The site of US bike industry trade paper Bicycle Retailer and Industry News reports that Cannondale‘s bike, motorbike and clothing factories have been closed and employees let go. BRAIN sought comment from Cannondale’s vice president Scott Montgomery on the closure but he declined, citing Securities and Exchange Commission rules. Nor would he comment on reports that VP of finance, Bill Luca, was laid off last week.

All this follows on from pre-Christmas rumours of trouble at Cannondale triggered by their laying off of 500 employees. They’ve traditionally done this in winter when demand is low, but usually rehire everyone in the new year. This time they apparently haven’t…

So assuming there’s anything to any of this, what’s gone wrong? Well, it would appear that Cannondale’s big push into motorsports with their motocross and quad bike projects has tripped them up. Last year the motorsports division brought in $22 million dollars in sales (while the bicycle bit brough in $134 million), but every single motorbike and quad bike was sold at a loss. And overall Cannondale’s been losing money. At the close of their last fiscal year in June they posted a $15.4 million loss. And in the first three months of FY2003 they recorded a loss of $8.4 million. If they kept that up for a whole year they’d be looking at $33.6 million down the swannie…

So where next? Well, there’s a few bike companies apparently in the frame to buy Cannondale out (and on past form, who’d bet against Trek having a punt?). They have a few other options – they could file for Chapter 11 bankruptcy protection, giving them a breathing space from paying off their long list of creditors; they could sell the motorsports division to save the bike division; find an investor willing to pump some more money in… One way or another, while things look pretty ugly we doubt that Cannondale will disappear. More on this story as it develops…