The US and Europe pretty much designed the factories, so its only the labor...and Taiwan labor is every bit as good as labor from any other country. People are the same, equal so to speak. Taiwan sailboats are a shining example of the quality Taiwan factories are capable of (and of course, so is my Tarmac).

Labor quality and training isn't always the same. Automation generally is.

The problem I have experienced with Chinese , Indian, etc. manufacturing is that you can never guarantee anything. I've experienced work teams that opened the factory after hours and produced product without proper quality control, then sold it through alternate channels as being authorized product. Or, labels and packaging smuggled out of the plant and product manufactured on the cheap and again sold as legitimate product. How was this discovered? After fielding a rash of customer quality/warranty complaints and trying to determine what in our production process was responsible. Initially we spent a lot of money replacing product that we never actually saw any revenues on - just to keep customers happy. Then we figured it out.

There is little regard (or enforcement) for intellectual property in Asia. Improving because a number of companies have pulled out, or threatened to. Ten to fifteen years ago it was a nightmare.

[pbarry]

Originally Posted by slidey

Quite possible. I'm guessing you're referring to the vastly differing markets that both these co's operate in, I presume? My point was that its easier to own Ferrari something than Serotta anything.

Buying a Ferrari key fob does not get you anything made by them. If you perceive that you are getting something more than a key fob made in China, then their marketing is successful. Schwag sales won't make or break a bike company.

[echelon_john]

1. An $8000 carbon frame is not 100% better than a $4000 carbon frame. Nor is it 200% better than a $2000 carbon frame.

2. Ben doesn't want to make bikes. He hasn't stood at a bench for 30+ years. No disrespect; but the truth. If he wanted to make bikes, he could do so, in a shop attached to his house. From the very early days, he's aspired to Run A Company, something which he's proved unsuccessful at doing. Truth: Ben is not the guy who made your bike.

3. Firefly. They're doing what Serotta aspires/proclaims to do, but they're doing it sustainably and cost competitively. US-made framebuilding components? Check. Full Customization? Check. Impeccable craftsmanship? Check. I'm no fanboy, but I know quality when I see it.

4. It's a tough f&cking business. On the handbuilt side, it's largely cult of personality. Ben ain't got that in sufficient quantity to monetize. On the large-scale side, it's value/$. Ben ain't had that for a decade.

5. Whatever S were, they've found themselves in desperate situations/sold themselves so many times that they'll NEVER be that again.