SEYMOUR, Conn. (BRAIN) — As Sweden-based Thule Group's executives are warning investors of a sharp decline in sales and earnings due to a softening bike sector, the company's Americas division is making organizational changes that include 34 staff cuts in management, product development, and manufacturing.
Last week the company made a second mid-quarter trading update about its third-quarter financials, which will be announced Oct. 27. Group CEO and president Magnus Welander said sales for the third quarter will be down 25% while operating income will decline about 72%. Welander said the hard times were due to excessive inventory in the bike retail sector that are hampering sales of Thule products into bike shops.
Hilary Hartley, the president of Thule Group's Region America division, said three separate organizational changes led to cutting 34 staff from the 450 employees in the region.
"These types of organizational changes are always tough, first and foremost of course, for the affected staff, and therefore we never take them lightly," Hartley said in a statement to BRAIN. "We wanted to be able to be clear to the remaining team that with these changes implemented, we are confident in the short and mid-term that we have the right organization going forward, which is why the three separate organizational changes were communicated at the same time," he said.
The three changes were:
- Commercial management. Hartley said there have been "a limited number" of staff changes in management as he takes a more hands-on lead with the local sales and marketing teams
- Product development. Hartley said Thule has decided to move product development positions from Connecticut to Sweden. He said the product development team in the U.S. worked on a limited number of projects in racks and carriers. The positions move to Thule's global development center in Sweden which has 300 employees, including 50 added in the last year. He said he's confident of Thule's new product pipeline. " This year as a group, we will spend more than 6 percent of sales on product development, and in addition, we have the last 12 months significantly strengthened our regional product management team, who are key in providing the right input to ensure we have the right products for the N. American market also going forward. We will, over the next two years, launch more new products than we ever have done, so I am convinced that our innovation drive will only improve over the coming years."
- Connecticut manufacturing. Hartley said cuts were made to white- and blue-collar positions at its Seymore, Connecticut, factory. "We will continue to operate with two large local manufacturing plants in the U.S. and will continue to have more locally made products than our competitors," he said. He said Thule will continue making roof boxes at a plant in Forrest Park, Illinois, and bike carriers in Seymour. "We already today sell many products in N. America that are manufactured in the Swedish, German, Polish and Belgian plants of the Thule Group, as well as packs and bags sourced from suppliers in South East Asia," he said. "In manufacturing, the staff reductions relate to the fact that the new models of bike carriers that we are bringing to market in the region in the next 18 months, and that I personally am very excited about, will be made utilizing a more automized production set-up."
Hartley reiterated Welander's long-term confidence in the bike market. "Overall, we expect, as have been communicated in our public reports, that the bike-related products will face a tough 2-3 quarters due to extremely strong comps and with bike retail sitting on high stock levels. But we remain very optimistic, thanks to our growth in other product categories, and we are also convinced that the bike sector will regain its momentum mid-term after the necessary inventory corrections."
