Montreal bike maker announces plans to close pair of U.S. facilities

MONTREAL—A Montreal-based juvenile product and bike maker has announced plans to shutter a Pennsylvania plant and relocate a Connecticut research and development facility as part of a restructuring plan.

According to Dorel Industries Inc., which owns a variety of popular bicycle brands including Cannondale and Schwinn, it plans to close its assembly and testing facility in Bedford, Pa., by the end of 2014 as it looks to “simplify and optimize its business model.”

The company also announced it will relocate its R&D facility in Bethel, Conn., to its recreation and leisure division’s new headquarters in Wilton, Conn., about 20 kilometres south.

“The objective is to accelerate operational excellence at our recreational/leisure segment by strengthening its working relationships with its global partners,” Peter Woods, Dorel’s global CFO and interim president of the division, said in a statement.

“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.”

Part of the plan includes working with third party partners, the company said.

The company said about 100 employees will be affected by the changes.

It said it will incur pre-tax restructuring charges of between US$14- and $16-million, and expects to realize annualized cost savings of at least US$6-million once the restructuring is completed in late 2014.

“Today marks the beginning of the next phase in Dorel’s evolution as a global bicycle and apparel company,” division CFO Jeffrey Schwartz said in a statement. “This plan will result in higher quality products and services for our customers and consumers.”

Dorel has been busy in recent months, announcing deals to purchase one of the world’s oldest bike makers, Brazil’s Caloi, in August 2013, and Israel-based juvenile products maker Tiny Love Ltd. this month, as part of a major growth plan.