In a message dated 3/14/2002 2:47:44 PM Eastern Standard Time, news@biggs.tc writes:
<< rom http://www.bikebiz.co.uk Thursday 14th March 2002 :
Raleigh to cease UK assembly; move to new factory is shelved
280 assembly and factory jobs are to go. From 2003, Raleigh bikes will come in to the UK fully-assembled and sales will be handled from a Nottinghamshire distribution centre. Triumph Road is currently chocka with radio cars, photographers and camera crews...
Raleigh staff were told the news at 2.30 this afternoon.
The decision was made by the twelve members of the Executive of The Raleigh Cycle Group on 11th March.
The Executive decided to cease assembly of cycles in the UK from the end of 2002.
Raleigh executive chairman Phillip Darnton told BikeBiz.co.uk that in a price fight only those companies who could reduce their costs would survive:
"Chinese bikes have a 45.6 percent duty against them yet imports increased by 150 percent last year. There are key countries that have no tariffs such as Bangladesh and Vietnam. The quality of the bikes from these countries has increased dramatically over the last couple of years.
"Product will also become cheaper from Taiwan because the bicycle industry across there has all but collapsed. They will do almost anything to keep their factories turning over.
"Over-capacity is hitting hard. It's a price fight out there and profitability forecasts for the next few years are nowhere near as good as they were in 1999 and 2000.
"Re-investment in a new assembly plant in the UK cannot now be financially justified. Tariff protection does not extend beyond 2005, and it cannot be assumed sufficient in the medium term to ensure the financial viability of the investment required in a UK assembly plant of Raleigh's scale."
Darnton told Bikebiz.co.uk he was "very, very disappointed" at the loss of UK assembly.
"I thought it could be done but it can't."
Darnton will leave Raleigh next year.
"There's no place for a top heavy management structure, myself very much included. However, I would like to see things through to completion."
In 1999 the previous owners of Raleigh - the US-based Derby Cycle Corporation - sold the Triumph Road site to the University of Nottingham. Derby CEO Gary Matthews also sold Sturmey Archer to a flaky investment firm for £30.00 and when Sturmey Archer was soon thereafter closed, Derby Cycle Corporation came in for worldwide criticism, including from this website. Matthews was later shown the door and in August last year Derby, led by Alan Finden-Crofts, filed a voluntary petition under Chapter 11 of the US Bankruptcy Code.
Derby's assets were bought by Raleigh Cycle Limited, formed by a management buy-out team, consisting of Alan Finden-Crofts and a number of key managers within the existing business. The purchase includesd Raleigh America, Raleigh Canada, Raleigh UK, Derby Cycle Werke in Germany and Derby Trading Company in Taiwan and China and was completed on 26th October 2002.
Under the Asset Purchase Agreement between Raleigh Cycle Limited and The Derby Cycle Corporation, Raleigh Cycle Limited acquired approximately $95 million in assets of the businesses and was established on a debt-free basis, with trade suppliers of the business being paid in full. The businesses acquired had annual sales of approximately $280 million in 2001, including approximately 1.4 million bicycles.
The Triumph Road factory had to be vacated by December 2003 and Darnton was charged with moving to a new assembly plant on allotment land in Bulwell, north of Nottingham. However, this is currently being held up in a legal tussle between three allotment holders and a rich farmer who wanted Raleigh to move on to his land.
The judicial review was due to heard on March 20th but with the Bulwell plot no longer required, the court has been informed there is no longer a need for the judicial review.
280 assembly jobs are to go by the end of 2002, including the job of Steve White, factory manager. Raleigh currently employs 380 people. 100 jobs will be safe, including sales, marketing, finance and product design jobs.
The Raleigh Cycle Group CEO, Alan Finden-Crofts, expressed his regret at the loss of jobs but said redundancy payments would be made in and "loyalty and commitment at this most difficult time will be financially recognised and rewarded appropriately."
Phillip Darnton said: "We are absolutely committed to continue to supply 'Raleigh-quality' cycles, built to our specified high standard by partner suppliers overseas. We are seeking an appropriate location locally for our distribution centre, as well as offices, so that we will maintain our own distribution fleet with which to support fully our customers nation-wide."
He said the problems encountered over the proposed move to Bulwell did not overly influence the decision to shed jobs and cease UK assembly:
"The protracted uncertainty about the availability and timescale for a move to [Bulwell] site has not helped the company's position. Nevertheless we very much regret that the Raleigh Cycle Group's decision should have quite unforeseeably coincided with the latest phase of the litigation concerning the Judicial Review of the City Planning Application.
"Throughout the anxious and difficult period since the sale of the [Triumph Road factory in 1999]we have endeavoured to keep everyone - especially our own employees - advised of any developments in this extended effort to maintain a UK assembly facility. This present situation is no exception - inevitably there are many details still to be worked out, but we will strive to maintain clear and open communications with all who are concerned with the future of our company.
"It was a serious decision we had to make and one that clearly has impact throughout the UK cycle industry." >>
Dale Brown
cycles de ORO, Inc.
1410 Mill Street
Greensboro, NC 27408
336-274-5959
fax 336-274-6360
http://www.cyclesdeoro.com
http://www.classicrendezvous.com