Cannondale's future

Doesn't look good:

http://www.bicycleretailer.com/bicycleretailer/headlines/article_display.jsp?vnu_content_id=1804453

John Riley

 

Wow! I am totally shocked! Back in 1980, I purchased Cannondale bags and shoes and finally their
first bicycle (ST500) back in 1983. I still have the bike, and have even e-mailed Scott Montgomery
on a few occasions thanking him and his father for the inspiration that led me into building an
aluminum recumbent trike. I sincerely hope that Joe can pull off a miracle. It would be a complete
shame to see them go.

Regretfully,

--
Rickey Horwitz Hell-bent Cycle Works http://www.hellbentcycles.com

"John Riley" <[email protected]> wrote in message news:[email protected]...
> Doesn't look good:
>
>
http://www.bicycleretailer.com/bicycleretailer/headlines/article_display.jsp ?vnu_content_id=1804453
>
> John Riley

 

It is sad, Cannondale leveraged a bicycle company to make motorcycles...and failed. Hopefully,
C-dale will be bought out as a bicycle company and they pull their heads out of their butts and make
a fast, cool bent. One can hope.

John H N TX

 

John, Their venture into motorcycles started with the purchase of Magic Motorcycles back in '93/'94.
The buy-out gave C'dale the CNC machining technology to produce many of the extreme and outragous
designed bikes we see today. Sadly, this technology came at an extreme price.

In my opinion, Cannondale's failure was attributed to their horizontal integration philosophy.
Meaning that they tried to fabricate everything in-house. I sincerely believe they would have been
much more successful if they limited themselves to a core competency and vertically integrated their
product line. However, being one of the very few surviving American bicycle manufacturers, perhaps
they needed this extreme technology lead over their competitors. In closing, I am praying that
Cannondale will pull itself out of this mess and continue building fine American products.

--
Rickey Horwitz Hell-bent Cycle Works http://www.hellbentcycles.com

better off by having a "BentHeadSWB" <[email protected]> wrote in message
news:[email protected]...
> It is sad, Cannondale leveraged a bicycle company to make motorcycles...and
failed.
> Hopefully, C-dale will be bought out as a bicycle company and they pull
their
> heads out of their butts and make a fast, cool bent. One can hope.
>
> John H N TX

 

I remember seeing the mockup of the Cannondale-Magic Motorcycle CNC machined mountain bike at
Interbike in 1993. The whole frame was to be a CNC machined monocoque structure with the two halves
bolted together though the mockup was made of a solid piece of aluminium. All the bearings (headset,
hubs, suspension pivots) were all the same size and extremely oversized. All the bolts on the bike
were to be operated by the same size key. It was a clean sheet of paper design and very intriguing
but it never went into production.

I thought fabricating everything in-house is called "vertical integration" rather than "horizontal
integration".

Zach Kaplan

"Hel-bent" <[email protected]> wrote in message
news:<[email protected]>...
> John, Their venture into motorcycles started with the purchase of Magic Motorcycles back in
> '93/'94. The buy-out gave C'dale the CNC machining technology to produce many of the extreme and
> outragous designed bikes we see today. Sadly, this technology came at an extreme price.
>
> In my opinion, Cannondale's failure was attributed to their horizontal integration philosophy.
> Meaning that they tried to fabricate everything in-house. I sincerely believe they would have been
> much more successful if they limited themselves to a core competency and vertically integrated
> their product line. However, being one of the very few surviving American bicycle manufacturers,
> perhaps they needed this extreme technology lead over their competitors. In closing, I am praying
> that Cannondale will pull itself out of this mess and continue building fine American products.
>
> --
> Rickey Horwitz Hell-bent Cycle Works http://www.hellbentcycles.com
>
>
>
>
>
> better off by having a "BentHeadSWB" <[email protected]> wrote in message
> news:[email protected]...
> > It is sad, Cannondale leveraged a bicycle company to make motorcycles...and
> failed.
> > Hopefully, C-dale will be bought out as a bicycle company and they pull
> their
> > heads out of their butts and make a fast, cool bent. One can hope.
> >
> > John H N TX

 

Zach,

Actually, I used this term in incorrect fashion. Horizontal integration is where a company acquires
a competitor (E.g., Compaq and HP) and merges the two companies together. Vertical integration is
where a company is acquired to compliment or add value to a existing product line.

It was Horizontal and Vertical manufacturing is what I was implying. And yes, I stand corrected.
After I wrote that initial message, I wanted to go back and make the correction, but it was the
Superbowl Slaughter, and I was captivated watching my favorite team get their butts kicked (and
rightfully so!).

Anyway, I do recall reading an article in bicycle magazine about that fully machined MTB back in
1994. If I remember correctly, they spent a king's ransom on CNC machining (was it $600,000 each?).
When you purchase a machine like that, it must be running 80 hours/wk to pay for itself. Needless to
say, I believe Cannondale stood a better chance of survival using off the shelf technology, rather
than re-invent the wheel. I wonder what would be their fate if they never purchased magic
motorcycle.

Regards,

--
Rickey Horwitz Hell-bent Cycle Works http://www.hellbentcycles.com

"Zach Kaplan Cycles" <[email protected]> wrote in message
news:[email protected]...
> I remember seeing the mockup of the Cannondale-Magic Motorcycle CNC machined mountain bike at
> Interbike in 1993. The whole frame was to be a CNC machined monocoque structure with the two
> halves bolted together though the mockup was made of a solid piece of aluminium. All the bearings
> (headset, hubs, suspension pivots) were all the same size and extremely oversized. All the bolts
> on the bike were to be operated by the same size key. It was a clean sheet of paper design and
> very intriguing but it never went into production.
>
> I thought fabricating everything in-house is called "vertical integration" rather than "horizontal
> integration".
>
> Zach Kaplan
>
> "Hel-bent" <[email protected]> wrote in message
news:<[email protected]>...
> > John, Their venture into motorcycles started with the purchase of Magic Motorcycles back in
> > '93/'94. The buy-out gave C'dale the CNC machining technology to produce many of the extreme and
> > outragous designed bikes
we
> > see today. Sadly, this technology came at an extreme price.
> >
> > In my opinion, Cannondale's failure was attributed to their horizontal integration philosophy.
> > Meaning that they tried to fabricate everything in-house. I sincerely believe they would have
> > been much more successful
if
> > they limited themselves to a core competency and vertically integrated
their
> > product line. However, being one of the very few surviving American
bicycle
> > manufacturers, perhaps they needed this extreme technology lead over
their
> > competitors. In closing, I am praying that Cannondale will pull itself
out
> > of this mess and continue building fine American products.
> >
> > --
> > Rickey Horwitz Hell-bent Cycle Works http://www.hellbentcycles.com
> >
> >
> >
> >
> >
> > better off by having a "BentHeadSWB" <[email protected]> wrote in message
> > news:[email protected]...
> > > It is sad, Cannondale leveraged a bicycle company to make motorcycles...and
> > failed.
> > > Hopefully, C-dale will be bought out as a bicycle company and they
pull
> > their
> > > heads out of their butts and make a fast, cool bent. One can hope.
> > >
> > > John H N TX

 

[email protected] (Zach Kaplan Cycles) wrote in message

> I thought fabricating everything in-house is called "vertical integration" rather than "horizontal
> integration".

It is:

Horizontal Integration: Combining companies of at the same level of operation under one management.
Disney owning ESPN, ABC, and the Disney channel is a good example.

Vertical Integration: Combining two or more stages of the marketing channel (i.e., parts
fabrication, assembly, wholesaling, retailing, etc.) under one management. The US steel industry in
the 1960s was good example. They owned the iron mines, the smelters, and the railroads used to
transport both the ore and the finished product.

Vertical integration has been shown in numerous studies to eventually increase bureaucracy that
subsequently leads to slower market shifts and higher total costs. The big push toward
disintegration that started in the early 1990s (and continues today -- outsourcing) is a consequence
of companies discovering they can get things done better, faster, and cheaper (BTW, NASA's current
business model) outside the firm than inside (an explication of Metcalfe's Law).

Thus ends the business lesson for the day >)...

Regards -- DP

 

It really does not look good for Cannondale. There are a number of business techniques that can
be used to survive for a while but when the long term viability of the company is in doubt
customers vanish.

If you were in the market for good bike and cared about the frame warranty wouldn't you want to be
sure the company would be around to honor the warranty? It gets worse with bikes with proprietary
parts. Now the customer also has to worry that the company will be around to supply those special
parts and wear items. Trek and Specialized are more than willing to take Cannondales aluminum DF
customers.

This is a sad situation. I regulary ride my Merlin with some Cannondale riders who love their bikes
so I know they are a quality product with devoted owners. It was not product quality that is the
problem, it is failed management.

 

A likely scenario will be someone will purchase the Cannondale name/logo and stick it on something
Pacific distributes that is made in Taiwan or China. People will think Cannondale is still around
and made in the U.S.A.. It would be unlikely TREK/Specialized would buy up C'dale since
TREK/Specialized frames are made in Taiwan. You'd need a company that is either already building
frames in the USA or is willing to stop importing frames their from the Orient....cannot think of
any that fit the bill and have the bucks free to buy C'dale too. Personally I would think the
Motorsports division would fetch the highest bidders, simply because European MC companies i.e.
Piaggio will have an Instant U.S. presence and can get around U.S. import duties for stuff made in
Europe/Italy.

Problem with C'dale is that the # of bicycles made in Asia, are what sells at a lower price, C'dale
has to compeat with that monster on their own turf. U don't see a lot of C'dales flying off the
shelves in Wal-Mart. C'dale chose quality over quantity and this is good, but tends to result in
such companies going glug.
------------------------------------------------------------------
"Don" <[email protected]> wrote in message news:[email protected]...
> It really does not look good for Cannondale. There are a number of business techniques that can
> be used to survive for a while but when the long term viability of the company is in doubt
> customers vanish.
>
> If you were in the market for good bike and cared about the frame warranty wouldn't you want to be
> sure the company would be around to honor the warranty? It gets worse with bikes with proprietary
> parts. Now the customer also has to worry that the company will be around to supply those special
> parts and wear items. Trek and Specialized are more than willing to take Cannondales aluminum DF
> customers.
>
> This is a sad situation. I regulary ride my Merlin with some Cannondale riders who love their
> bikes so I know they are a quality product with devoted owners. It was not product quality that is
> the problem, it is failed management.

 

Sorry bout the 2 spelling mistakes and sticking the word (their) after the word frames...I was
distracted.
----------------------------------------------------------------------------
----------------------------
"Joshua Goldberg" <[email protected]> wrote in message
news:[email protected]...
> A likely scenario will be someone will purchase the Cannondale name/logo
and
> stick it on something Pacific distributes that is made in Taiwan or China. People will think
> Cannondale is still around and made in the U.S.A.. It would be unlikely TREK/Specialized would buy
> up C'dale since TREK/Specialized frames are made in Taiwan. You'd need a company that is either
> already building frames in the USA or is willing to stop importing frames their from the
> Orient....cannot think of any that fit the bill and have the bucks free to buy C'dale too.
> Personally I would think the Motorsports division would fetch the highest bidders, simply because
> European MC companies i.e. Piaggio will have an Instant U.S. presence and can get around U.S.
> import duties for stuff made in Europe/Italy.
>
> Problem with C'dale is that the # of bicycles made in Asia, are what sells at a lower price,
> C'dale has to compeat with that monster on their own
turf.
> U don't see a lot of C'dales flying off the shelves in Wal-Mart. C'dale chose quality over
> quantity and this is good, but tends to result in such companies going glug.
> ------------------------------------------------------------------
> "Don" <[email protected]> wrote in message news:[email protected]...
> > It really does not look good for Cannondale. There are a number of business techniques that can
> > be used to survive for a while but when the long term viability of the company is in doubt
> > customers vanish.
> >
> > If you were in the market for good bike and cared about the frame warranty wouldn't you want to
> > be sure the company would be around to honor the warranty? It gets worse with bikes with
> > proprietary parts. Now the customer also has to worry that the company will be around to supply
> > those special parts and wear items. Trek and Specialized are more than willing to take
> > Cannondales aluminum DF customers.
> >
> > This is a sad situation. I regulary ride my Merlin with some Cannondale riders who love their
> > bikes so I know they are a quality product with devoted owners. It was not product quality that
> > is the problem, it is failed management.

 

Joshua Goldberg wrote:

>
> Problem with C'dale is that the # of bicycles made in Asia, are what sells at a lower price,
> C'dale has to compeat with that monster on their own turf. U don't see a lot of C'dales flying off
> the shelves in Wal-Mart. C'dale chose quality over quantity and this is good, but tends to result
> in such companies going glug.

I think their bike business was viable. Their products were differentiated enough that they were
able to sell at higher prices. I think the bike business was still making money. I think the trouble
was that the motor business just took too much cash to get going.

John Riley

 

Cannondale Plans To File Voluntary Chapter 11 Petition

DOW JONES NEWSWIRES

BETHEL, Conn. -- Cannondale Corp. (BIKE), citing difficulties at its motorsports operations, plans
to file for Chapter 11 bankruptcy protection Tuesday, the company said in a press release.

Shares of Cannondale have been halted for news since Monday morning. The shares last closed on
Friday at 80 cents, up 3 cents, or 3.9%.

Bike maker Cannondale said it has reached an agreement in principle with its lenders -- CIT/Business
Credit Inc. and Pegasus Partners II L.P. -- that, subject to bankruptcy court approval, will provide
interim financing to fund post-petition operating expenses and to meet supplier and employee
commitments.

Cannondale also agreed in principle to sell substantially all of its assets to Pegasus Partners II,
subject to better and higher offers and court approval.

Pegasus would operate the bicycle business as a going concern with the involvement of current
management and would purchase separately the company's motorsports assets....
--

Cletus D. Lee Bacchetta Giro Lightning Voyager http://www.clee.org
- Bellaire, TX USA -

 

"Joshua Goldberg" <[email protected]> wrote in message
news:<[email protected]>...
> A likely scenario will be someone will purchase the Cannondale name/logo and
<snip>
> Problem with C'dale is that the # of bicycles made in Asia, are what sells at a lower price,
> C'dale has to compeat with that monster on their own turf. U don't see a lot of C'dales flying off
> the shelves in Wal-Mart. C'dale chose quality over quantity and this is good, but tends to result
> in such companies going glug.

The problem with Cannondale is that they spent close to $660 million getting this motorsports crap
off the ground. The bicycle division was doing fine, but the motorsports division was sucking them
dry. IFAIK, every ATV/motorcyle C-dale sold was sold at a loss.

Rick, not to far from Bedford ,Pa.

> ------------------------------------------------------------------
> "Don" <[email protected]> wrote in message news:[email protected]...
> > It really does not look good for Cannondale. There are a number of business techniques that can
> > be used to survive for a while but when the long term viability of the company is in doubt
> > customers vanish.
> >
<snip

 

Yeah I got the sucking them dry part from a few weeks ago. <y point was that in the breakup of
C'dale, the Motorsports division would be a good buy for a Euro/Italian maker of a similar product.
The bicycle division was doing fine...even with the Asian competition, but when someone takes over
C'dale....they'll keep the name/logo and outsource to China/Taiwan. Realistically the new owner will
have to get the frames made offshore to recover the $ spent buying C'dale.
----------------------------------------------------------------------------
-------------------------------------
"R.White" <[email protected]> wrote in message
news:[email protected]...
> "Joshua Goldberg" <[email protected]> wrote in message
news:<[email protected]>...
> > A likely scenario will be someone will purchase the Cannondale name/logo
and
> <snip>
> > Problem with C'dale is that the # of bicycles made in Asia, are what
sells
> > at a lower price, C'dale has to compeat with that monster on their own
turf.
> > U don't see a lot of C'dales flying off the shelves in Wal-Mart. C'dale chose quality over
> > quantity and this is good, but tends to result in
such
> > companies going glug.
>
> The problem with Cannondale is that they spent close to $660 million getting this motorsports crap
> off the ground. The bicycle division was doing fine, but the motorsports division was sucking them
> dry. IFAIK, every ATV/motorcyle C-dale sold was sold at a loss.
>
> Rick, not to far from Bedford ,Pa.
>
>
> > ------------------------------------------------------------------
> > "Don" <[email protected]> wrote in message
> > news:[email protected]...
> > > It really does not look good for Cannondale. There are a number of business techniques that
> > > can be used to survive for a while but when the long term viability of the company is in doubt
> > > customers vanish.
> > >
> <snip

 

I really hope you're wrong, but if the Schwinn name can be so cheapened (is that a word?) I guess
it's possible. How sad.

Tidbit: The old Cannondale clothing plant here at Black Moshannon is now a tarp factory!

"Joshua Goldberg" <[email protected]> wrote in message
news:[email protected]...
> Yeah I got the sucking them dry part from a few weeks ago. <y point was that in the breakup of
> C'dale, the Motorsports division would be a good buy for a Euro/Italian maker of a similar
> product. The bicycle division was doing fine...even with the Asian competition, but when someone
> takes over C'dale....they'll keep the name/logo and outsource to China/Taiwan. Realistically the
> new owner will have to get the frames made offshore to recover the $ spent buying C'dale.
> ----------------------------------------------------------------------------
> -------------------------------------
> "R.White" <[email protected]> wrote in message
> news:[email protected]...
> > "Joshua Goldberg" <[email protected]> wrote in message
> news:<[email protected]>...
> > > A likely scenario will be someone will purchase the Cannondale name/logo
> and
> > <snip>
> > > Problem with C'dale is that the # of bicycles made in Asia, are what
> sells
> > > at a lower price, C'dale has to compeat with that monster on their own
> turf.
> > > U don't see a lot of C'dales flying off the shelves in Wal-Mart. C'dale chose quality over
> > > quantity and this is good, but tends to result in
> such
> > > companies going glug.
> >
> > The problem with Cannondale is that they spent close to $660 million getting this motorsports
> > crap off the ground. The bicycle division was doing fine, but the motorsports division was
> > sucking them dry. IFAIK, every ATV/motorcyle C-dale sold was sold at a loss.
> >
> > Rick, not to far from Bedford ,Pa.
> >
> >
> > > ------------------------------------------------------------------
> > > "Don" <[email protected]> wrote in message
> > > news:[email protected]...
> > > > It really does not look good for Cannondale. There are a number of business techniques that
> > > > can be used to survive for a while but when the long term viability of the company is in
> > > > doubt customers vanish.
> > > >
> > <snip>

 

Similar article here, with some additional details:

http://www.bicycleretailer.com/bicycleretailer/headlines/article_display.jsp?vnu_content_id=1805068

 

"Joshua Goldberg" <[email protected]> wrote in message
news:[email protected]...
> A likely scenario will be someone will purchase the Cannondale name/logo
and
> stick it on something Pacific distributes that is made in Taiwan or China. People will think
> Cannondale is still around and made in the U.S.A..

This could happen.

> It would be unlikely TREK/Specialized would buy up C'dale since TREK/Specialized frames are made
> in Taiwan.

Trek frames are mostly built in a high-tech factory in Waterloo, Wisconsin, IIRC.

-Barry

 

Does this include their Aluminum frames, the Aluminum frames I was carrying last year all came from
Taiwan and stamped "Made in the U.S.A.". When I contacted TREK about this I was told that Steel
frames are not made in the Orient due to their shipping weight...(implying but not stating...that
the steel frames are made in North America)....but that was maybe 15 months ago.
-------------------------------------------------------
"B. Sanders" <[email protected]> wrote in message news:[email protected]...
> "Joshua Goldberg" <[email protected]> wrote in message
> news:[email protected]...
> > A likely scenario will be someone will purchase the Cannondale name/logo
> and
> > stick it on something Pacific distributes that is made in Taiwan or
China.
> > People will think Cannondale is still around and made in the U.S.A..
>
> This could happen.
>
> > It would be unlikely TREK/Specialized would buy up C'dale since TREK/Specialized frames are made
> > in Taiwan.
>
> Trek frames are mostly built in a high-tech factory in Waterloo,
Wisconsin,
> IIRC.
>
> -Barry

 

I sem to recall hearing something like, if it costs more to paint a frame than it does to make the
frame, and you paint the frame in the US, then you can say it was made in the US because the higher
value process was done in the US. Don't quote me on that.

As far as Trek goes, they may not have any more low end steel framed bikes. All their low end bikes
might be aluminum. So I don't think it has anything to do with shipping weight, but with the volume
and price point of the end product.

Other than low volume speciality products like recumbents, I don't think there is much steel bike
production in Taiwan anymore. And I think even the recumbent people are under some pressure from
their Taiwan suppliers to go to aluminum. I think all the steel bike production has gone to China.

John Riley

Joshua Goldberg wrote:
>
> Does this include their Aluminum frames, the Aluminum frames I was carrying last year all came
> from Taiwan and stamped "Made in the U.S.A.". When I contacted TREK about this I was told that
> Steel frames are not made in the Orient due to their shipping weight...(implying but not
> stating...that the steel frames are made in North America)....but that was maybe 15 months ago.

 

Last year I noticed that TREK had 2 labels on their 4900 series Alum. Mtbs. Label One said "Made in
the U.S.A." and Label Two said "Union Made", which combined implied the bike was made in the USA by
a Unionized workforce. What it actually meant was (the Labels are made in the USA by a shop that had
a Union)...none of the Mtb. was made in the USA (except) the label...even the Bontrager parts were
made offshore. Seems under law, as long as the bike is Assembled in the U.S.A. and the Labels are
made in the USA...then it is okay to say made in America. It kinda floored me.
----------------------------------------------------------------------------
-----
"John Riley" <[email protected]> wrote in message news:[email protected]...
> I sem to recall hearing something like, if it costs more to paint a frame than it does to make the
> frame, and you paint the frame in the US, then you can say it was made in the US because the
> higher value process was done in the US. Don't quote me on that.
>
> As far as Trek goes, they may not have any more low end steel framed bikes. All their low end
> bikes might be aluminum. So I don't think it has anything to do with shipping weight, but with the
> volume and price point of the end product.
>
> Other than low volume speciality products like recumbents, I don't think there is much steel bike
> production in Taiwan anymore. And I think even the recumbent people are under some pressure from
> their Taiwan suppliers to go to aluminum. I think all the steel bike production has gone to China.
>
> John Riley
>
>
> Joshua Goldberg wrote:
> >
> > Does this include their Aluminum frames, the Aluminum frames I was
carrying
> > last year all came from Taiwan and stamped "Made in the U.S.A.". When I contacted TREK about
> > this I was told that Steel frames are not made in
the
> > Orient due to their shipping weight...(implying but not stating...that
the
> > steel frames are made in North America)....but that was maybe 15 months
ago.