Serotta lays off 40% of workforce, planning shutdown

Charles M · #1 07-31-2013, 11:56 AM

Serotta lays off 40% of workforce, planning shutdown

by Steve Frothingham / Bicycle Retailer

CEO says "funds never came" after merger with Blue and Mad Fiber
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 and company founder Ben Serotta 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's bike builders 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 shut down 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.

laupsi · #2 07-31-2013, 12:01 PM

yes I just tried to get information so I could order a new Pronto, was informed by my LBS who retails Serotta that they are not currently taking new orders. how unfortunate!

gone · #3 07-31-2013, 12:04 PM

Sad.

eddief · #4 07-31-2013, 12:06 PM

what a terrible american biz debacle. can you say "ibis"? a great case to be studied by a good MBA candidate. wow.

bikinchris · #5 07-31-2013, 04:58 PM

Quote:

Originally Posted by eddief

what a terrible american biz debacle. can you say "ibis"? a great case to be studied by a good MBA candidate. wow.

Not hard to figure out. When they turned down sales and refused to deal with bike shops, that was a door closed that would not easily be reopened.

dd74 · #6 07-31-2013, 05:24 PM

Heartbreaking. Just heartbreaking.

Jgrooms · #7 07-31-2013, 05:34 PM

Quote:

Originally Posted by eddief

what a terrible american biz debacle. can you say "ibis"? a great case to be studied by a good MBA candidate. wow.

Yes let's get a misty eyed MBA who couldn't glue three popsicle sticks together in the shape of a frame and present the 'what went wrong' scenario to a professor who never produced a nickel.

akelman · #8 07-31-2013, 05:36 PM

Quote:

Originally Posted by Jgrooms

Yes let's get a misty eyed MBA who couldn't glue three popsicle sticks together in the shape of a frame and present the 'what went wrong' scenario to a professor who never produced a nickel.

Awesome first post! Welcome to the forum, sunshine!

Jgrooms · #9 07-31-2013, 09:26 PM

Quote:

Originally Posted by akelman

Awesome first post! Welcome to the forum, sunshine!

Thanks brother! Unfortunately US 'higher' education cranks out useless MBas by the thousands. "Yes you too can earn this valuable 'experience' two nights a week....'" Sorry I've high jacked, but yes I've got another bunch of bean counters telling me how to run my product to some formula. Go get some glue and sticks kiddo and come back when you can make it work.

cinema · #10 07-31-2013, 09:40 PM

Quote:

Originally Posted by Jgrooms

Thanks brother! Unfortunately US 'higher' education cranks out useless MBas by the thousands. "Yes you too can earn this valuable 'experience' two nights a week....'" Sorry I've high jacked, but yes I've got another bunch of bean counters telling me how to run my product to some formula. Go get some glue and sticks kiddo and come back when you can make it work.

the bikeforums.net migration is strong with this one.

please keep it decent here guys. no need for

Jgrooms · #11 07-31-2013, 09:45 PM

Quote:

Originally Posted by cinema

the bikeforums.net migration is strong with this one.

please keep it decent here guys. no need for

Never been there, but i catch your drift otherwise :-)

cinema · #12 07-31-2013, 10:11 PM

Quote:

Originally Posted by Jgrooms

Never been there, but i catch your drift otherwise :-)

Good. we <3 u. long live serotta! waiting for my old one to show up in the tribute thread. it was an excellent beautiful omg red fierte with engraved 9sp veloce. wish i hadn't sold it.

Norm Swift · #13 08-01-2013, 02:49 PM

Quote:

Originally Posted by cinema

Good. we <3 u. long live serotta! waiting for my old one to show up in the tribute thread. it was an excellent beautiful omg red fierte with engraved 9sp veloce. wish i hadn't sold it.

Cinema,

It's still on the roads. You just motivated me to take a better photo than this low-res one from a few days ago and make the addition to the tribute thread.

Charles M · #14 08-01-2013, 03:45 PM

Guys,

The problem isn't that Serotta was larger than a back yard operation...

The problem wasn't offering stock bikes...

The problem wasn't carbon fiber...

And it's not a price point issue.

There is a larger market than some would think here for high end bikes... You have guys like Cervelo selling R5ca and there are a slew of people selling in the 5-8000 range or complete bikes for 10k+...

Parlee are pretty damn healthy. They're not small. And the line is out the door and around the block for the carbon Z Zero at $8k+... You also have Crumpton and Guru and Cyfac and Alchemy and Calfee and a dozen others (heck, Sarto build for a half dozen alone).

The "market collapse" that people mention has been very good for well run custom companies with controlled growth and reasonable expectations. It's been harder on others.

firerescuefin · #15 07-31-2013, 06:39 PM

Quote:

Originally Posted by Jgrooms

Yes let's get a misty eyed MBA who couldn't glue three popsicle sticks together in the shape of a frame and present the 'what went wrong' scenario to a professor who never produced a nickel.

....I bet the "business" decisions are precisely what brought the company down....not the inability to produce world class bicycles...had Rusty Lion come along 3-5 years ago, this conversation doesn't take place. Sorry if that offends your inner child.