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Discussion Starter · #1 ·
just read this over on another forum.

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.
 

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This probably explains why I couldn't get anyone on the phone today when I called them. I hope the shutdown is just temporary.
 

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Discussion Starter · #3 ·
according to the chatter on the old Serotta forum (now Paceline), the remaining staff are working to fulfill already-placed orders, returns/warranty work...doesn't sound they're going to maintain normal production.
 

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Discussion Starter · #5 ·
here's a note from Ben Serotta posted on the old Serotta forum:

Dear Friend,

I apologize for the lack of personalization in this note.

Since news broke of the planned shutdown of the Serotta facility there has been an absolute deluge of calls and emails expressing concern, hope, thanks, well wishes into the future and even offers for financial backing. I can’t thank you enough for your show of support and friendship.

It has been a difficult time for sure, but all of us here gain resolve from each other to find a path for a viable continuum of building the finest bicycles, but without the complications, restrictions and frustrations that come along with ‘outside’ corporate structure.

Bill and I have been working hard to structure a management buyout of Serotta, extricating it from the current holding company and we remain hopeful. If that doesn’t work out, there’s always plan B (or was it D?).

I believe that everyone on this planet has certain special skills. My wonderful, dedicated staff, colleagues and I are fortunate enough to have discovered some time ago that we are here to make wonderful things with our hands, hearts and minds. While many details remain between now and the future, the one thing that is certain, is that we’ll continue to make fabulous bicycles, because, that’s what we do. You can count on it!

Hope to see you on the road soon,

Ben
__________________
 

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Divine Cycling Group turmoil continues: Blue on the block, Serotta divided | Bicycle Retailer and Industry News

Divine Cycling Group turmoil continues: Blue on the block, Serotta divided
Serotta and Saratoga

Case announced last month that Serotta would look to contract framebuilding as a stabilizing force.
"Contract manufacturing may represent a significant profit opportunity for the company, which in turn supports the future of the Serotta brand," Case said in a letter to dealers.
On Wednesday, he indicated he expects contract manufacturing to support itself, while the Serotta brand "cools off."
Bradway Capital acquired Serotta's factory from DCG, and has renamed the business Saratoga Frameworks. Case said he's been able to rehire some of the workers who were laid off earlier in the summer. (Related resource: Saratoga's press release)
He said the contract to build the Tomac bike for Planet X was particularly satisfying because it brings work back to the U.S. that might otherwise have gone overseas.
The Saratoga-made Tomac has already been teased on Instagram.

Serotta's troubles over the years stemmed from its business model, which remained focused on super high-end sales even after the economic collapse of 2008, Case said.
"Serotta's troubles were mostly a sales and marketing problem, it was never a manufacturing problem ... a bad product never came out of that factory."
He said historically, Serotta's best years were when the company did significant contract work in addition to its own bikes. Serotta made 7-Eleven team bikes that were labeled as Huffys and Murrays, and also made Schwinn's titanium Paramount frames for a time.
Case said several bike brands have contacted him about contract work. The Tomac gravel grinder has already been teased on Instagram by @TomacBikes. Planet X, a U.K. mail order company that bought the Titus bike brand at auction last year, apparently is licensing the Tomac brand from retired racer John Tomac.
Besides contract building for brands, Case said Saratoga would do custom private label bikes for retailers and fit studios.
As for the Serotta brand, Case said the recent turmoil has made it "too hot to touch right now," and he wasn't sure of its future. Saratoga does have an agreement to manufacture Serottas for DCG through the end of 2013.
Case said there have been no discussions with Ben Serotta about acquiring the brand, which Ben Serotta confirmed in a phone call with BRAIN late Wednesday.
"It hasn't been offered to me," Serotta said. "I'd rather that (the brand) was shelved than have bad things happen to it ... as long as it's shelved some dignity is protected."
 

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Divine Cycling Group turmoil continues: Blue on the block, Serotta divided | Bicycle Retailer and Industry News

Divine Cycling Group turmoil continues: Blue on the block, Serotta divided


Serotta and Saratoga

Case announced last month that Serotta would look to contract framebuilding as a stabilizing force.
"Contract manufacturing may represent a significant profit opportunity for the company, which in turn supports the future of the Serotta brand," Case said in a letter to dealers.
On Wednesday, he indicated he expects contract manufacturing to support itself, while the Serotta brand "cools off."
What Mr. Case is actually saying here is that Serotta is going the way of Kestrel and Schwinn. An empty name that once was respected for a history of quality American-made product. But at least the CEO and his cronies are still pulling in the bucks. That is the most important thing, of course. To hell with pride.

I hope Ben Serotta takes the brand out back and shoots it than let Case do what he wants with it.
 
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