Levo Gen 3 Specialized Layoffs

[RickBullotta]

Ouch. Sorry to see this.

Specialized laying off 8% of its employees

MORGAN HILL, Calif. (BRAIN) — Specialized announced Wednesday that it is laying off 8% of its workforce in what the company called a “transformation.” The layoffs are across the company globally, including at company-owned retail stores in the U.S. and overseas. Public filings show that the...

www.bicycleretailer.com

 

[RustyMTB]

You think that may play into the athelete cuts we discussed last week, Rick?

 

[RickBullotta]

You think that may play into the athelete cuts we discussed last week, Rick?

Could well be - I'm not privy to the inner discussions, but I suspect many companies in the industry are feeling the "post COVID hangover" with excess inventory and reduced demand.

 

[RustyMTB]

Yes, seems plausible to me too.

 

[Mikerb]

Ouch. Sorry to see this.

Specialized laying off 8% of its employees

MORGAN HILL, Calif. (BRAIN) — Specialized announced Wednesday that it is laying off 8% of its workforce in what the company called a “transformation.” The layoffs are across the company globally, including at company-owned retail stores in the U.S. and overseas. Public filings show that the...

www.bicycleretailer.com

There are a number of articles describing stormy waters in 2023 for the bike industry mostly because of the massive increase in demand during the pandemic together with supply chain issues which made parts scarce and expensive.
Demand has now dropped so an adjustment is required. Many are predicting that brands will probably have to discount or be left with lots of stock.
The second hand market has already shown signs of being significantly overpriced as those who paid a premium for their bikes expect a reasonable return......but many bikes are listed on sales sites for weeks without selling.

 

[RickBullotta]

There are a number of articles describing stormy waters in 2023 for the bike industry mostly because of the massive increase in demand during the pandemic together with supply chain issues which made parts scarce and expensive.
Demand has now dropped so an adjustment is required. Many are predicting that brands will probably have to discount or be left with lots of stock.
The second hand market has already shown signs of being significantly overpriced as those who paid a premium for their bikes expect a reasonable return......but many bikes are listed on sales sites for weeks without selling.

Part of me wonders how many "planners" used traditional demand/supply chain planning tools to project 2022/2023 and beyond, forgetting that a global pandemic is kind of an anomaly...

 

[SwampNut]

Many are predicting that brands will probably have to discount or be left with lots of stock.

We're already seeing this here, locally, for both new and used. Same as car prices and inventory, another crashing market. People overpaid and over-bought for the last couple years, creating a big bubble market. Now people either already have what they need, or can't afford it as inflation/recession hits. Luxury items like e-MTB will be the first and most hit.

My riding buddy just picked up an end of year sale that was discounted around 45%. Now granted it had also been a demo, with 14 miles on it, but still full warranty and in perfect shape. As I told him, at least at 14 miles any out-of-the-box issues have been worked out.

 

[Mikerb]

Part of me wonders how many "planners" used traditional demand/supply chain planning tools to project 2022/2023 and beyond, forgetting that a global pandemic is kind of an anomaly...

maybe a little more complex with Ebikes ( not just EMTBs) since even without the lockdowns etc, demand for ebikes was growing.
Inventory is ordered so far in advance in our little sector of the market that mistakes on volume could easilly be made and one other factor could be just how much any brand believed the hype about new covid variants etc such that some forms of lockdown etc would continue into 2023. ........keeping in mind they were making the relevant decisions probably nearly a year ago.

 

[RebornRider]

Sort of related comment: I work for a gigantic international pharma/medical company (please don't hate - I'm just a lowly design engineer) that has seen record revenue the past few years (hmmmm, I wonder if that has anything to do with ...) Yet, there is a hiring freeze and the group I work with is hurting because of insufficient staff.

My point is that, unless you were in the meeting with the execs, any guess you make as to their motivation is more likely to be wrong than right.

 

[Dave Jenvey Superfan]

I don't understand how years of record sales can be undone in such a short time frame. The industry was still flourishing through most of 2022. Now the beginning of 2023 and they are putting off a huge amount of staff. Sure, you can project sales slow down in the coming 12-24 months, but surely this is nothing more than a return to the median from 2019 and prior.

 

[Pdoz]

8% of the workforce could be brose warranty claims dropping off

 

[RustyMTB]

My business is concerned with primary logistics, mostly for retail. We move a variety of things in industrial quantities from foodstuffs to lots of the display unit stuff you see in store, so we are placed between the factory gate & the till & see at first hand what's going on at the sharp end of national trade & there ain't a lot going on.

Consumers are keeping their hands in their pockets for now & with food inflation in the UK running well into double digits, rampant domestic energy costs and a background of industrial unrest, a creaking health system & a plainly exhausted government in its death throes, you can't blame them. The economic outlook in the UK at the domestic level is bleak, people see this & are battening down the hatches. Not bunging north of £5k on a bike is a no brainer for now, so my best guess is brands are in for a rough ride in 2023.

After a couple of years of astronomical shipping costs & supply challenges, it's ironic to overcome those problems only to see demand ebb away. For me though, the big one looks like Taiwan & China. So much of bike manufacturing is centred there & if China moves on Taiwan, the implications are huge. We saw Brompton announce they're leaving Taiwan last week, seems to me others will follow.

 

[Straker]

It’s the result of economic down turns and the price gouging of consumers during and post covid….. products that were already expensive in 2019 are now beyond the reach of many consumers

 

[Gavalar]

Ouch. Sorry to see this.

Specialized laying off 8% of its employees

MORGAN HILL, Calif. (BRAIN) — Specialized announced Wednesday that it is laying off 8% of its workforce in what the company called a “transformation.” The layoffs are across the company globally, including at company-owned retail stores in the U.S. and overseas. Public filings show that the...

www.bicycleretailer.com

It's not unique to the bike industry plus they have invested $14 million in purchasing the old Pearl Izumi facility to use as an innovation facility.
Any company with a focus on the future has to be agile in order to stay ahead of the game, because they are one of the largest companies in the cycling industry it makes headlines, Amazon cutting 18000 employees worldwide barely causes a ripple.

 

[RickBullotta]

It's not unique to the bike industry plus they have invested $14 million in purchasing the old Pearl Izumi facility to use as an innovation facility.
Any company with a focus on the future has to be agile in order to stay ahead of the game, because they are one of the largest companies in the cycling industry it makes headlines, Amazon cutting 18000 employees worldwide barely causes a ripple.

Of course. It's the norm these days, but different causes between the tech industry and the bike industry.

 

[Gavalar]

Of course. It's the norm these days, but different causes between the tech industry and the bike industry.

The causes are the same, Amazon is an e-commerce company who people thought were immune from the influences of bricks and mortar retailers, the cost of living crisis, interest rates etc has made people realise that they're not, the same outside influences are affecting the bike industry, if the bike industry was still buoyant then the crazy discounts now offered by Specialized, YT, Yeti and all the rest wouldn't be so prevalent, if anything the discounts offered have possibly made people realise that they have been paying way over the odds for far too long.

 

[RickBullotta]

The causes are the same, Amazon is an e-commerce company who people thought were immune from the influences of bricks and mortar retailers, the cost of living crisis, interest rates etc has made people realise that they're not, the same outside influences are affecting the bike industry, if the bike industry was still buoyant then the crazy discounts now offered by Specialized, YT, Yeti and all the rest wouldn't be so prevalent, if anything the discounts offered have possibly made people realise that they have been paying way over the odds for far too long.

They're VERY different. Tech is suffering from over hiring and poor cost control. Retailers are challenges by excess inventories of some products and an inability to get others due to chip and material shortages.
Amazon is not AWS. They're an online retailer of course, like bike companies. AWS, Microsoft, Google, Meta, Uber, Lyft, and countless others are more software than hard goods. Apple straddles the fence and faces a blend of inventory/supply challenges (both directions) and tech challenges.

Totally different issues in tech than in retail.

 

[randycpu]

8% of the workforce could be brose warranty claims dropping off

Many 2019 Gen2 Levos are now coming off of the extended (4-year) motor warranties...

 

[E-MAD MALC]

Only the strongest survive i any business
Good leadership, good vision of the future
Look at Tesla cutting prices what an uprore that has caused for customers who bought the car late last year
I think the bottom line is greed

 

[Arminius]

Hi,
In Germany high fuel prices pushed ebike sales to empty stocks in 2022 and lots of people seem to be affording a bike by job-bike-leasing and savings on income taxes.
2023 will be challenging year with extraordinary energy prices and also increasing food prices. Even prices for fire wood tripled end 2023.
The good is that so far the winter was pretty mild.

 

[ian408]

Specialized (and others) are just following the current business trend. More than likely (my opinion) it's an excuse to reduce the payroll--maybe cleanup if you like. And the timing is convenient. Amazon just layed off something like one or two percent of their staff. Even companies like SalesForce, Slack, and many others are laying off.

It's possible they're working on the premise recession is coming?

What I'd be more worried about are dealers that placed orders they are receiving on top of back orders they weren't sure they would receive based on inflated demand. Many mfg don't let dealers modify orders once they are placed. Given the current cost of borrowing money, I'm betting there will be a lot of small shops who cannot afford to stay in business.

 

[brigcampbell]

What I'd be more worried about are dealers that placed orders they are receiving on top of back orders they weren't sure they would receive based on inflated demand. Many mfg don't let dealers modify orders once they are placed. Given the current cost of borrowing money, I'm betting there will be a lot of small shops who cannot afford to stay in business.

I was in a specialized shop yesterday that was my LBS but purchased last year. They still sell Pivot so I asked if they had to do that contractually.

He said every day more bikes show up from corporate unannounced. Now they have a wall of Scott bikes from the acquisition of Incycle dealers.

So I'd guess Scott is more than happy to make Specialized take their bikes.

Bikes are literally stacked to the ceiling.

 

[ian408]

I was in a specialized shop yesterday that was my LBS but purchased last year. They still sell Pivot so I asked if they had to do that contractually.

He said every day more bikes show up from corporate unannounced. Now they have a wall of Scott bikes from the acquisition of Incycle dealers.

So I'd guess Scott is more than happy to make Specialized take their bikes.

Bikes are literally stacked to the ceiling.

What happens in a chain LBS depends on what HQ says. I know that to be a Specialized Dealer, you commit to apparel, parts, and so on. And sales drive what you get. Kinda sucks because let's say all you sell are road bikes. Maybe very few mtb. You might not get the nicer model road bikes. Then what?

 

[brigcampbell]

What happens in a chain LBS depends on what HQ says. I know that to be a Specialized Dealer, you commit to apparel, parts, and so on. And sales drive what you get. Kinda sucks because let's say all you sell are road bikes. Maybe very few mtb. You might not get the nicer model road bikes. Then what?

To be clear my LBS was a specialized dealer along with Pivot. They were purchased by specialized corporate.

Also of note there were Rad Bike ebikes on the floor too. That was surprising.