Dorel to Shutter Pennsylvania Bike Factory in New Restructuring

Dorel Industries Inc. will close its assembly and testing facility in Bedford, PA. and layoff 100 employees as part of a global restructuring of its Recreational/Leisure segment announced Thursday morning. The segment  owns the Cannondale, Schwinn, GT, Mongoose and Sugoi bicycling brands.

Dorel said it would close the facility toward the end of the current calendar year and leverage the strengths and capabilities of its global resources, third party partners, and existing facilities to simplify and optimize its business model.

Operations currently performed at Bedford , including manufacturing, assembly, testing, quality control and customer and technical services are expected to be redeployed by the end of calendar 2014.

In addition, Recreational/Leisure will relocate its research and development facility in Bethel, CT to the segment's new headquarters in Wilton, CT, and will convert its former retail lab in Bethel to accommodate GURU Academy activities. The value of the former Bethel headquarters will be written down to reflect the market value of the property.

As such, the segment will incur approximately $14-$16 million pre-tax in restructuring charges associated with its plan of which 70 percent are non-cash and expects to realize annualized cost savings of at least $6 million once the restructuring is completed in late 2014. Approximately 100 employees will be affected globally once all changes are implemented.

"The objective is to accelerate operational excellence at our Recreational/Leisure segment by strengthening its working relationships with its global partners," said Peter Woods , Global CFO & Interim Recreational/Leisure President. "In particular, we want to significantly reduce development and supply chain lead times, improve cost structures and operating margins, and enhance quality while lowering warranty costs."

"Today marks the beginning of the next phase in Dorel's evolution as a global bicycle and apparel company. This plan will result in higher quality products and services for our customers and consumers," stated Jeffrey Schwartz , Chief Financial Officer.

Dorel’s Recreational/Leisure segment, which owns the Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI brands, generated sales of nearly $1 billion in 2012. 

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