Redundancies at Raleigh

Of the 110 office staff, 40-50 will be made redundant. A staff-management committee will be formed this week and will oversee the redundancies.

A letter explaining the motives for the move was sent to Raleigh stockists on Friday. MD Philip Darnton explained the motives behind the redundancies but said that "we will still be fully resourced to provide a first class service to all our customers."

Here’s the full text of the letter:

ORGANISATIONAL CHANGES AT RALEIGH

Raleigh in Nottingham has undergone a difficult time over the past few years, and in both 1999 and 2000 was unable to make any significant profit. Undoubtedly this situation has not been helped by very poor weather conditions last year – the wettest since 1766; industry figures indicate that the UK retail market actually declined in 2000, after a period of relative stability. Furthermore, the start to 2001 has been depressing – Foot and Mouth disease has seriously affected cycle industry sales, with average market volumes down 17%, even against last year. Additionally the market for cycles has, year by year, become more competitive and retail prices have, in real terms, fallen considerably, while consumer expectations of performance have increased. All of this requires us to be progressively more cost effective in how we manage our business, as well as faster to anticipate – and react to – changing market needs.

Over the past months we have made a number of important changes to our management team, as part of an overhaul of our professional skills. We have appointed experienced and well-trained personnel to head our Sales and Marketing efforts, and recently brought in new management to our Product and Sourcing team. We have made changes in our factory to ensure that our working efficiencies are comparable to the best in the world; recent sourcing surveys show that Nottingham production can offer competitive advantages against third party manufacturers overseas.

Nevertheless, the business is still hampered by its fixed cost of overheads. Not only are our costs too high, but the consequential inefficiency of having too many people involved in all our business processes is that we become slow in decision-making and late in action.

It has become essential that we act now to reduce our fixed cost overheads by reducing our staff numbers. There is no alternative but to cut our Head Office structure by some 40-50 positions. Even so, we will still be fully resourced to provide a first class service to all our customers.

We will work to ensure that these changes are carried out as sensitively as possible, considering the individual circumstances of all those affected. We will also make these changes speedily. Individual notices of potential job redundancies will be issued next week, and the consequent organisational changes made during July. The aim will be to minimise uncertainty and anxiety within the business, and any risk of disruption in the market place.

To be sure of a secure long-term future, with a stable level of ongoing profit, Raleigh must now ensure that it is the most efficient and consumer-responsive cycle business in the UK. For these reasons, we are acting immediately to ensure that our strategic plan to sustain – and to strengthen – our position as the number one bicycle brand is achieved.