Dorel Industries Inc. is shutting down its bicycle assembly facility in the United States and moving it to Asia in a cost-cutting and efficiency move.
Montreal-based Dorel said on Thursday it will close its assembly and testing facility in Bedford, Pa. later this year, resulting in the loss of about 100 jobs.
The move follows on Dorel’s decision five years ago to move the bulk of bicycle manufacturing operations in Bedford – where its line of high-end Cannondale bicycles was made – to Asia.
“It [Bedford] is no longer competitive. It’s not what any of our competitors are doing. It adds costs and its adds time,” Jeffrey Schwartz, Dorel’s chief financial officer, said in an interview.
“We have some parts assembled in Bedford, shipped to the Far East, and then shipped back for assembly,” he said.
“If most of the production is done, and the frames built, in the Far East, then it’s more efficient to do your testing in the Far East,” he added.
Dorel acquired Cannondale in 2008 for $202-million and has implemented a strong marketing strategy for the brand, including sponsoring a team competing in the Tour de France and other world-class bicycle races.
Most North American bicycle manufacturers have moved their manufacturing operations to Asia over the past decade or so in order to take on lower-priced competition and cut costs.
Dorel also said on Thursday it is relocating its R&D facility in Bethel, Ct. to the company’s recreational/leisure segment’s new head office in Wilton, Ct.
The recreational/leisure unit will book restructuring charges of between $14-million (U.S.) and $16-million, pre-tax, of which 70 per cent are non-cash .
Annualized savings of at least $6-million are expected once the restructuring is completed in late 2014, Dorel said.
“We want to significantly reduce development and supply chain lead times, improve cost structures and operating margins, and enhance quality while lowering warranty costs,” Peter Woods, Dorel’s global chief financial offer and interim president of the recreational/leisure unit, said in a news release.
Dorel also makes other well-known bicycle brands, including Schwinn and Mongoose.
It has two other divisions: juvenile products such as car seats and strollers; and furniture products.
Annual sales are $2.6-billion.