"Liberacci was...? I never saw that one coming."
~Austin Powers
I would not say that the news is unexpected, but it still stings. In a story broken by Carlton Reid on www.BikeBiz.com, Dorel, Cannondale's parent company, announced today that there will only be one big brand left in the United Stated that can claim to manufacture its bicycles here. That's right, Cannondale will abandon its proud legacy of US manufacturing and become a design-and-warehouse operation, joining the likes of Specialized, GT, Giant, and every other major player in this country, who outsource production and assembly, primarily to Asia.
Dorel and Cannondale put an upbeat spin on the announcement, underscoring that the revamped organization will be a global business model. We wish them well, and can honestly report that Cannondale's off-shore-built bicycles to date have been competitve performers. A good deal of the brand's mystique has been generated by its maverick, "we do it our way" design axiom, however, and experience has shown that off-shore production results in more similarity than uniqueness.
This leaves Trek, which is in a similar situation. With most of its production already outsourced to Asia, and with high-tech Chinese frame and accessory makers poised to outpace its once-heralded OCLV composite operation--Trek's decision makers must be taking a long, hard look at their Wisconsin manufacturing facilites.
While the draw-and-develop bike making strategy has proven to be the most successful business model over the past three decades, the fact that the US dollar is plummeting against the currencies of the countries upon which these folks rely on for inexpensive bicycles and accessories should be a mushroom cloud on the horizon for big-brand bike makers in this country--but Cannondale's announcement indicates otherwise.
The cost of outsourcing bicycles may bite bicycle makers sooner than anticipated. Big brands may well get caught with their pants down--faced with skyrocketing bicycle prices from their foreign suppliers and difficult sales in a not-quite-recovered US economy. If this occurs, there will be little or no money left to invest in new factories here. Cannondale and Trek might end up wishing that they had stuck with domestic production a little while longer. Time will tell.
Read Carlton Reid's article and Cannondale's statements about terminating domestic manufacturing.