Serotta lays off 40% of workforce, planning shutdown

[jmoore]

Originally Posted by alembical

I should have said 5+ pages in the first hour

[jpw]

i just got off the phone from speaking with Serotta. they're still attending to warranty work. no further news on the future.

[Liberace]

Originally Posted by Serotta_Carbon

There's a very good reason they don't relocate the composites effort to NY. They don't own it...Never did... If you read what I said in that post it mentions that Serotta bought some production tooling. What they bought were some molds and mandrels used to produce the Serotta brand parts. They didn't buy my building full of equipment, the processes, or any IP. What they did do in addition to buying the molds was to lease a building that I set my equipment up in and made their parts. I think I may have mentioned that in another post sometime back.

For some reason or another the collective group in charge of Serotta has made the decision that they no longer need our services and have let us go. That was their choice and I'm sure they feel like they had a good reason to make it. It's not my place to question their decision. What's the point?

I'll continue to make composite products. It's what I've done my entire life and it's what I'll do in the future. The only question is will I stay in the same building that Serotta once leased or will I relocate.

Thanks for your support during my days with Serotta. I enjoyed working with Ben and the crew in Saratoga and will miss them all in the future.

Mike

Any chance you'll continue to make forks on your own?

[BumbleBeeDave]

Originally Posted by 1centaur

The guys with the money make more money by making money, not taking tax losses. If Bradway paid $1.5MM to play (saw that a few pages back but won't go find it) and now has a minor % of DCG and a facility in Saratoga, they've lost most of their investment and are hoping it's not a complete write-off. I've never heard of a prescribed time to wait; I think they could have shut it down pre-DCG and taken the hit, but seemingly they hope there are some scraps to soften the blow (to the wallet and to the ego). Not holding out a ton of optimism there; Dave Kirk more completely fleshed out my point about giving away margin (to a third party manufacturer) while not having the backstory to pay for that margin. But hey, maybe there's some insider tack that is well off this speculative track - Russian oligarch has Ti tubes and wants to start up his Perestroika brand of made in the US bikes to get past customs charges, thinks he can sell 800 bikes a year easily with his marketing savvy (or at least through Colorado Cyclist's close-outs)...

Since I don't know financial or tax rules or law. But I do agree with what you say that this has to do with ego. Bradway and DCG are looking for some face-saving damage control.

But when you think about it, this whole sorry affair may come down to clash of egos.

BBD

[Ken Robb]

Has there ever been a thread this long before?

[Climb01742]

Originally Posted by Ken Robb

Has there ever been a thread this long before?

Yes, a few. Go to the main page for 'General Discussion' and on the far right click on the header for the 'Views' column. You'll see the longest threads. You can check 'Replies' the same way.

[slidey]

Ah-ha! So the plant isn't even set up for mass production, hadn't even thought of that! Great, thanks for the insightful info.

Originally Posted by David Kirk

I understand what you are saying but the reality is that the guys have worked for Ben for a long time and they are loyal to him and the long time 'Serotta way' for lack of a better term. Now there is some guy who has no history with them telling them what to do. This goes over like a lead balloon - I know because i lived through this there more than once. The potential customer will visit see for themselves what the place is like and how much is happening, or not, and base their decision on that. There are plenty of places to go that are happy and healthy, that have cash flow and stability and no stories and in most cases the purchasing manager will choose security over drama. The one exception is the guy who thinks he can leverage Serotta's position into a lower price for him and that only helps the one side.

Anyway - back to the bench for me.

Dave

[David Kirk]

Originally Posted by slidey

Ah-ha! So the plant isn't even set up for mass production, hadn't even thought of that! Great, thanks for the insightful info.

The place was set up to make 10 - 30 bikes a day of widely ranging sizes and models. All the tooling was optimized to make one offs give or take. This way they could respond to orders quickly and keep stock to a minimum. It worked very well for that purpose but the idea of making 100 unit runs of bikes in five sizes would not be the shop's forte.

One could of course change this but that means a huge investment to get things set up to deal with the numbers.

Dave

[pbarry]

Originally Posted by David Kirk

The place was set up to make 10 - 30 bikes a day of widely ranging sizes and models. All the tooling was optimized to make one offs give or take. This way they could respond to orders quickly and keep stock to a minimum. It worked very well for that purpose but the idea of making 100 unit runs of bikes in five sizes would not be the shop's forte.

One could of course change this but that means a huge investment to get things set up to deal with the numbers.

Dave

Really good to know, Dave. More than a few of us here had hoped for a reasonably priced steel frame again from Serotta. With the one-off method of production, that wasn't going to happen in the last decade(?) or so.

At Merlin in the early days after ramping up production, we were doing runs of 25(49cm) to 120+(55cm) frames. A custom builder worked on one-offs for sponsored riders and custom Spectrums. Stock Spectrum frames went through the size runs at the same time, with different seat tube collars/top tubes/and TK specified welding.

Frames were flying out the door in the early 90's, so we didn't sit on a ton of inventory. Wholesale was $1,350; materials and labor came to $835, iirc. Merlin had great marketing, but too much revenue devoted there. Full page ads in Bicycle Guide and Bicycling for years. And top heavy in office/management. Never in the black while I was there, leaving in 1991. Maybe they broke even in '92/'93, when sales were around 2,400 units, vs. 2,000 in '91, don't know. Carbon started to take a foothold, companies like Serotta started building in numbers with Ti., and Litespeed's quality improved a lot. Sales dropped steadily after '94.

Point being, I have no idea what the perfect recipe is for medium sized bike manufacturers. Create a workflow and staff for numbers; when things get slow, you are bleeding. Construct a more flexible chain of production like Serotta; lose the ability to make a large run, and forfeit a price point...

Better to stay small and flexible, and always be attentive to customers. Dave and Kelly get this. Great to see the lineage going forth. Serotta may be gone, but you two continue the spirit and magic that was there at the barn.

[#campyuserftw]

We are in the Great Recession...and our front wheels are not reaching the plateau. Poverty is growing, and what we're seeing in upstate NY, at one bike shop, is across the country, a financial strife in all fields. We all feel a sense of connection with the bike brand, and the folks from the shop.

Without minimizing, or distracting, here's some data points below for reference; while data can be debated...what is clear...is this bike market is an example of the overall economy. Out of the chaos, it may require time, but if we take Mr. Kirk and Mr. Bedford as examples, those within Serotta (or what's left of it), those who may have left, or been fired, may be able to look back at this as a launching pad to something bigger, better, or simply more gratifying:

"The official unemployment rate is 7.6%, but the real number is actually about twice that. A statistic known as the U-6 figure includes the unemployed, plus those “marginally attached” to the labor force (they want a job but have largely given up looking), plus those working part-time but who want a full-time job. The U-6 number for June 2013 was a resounding 14.3%, up half a percentage point from May. Fewer working-age Americans are working than at any time in the past 30 years. The employment-to-population ratio is 58.7% according to the Department of Labor, a drop from 63% five years ago, before the recession hit.

According to the Bureau of Labor Statistics, more Americans are working part-time involuntarily. These part-timers now number more than 8.2 million, which is an increase of 322,000 workers from May and almost double the number this time five years ago. Also, a July National Employment Law Project (NELP) study concluded that real median hourly wages declined by 2.8% averaged across all occupations from 2009 to 2012."

Note: "China’s economy will grow around 7.5% this year, with industrial production set to rise by around 9%."

http://electronicdesign.com/trends-a...&sfvc4enews=42

[slidey]

Yes, well done! Take that a few more steps forward why don't you; unemployment is an intergalactic phenomenon, we will forever be in recession!

<Please affix face-palm image here>

Originally Posted by #campyuserftw

Poverty is growing, and what we're seeing in upstate NY, at one bike shop, is across the country, a financial strife in all fields.

[Charles M]

Just posted by Steve Harad / Honcho of Blue Bicycles...

" Here's hoping we aren't next but it looks like we are. Lets catch up Ben Serotta"...

Damnit...

[Charles M]

aND...


http://www.bicycleretailer.com/north...ling-community

Editor's note: Serotta founder Ben Serotta sent BRAIN this open letter to the cycling community on Wednesday. Serotta was recently fired from the company he founded 41 years ago.

To the cycling community at large and my many friends and supporters;

In the wake of the last few weeks of frenzied reporting and announcements of what’s been going at Serotta I wanted to take the time to personally say thanks to the many hundreds of you who have expressed words of support for the company that bears my name, for the wonderful people who try to make things happen every day and for my family and me.

I also want everyone to know that I am fine and while this is not the time or place to debate or explain any details, I’d like to clarify the circumstances regarding my departure.

Early last Sunday evening while stopped at the side of the road looking at a paper map with Marcie, thinking about where we should head to enjoy the remaining hours of a beautiful sunny, mid-summer evening, my cell phone rang and I instinctively answered it. One of the current company owners was on the other end and he coldly started, “I am terminating you. Your email password has been changed and your building access code has been deleted. You can arrange to get your personal things on Tuesday.” And with that (no cause was given, aka terminated without cause) my life at Serotta the company, came to an abrupt end.

By the next morning, Bill Watkins, the company’s CEO, whom I’ve viewed as the company’s long missing link- someone who had the skills to lead the business end of the business, while I focused on brand and product, had been given the same treatment. It was an absolute honor working with Bill and the loss of his leadership is a loss for the company.

We broke ground on the new facility in Saratoga Springs just days before September 11, 2001. For a time, sales that had been brisk, all but stopped. But like the rest of America, rather than pulling the plug on the future, we decided to continue with the building with the confidence that we’d overcome whatever adversity lay ahead. In June 2002 we moved in to the new digs. On the side of the building there is a plaque that was placed on the day of our opening that dedicates the facility “...to the spirit of the great American craftsmen, past, present and future...”. Nothing would please me more than to see it remain as a showcase for the best that American craftsmen have to offer and thus my best wishes go to everyone who remains at Serotta for a successful recovery and prosperous future.

Serotta, and for that matter, the whole of the artisan bicycle industry is fueled by passionate people - the builders and the cyclists who interact with us personally and the products born from our efforts. Bringing joy and excitement is in its own way intoxicating which is what makes escape from this industry more or less futile to those of us who have experienced it from the inside. I don’t yet know exactly what I’ll be doing next, although one thing is certain, I will be riding my bike.

Hoping to see you on the road,

Ben Serotta

[jlwdm]

Originally Posted by Charles M

Just posted by Steve Harad / Honcho of Blue Bicycles...

" Here's hoping we aren't next but it looks like we are. Lets catch up Ben Serotta"...

Damnit...

Starting to look like nothing was right with the DCG setup.

Jeff

[jlwdm]

Originally Posted by #campyuserftw

We are in the Great Recession...and our front wheels are not reaching the plateau. Poverty is growing, and what we're seeing in upstate NY, at one bike shop, is across the country, a financial strife in all fields....


"The official unemployment rate is 7.6%, but the real number is actually about twice that. A statistic known as the U-6 figure includes the unemployed, plus those “marginally attached” to the labor force (they want a job but have largely given up looking), plus those working part-time but who want a full-time job. The U-6 number for June 2013 was a resounding 14.3%, up half a percentage point from May. Fewer working-age Americans are working than at any time in the past 30 years. The employment-to-population ratio is 58.7% according to the Department of Labor, a drop from 63% five years ago, before the recession hit.

According to the Bureau of Labor Statistics, more Americans are working part-time involuntarily. These part-timers now number more than 8.2 million, which is an increase of 322,000 workers from May and almost double the number this time five years ago. Also, a July National Employment Law Project (NELP) study concluded that real median hourly wages declined by 2.8% averaged across all occupations from 2009 to 2012."

...

Unfortunately there are lots of people who don't want to work or don't want to work hard. Too many people want the government to take care of them.

Also, education and real learning are just not important to too many people in this country. It is easy to make it through the US education system without learning a lot. If people would be inquisitive throughout their lives they could learn so much.

Jeff