Cannondale closes down US Factory

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wombatK
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Re: Cannondale closes down US Factory

Postby wombatK » Wed Jan 29, 2014 7:45 pm

The USA has hordes of working poor who earn minimum wages and who have to work multiple jobs and absent themselves from family care
responsibilities. The minimum wages aren't even providing survival rations. Yet we're supposed to believe Cannondale can't make a
profit from staffing a factory on such wages ? How is it that Taiwanese manufacturers can ? What do they and their government
know and do that the USA's finest managers and political leaders can't do ?

Don't blame the USA's workers. Its the management and government that's letting them down (in that order).

What these managers don't understand is where their brand value came from. As an owner of a Cannondale, I know
my bike was manufactured in Taiwan or China; but it was a major point of appeal that there
was American design input and American quality control and testing oversighting this. Take that away, and you might as
well buy from the generics like the Cell's and Azzuris.
WombatK

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Re: Cannondale closes down US Factory

Postby redned » Wed Jan 29, 2014 8:33 pm

turtle rider wrote:The big picture is the Australian govt is ********** refuses to protect Australian workers in the manufacturing industry , easy fix re instate all trade Tariffs.


I am not sure which government you are talking about. The Button car plan, the breaking down of tariff barriers, removing centralised wage fixing, floating the AUD were all Labour Party policies in the Hawke/Keating era, benefits to the economy gradually overturned under Rudd/Gillard governments.

You may want to live back in the 60s, but I don't.

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Re: Cannondale closes down US Factory

Postby skull » Wed Jan 29, 2014 8:56 pm

*Labor

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Re: Cannondale closes down US Factory

Postby AUbicycles » Wed Jan 29, 2014 10:08 pm

I started liking Cannondale when their first Bad Boy came out and they have been really moving when it comes to innovation - Thier concept bikes have a flow on effect for future design (just like in the auto industry).

The original info (in the announcement) was a bit light on actual details - but I would hope that both the US and Taiwanese expertise can be united. With the ongoing knowledge transfer the Taiwanese are world leaders and even niche producers in Europe or the USA can be outclassed in modern production. But a continuing innovative drive is crucial, particularly for brands without a Taiwanese heritage so that the production isn't limited to the obligatory generic product (as was suggested).

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Re: Cannondale closes down US Factory

Postby mikgit » Thu Jan 30, 2014 12:51 am

it's all the X440's fault... if only they hadn't made it...
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Re: Cannondale closes down US Factory

Postby ldrcycles » Thu Jan 30, 2014 9:42 am

@turtle rider, $1250/week is a hell of a long way from a "basic" wage, I get about half that, and i'm a lot better off than I was in my last job. Which, btw, was operating a welding robot in a factory. I can say from personal experience, having a robot doing the job does not mean you sit on your backside and read a book, there is still hard yakka involved.
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Re: Cannondale closes down US Factory

Postby silentbutdeadly » Thu Jan 30, 2014 10:38 am

biker jk wrote: Wages are too high in Australia but the unions would not accept pay reductions


...and would you accept a cut to your current wages & conditions to do the same job you do right now?

The problem with way too many people in this day and age is that they don't seem to accept that other peoples skills and experience are quite as valuable as their own... :D

Cannondale have shuttered their US factories simply because it is cheaper/faster to build and assemble their products closer to where most of the parts come from. The incessant pursuit of growth in business under the current economic model has (due to a complete lack of inspiration and innovation) pretty much exhausted all avenues except that of cost cutting. And this is a cost cutting exercise.
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Re: Cannondale closes down US Factory

Postby simonn » Thu Jan 30, 2014 10:53 am

turtle rider wrote:Why should the unions accept pay cuts for their members.


Because high pay makes Toyota uncompetitive causing them to move factories out of the country.

turtle rider wrote:As for $48,000 subsidy , that is still good value as it kept people in jobs and the factory running.


Oh! Me! Me! Can the tax payer pay me to break windows!?!?!? Think of the jobs it would create!!!!!


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Re: Cannondale closes down US Factory

Postby Jesmol » Thu Jan 30, 2014 11:00 am

simonn wrote:
turtle rider wrote:Why should the unions accept pay cuts for their members.


Because high pay makes Toyota uncompetitive causing them to move factories out of the country.

turtle rider wrote:As for $48,000 subsidy , that is still good value as it kept people in jobs and the factory running.


Oh! Me! Me! Can the tax payer pay me to break windows!?!?!? Think of the jobs it would create!!!!!


Its not solely workers pay that is the issue, Labour cost to build a car is roughly about 15% of the total cost, Material content is much much higher at around 50% , we pay massive premiums here for many material, for example Steel is about 30% higher for local steel.

Toyota / Holden / Ford / MMAL / Nissan were / are all uncompetitive because of volume, build less than 100,000 vehicles pa in a car plant and you wont be competitive, especially when you're up against plants running 200K plus a year.

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Re: Cannondale closes down US Factory

Postby Mulger bill » Thu Jan 30, 2014 11:01 am

Isn't the current ratio ~1 senior executive = 140 drones in sector 7G?
Plenty of room to shave costs there, oh, wait...
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Re: Cannondale closes down US Factory

Postby simonn » Thu Jan 30, 2014 11:44 am

Jesmol wrote:for example Steel is about 30% higher for local steel.


Why is that? Labour costs (at least partially)?

Toyota / Holden / Ford / MMAL / Nissan were / are all uncompetitive because of volume, build less than 100,000 vehicles pa in a car plant and you wont be competitive, especially when you're up against plants running 200K plus a year.


I don't see how that is counter to high pay? If anything it is the opposite, especially as, in general, lower prices ~= higher volume.

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Re: Cannondale closes down US Factory

Postby Jesmol » Thu Jan 30, 2014 11:50 am

simonn wrote:
Jesmol wrote:for example Steel is about 30% higher for local steel.


Why is that? Labour costs (at least partially)?

Toyota / Holden / Ford / MMAL / Nissan were / are all uncompetitive because of volume, build less than 100,000 vehicles pa in a car plant and you wont be competitive, especially when you're up against plants running 200K plus a year.


I don't see how that is counter to high pay? If anything it is the opposite, especially as, in general, lower prices ~= higher volume.

Steel costs are high due to high input costs, power, water, labour etc.

Volume helps because the labour input costs reduce due to the ability to justify automation at higher levels. ie to produce 2x the number of cars you may only put on 0.3x to 0.5x the amount of labour thereby reducing the total labour input. Also it massively reduces your fixed OH costs per vehicle. Var OH will stay the same but in total cost to produce a car in a plant making 200K pa will be around 15% less, let alone the reduction in supplier pricing due to efficiency / volume improvements. In total I'd estimate around 25% cheaper in total , based on same labour rates.

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Re: Cannondale closes down US Factory

Postby nailsaslegs » Thu Jan 30, 2014 11:57 am

So we will see Cannondale frames quickly enter the Chinese knock off market...

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Re: Cannondale closes down US Factory

Postby AUbicycles » Thu Jan 30, 2014 1:28 pm

nailsaslegs wrote:So we will see Cannondale frames quickly enter the Chinese knock off market...


Not really, they have been manufacturing in Taiwan for a few years already. The fake bikes are not indicative of the manufacturing location (considering Taiwan and China host a majority of the worlds bicycle manufacture). If you every come across one of the dodgy alibaba sellers with fake bikes, it is a real mixed bag and certain brands tend to feature more than others.

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Re: Cannondale closes down US Factory

Postby Aushiker » Thu Jan 30, 2014 2:31 pm

Unlike Cannondale, Velocity moved to the US ...



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Re: Cannondale closes down US Factory

Postby ldrcycles » Thu Jan 30, 2014 8:40 pm

I've heard rumours that Velocity's quality went to hell when they shifted production, does anyone know if there's any truth to that?
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Re: Cannondale closes down US Factory

Postby RonK » Thu Jan 30, 2014 9:10 pm

ldrcycles wrote:I've heard rumours that Velocity's quality went to hell when they shifted production, does anyone know if there's any truth to that?

The US factory was in production long before head office moved. There were some production problems in the Brisbane factory before the move.
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Re: Cannondale closes down US Factory

Postby Duck! » Thu Jan 30, 2014 9:18 pm

ldrcycles wrote:I've heard rumours that Velocity's quality went to hell when they shifted production, does anyone know if there's any truth to that?

I don't know what it's like post-shift, but it had gone to hell way before then. I had a batch of locally-produced rims for my HPV (racing trike), and blew all seven of them apart. I also know several other people who had the same thing happen.
I had a thought, but it got run over as it crossed my mind.

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Re: Cannondale closes down US Factory

Postby nailsaslegs » Thu Jan 30, 2014 9:26 pm

Duck! wrote: I had a batch of locally-produced rims for my HPV (racing trike), and blew all seven of them apart. I also know several other people who had the same thing happen.


We have had the same issue, we were sponsored by them and blew 4 sets apart, we no longer use them. Had massive issued with braking and warping.

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Re: Cannondale closes down US Factory

Postby eeksll » Fri Jan 31, 2014 10:53 pm

simonn wrote:
turtle rider wrote:Why should the unions accept pay cuts for their members.


Because high pay makes Toyota uncompetitive causing them to move factories out of the country.

turtle rider wrote:As for $48,000 subsidy , that is still good value as it kept people in jobs and the factory running.


Oh! Me! Me! Can the tax payer pay me to break windows!?!?!? Think of the jobs it would create!!!!!



for the broken window fallacy to work full circle in this case, all those people at holden would need to find other jobs. No simple task when there are so many people.

also the logical conclusion that takes that argument to burning down the city is taking one side to an extreme. More often than not the best practical solution is something in between.

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Re: Cannondale closes down US Factory

Postby mtbkym01 » Sat Feb 01, 2014 2:06 am

It all starts with the cost of real estate, which is way to high, just to be able to pay an average mortgage you need so many $$$, retailers need to make so many $$$ to cover rent, Manufacturers need to make so many $$$ to pay rent, which pushes prices of everything up, meaning workers demand to earn more $$$ just to be able to live a "normal" life. Reduce real estate costs and everything will become more affordable.

Oh, and when did $1250 a week become an average wage??? Holy !! BAN ME NOW FOR SWEARING !!, seems i'm living in poverty.
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Re: Cannondale closes down US Factory

Postby ldrcycles » Sat Feb 01, 2014 7:56 am

mtbkym01 wrote:Oh, and when did $1250 a week become an average wage??? Holy showtime, seems i'm living in poverty.


I think statistically the "average" wage is somewhere around there, but just think how skewed that is by the wages of bank CEOs, Gina Rinehart etc.
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Re: Cannondale closes down US Factory

Postby rkelsen » Wed Feb 05, 2014 1:28 pm

biker jk wrote:Oh let me guess comrade, Work Choices 2 is just around the corner? :roll: Much as I admired the policy (and it's rollback by Rudd brought a return to the labour market inflexibility best demonstrated in the auto and building sectors), there's no way the LNP will revisit it anytime soon.

Here it comes: http://www.theage.com.au/federal-politics/political-news/abbott-targets-penalty-rates-in-submission-20140204-31zil.html

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Re: Cannondale closes down US Factory

Postby biker jk » Wed Feb 05, 2014 2:06 pm

rkelsen wrote:
biker jk wrote:Oh let me guess comrade, Work Choices 2 is just around the corner? :roll: Much as I admired the policy (and it's rollback by Rudd brought a return to the labour market inflexibility best demonstrated in the auto and building sectors), there's no way the LNP will revisit it anytime soon.

Here it comes: http://www.theage.com.au/federal-politics/political-news/abbott-targets-penalty-rates-in-submission-20140204-31zil.html


You clearly don't know what WorkChoices entailed. BTW, Gina Rinehart also donated to the Australian Labor Party! While the ALP was in government federally, 125,000 manufacturing jobs were lost. The strong currency contributed but so did excessive labour costs. If you think that the latter is not costing jobs in Australia and doesn't need to be addressed then perhaps I can lend you my microeconomics textbooks.

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Re: Cannondale closes down US Factory

Postby rkelsen » Wed Feb 05, 2014 3:43 pm

biker jk wrote:BTW, Gina Rinehart also donated to the Australian Labor Party!

Shock! Horror! Rich person attempts to buy politicians! Stay tuned for more at 11.
biker jk wrote:While the ALP was in government federally, 125,000 manufacturing jobs were lost.

The loss of manufacturing jobs has been a continuing trend since the late 90s. Howard did nothing to change it either. They're probably all as bad as each other in that respect.
biker jk wrote:The strong currency contributed but so did excessive labour costs.

Aha, but the problem isn't the minimum wage. It's the average wage.

Would you be able to feed your family, pay the mortgage and run your house & cars on $33k?
biker jk wrote:If you think that the latter is not costing jobs in Australia and doesn't need to be addressed then perhaps I can lend you my microeconomics textbooks.

Surely, Mr. Economics, your textbooks also discuss the topic of the "Marginal Propensity to Consume" and whose is highest?

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