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news
2020-specialized-diverge-launch-action-23Specialized slashes jobs in latest sign of cycle industry downturn
Specialized has said that it is cutting around one in 12 jobs worldwide, with what it described as a “difficult” decision reflecting the headwinds the global cycling industry is facing following a period of strong demand for bicycles at the height of the coronavirus crisis.
The company, which is based in Morgan Hill near San Jose in California, is the latest to announce job cuts, following recent announcements of redundancies from firms including Strava, Wahoo and Zwift.
> Cycling industry layoffs: Strava and Wahoo cut 15% of workforce
The announcement of the job losses was made yesterday, hours before Halfords, the UK’s biggest retailer of bicycles, said that the domestic cycling market had contracted by 20 per cent over the past year.
> Halfords says cycling market is down 20 per cent year on year
The US-based trade publication, Bike Retailer & Industry News (BRAIN) reported that employees whose contracts would be terminated included many working at company-owned stores in the US and across the world.
Like many other businesses within the cycling industry, Specialized saw strong growth in 2020 and 2021 due to the pandemic as people bought bikes, whether for fitness or to travel to work.
According to BRAIN, competition with rival Trek also saw the company looking to open more single-brand stores, but as with other businesses operating within the market it has been left with excess inventory as the boom prompted by the pandemic has subsided.
In its statement yesterday announcing the job losses, Specialized said: “Over the last three years, the industry has changed at an incredible pace and shown that cycling is more powerful than ever. It’s clear the time has come for transformation and shifts for the future.
“This past week, Specialized made the incredibly difficult decision to say goodbye to 8 per cent of teammates around the world.
“With the global economy changing faster than anticipated and rapid changes within cycling, the organisation adjustment will allow the brand to be adaptive, whilst still investing in innovation,” the company added.
CEO Scott Maguire – who replaced company founder Mike Sinyard in the role in March last year – commented: “We are transforming the company around our purpose to Pedal the Planet Forward.
“Our priority is to better serve riders, retailers, and communities and to be the best place for our teammates to innovate and grow.
“The time is now to adapt to the current environment and ultimately led us to make some extremely tough decisions today.
“I want to recognise those teammates who departed and thank them for all their contributions, hard work, and dedication to Specialized.
“We are focused on ensuring that they are fully supported during this difficult time.”
He added, in words that will be of scant comfort to the employees who have been laid off: “It may be tough to see in the moment, but the future of cycling and the future of our brand is bright.”
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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15 comments
My question on 'contraction' is, where does that contraction put the UK cycling market compared to pre-pandemic levels?
Likewise with job cuts, has Specialized increased their global workforce by 8% since the pandemic boom, or not?
The answers to those questions tell different stories about the context of the decline and the true challenges facing the industry.
There's some special BS going on here.
Apparently Specialized "has been left with excess inventory". But availability isn't exactly abundant.
Specialized also generally charge a lot more for bikes of similar level than competitors so the % mark-up must be big.
More sad news for the cycling industry and feel really sorry for those affected. This is 100% a result of unrealistic forecasting to please shareholders and investors. It was the same for Wahoo, Strava, Whoop and Peloton who all expanded way too quickly off the back of the covid wave growth. It didn't take a marketing genius to work out that kind of growth wasn't sustainable, but they all made the same idiotic assumption and now the poor sods who are losing their jobs are paying for it.
Is the 'downturn' just being measured against the lockdown 'peak'?
I'm not an economist or even much of a businessman, but should it not have been obvious that any growth enjoyed during the truly unique circumstances of lockdown would not have been sustainable, and any forward planning should have assumed as much?
Or is that what we're basically seeing, companies contracting back to pre-Covid scales?
It could be worse, they could be like Ribble. On the cusp of being struck off Companies House, Ribble have made a loss every year since 2016, totalling some £9.7 million. Check their accounts out, they're on Companies House. They are very late with this years accounts, which I reckon will show an even bigger loss. Nobody can sustain such heavy losses and continue.
I feel sorry for all the punters who are still ordering bikes from them, and paying in full up front. When(if) they go bang, which is looking very close, these people will be at the back of the queue for their money back.
I'm sure most people will use a credit card to make a purchase like that and the credit card company usually burdens the loss should the supplier fold.
The last thing a company needs is people putting off ordering, because a full order book is one thing that can help them get bank loans/corporate funding etc.
So I would not put off ordering from them if I was thinking about it. But would make sure the credit card I used would cover me for any losses should they go under.
I would hope they have done. But, when they do fold, and all who have ordered and paid in full claim the money back from their banks, who will the banks recoup the loss from? Will all the banks customer have to shoulder the loss? I genuinely do not know.
Like probably a good many other British cycling company (and not just cycling), brexit IMHO has been a disaster for Ribble. If buying from the EU, while you do get UK VAT knocked off, you have to pay your national VAT + 14% duty + whatever "handling charges" are cooked up by the courier. Others are in a similar position SJS for example, Merlin have a minimum €155 spend. Wiggle/CRC still do take care of the taxes, but they've become largely uncompetitive pricewise since the merger. These are just a selection, but there are many more
Pre brexit these and a lot of other British companies would have been the goto if not for bikes, then clothing, components, tyres etc. for me and many others I know. A lot of that has gone to the French and German online retailers.
A lot of that has gone to the French and German online retailers
I looked into an order with a Dutch company, but at the end of the procedure they informed me about the import duties which can be arbitrarily (it seems) applied at this end, for a difficult-to-be-sure amount. I therefore abandoned. Has anybody tried these continental suppliers and found these taxes being applied/ goods held up awaiting payment etc. etc?
I wanted to buy a winter beanie hat from Jumbo Visma, €23. Factor in delivery to UK, the delivery price was €29.95 making a total of €52.95. I didn't bother proceeding with the order.
Yes, but Ribble have been losing money since before Brexit happened, so Brexit cannot be blamed for this. More like the investment company have raped the account.
Good job they never purchased a cycling sales chain in the UK..... Oh wait
Man, Specialized are the corporate devil of the cycling world. I can only imagine how hard they must be finding it right now... It must be gutting for them to lose that 25% of the work force and really maximise their shareholder returns.
I'm sure all the big bike brands operate the same way, but for some reason, Specialized's corporate antics seem more in your face than the others.
Doesn't stop anyone buying their SL7's, £300+ saddles and £400+ shoes mind.
25%?? It's 8% in the article I read.
8% is on the low side for the current round of job cuts sweeping the corporate world. Just wish they'd cut out all the PR bollox around it. Having been made redundant three times in 30-odd years working it's far better for them to be honest about such things - management took a bet on growth which didn't pay off.