CHICAGO (BRAIN) — SRAM president Stan Day said the company has experienced soft sales over the past 12 months and is tightening its belt while putting focus on new areas of the business. Just what those new areas are, Day said he'd rather not say for strategic reasons.
The company announced Tuesday that it was laying off about 40 employees across its European, U.S. and Asian operations. The layoffs are effective April 26. All employees were given severance packages.
SRAM employs about 3,500 people worldwide. Some 450 of those are in the U.S., spread among its offices in Chicago, Indianapolis, San Luis Obispo, California, Colorado Springs, Colorado, and Spearfish, South Dakota.
Day said sales in the first quarter were down about 10 percent year over year. "The quarters before were soft as well. It's been cumulative. Certainly the softness of the last 12 months has not helped. It's definitely lowered the water level and exposed the rocks," he said.
(Shimano also pointed to a drop of 20 percent in net bicycle sales, and a 34 percent decrease in operating income for the quarter Tuesday, when it released its first-quarter report. The company cited high distributor inventory in North America, China and Japan and lackluster sales in South America and Japan due to the economic slowdown, weak currencies and a depreciating yen.)
The SRAM layoffs won't impact manufacturing or delivery of new products including SRAM's eTap or its new Eagle 1x12 mountain bike drivetrain, Day added. "Our factories are designed to handle the ups and downs," he said.
Despite the current softness in the market, Day remains optimistic about growth in spec for 2018. He said SRAM has been growing its share of OE spec, but overall orders are down.
"We saw strong spec growth with OEMs during last year. The problem was total volume for OEMs was down. We expect to go out next year with good spec growth. eTap is doing well. Eagle is doing well. We're strong in suspension, and we like what we see with Zipp. There's lots to be optimistic about going forward. We're confident in that. We're just adjusting through this softness right now."
In its announcement, SRAM said that "the objective is to reshape the organization for a future that is more aligned with the competitive dynamics of the industry."
"No one ever wants to be in position to request that people leave an organization, but sometimes it has to happen," Day said. "I am confident that this restructuring positions us where we need to be and puts us on a firm foundation to drive forward into an evolving bike market. I want to thank all of those that are leaving SRAM for their hard work and commitment over the years. We wish them the best in their new adventures."
