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sandranian · Site Admin

Although the news isn't very good at Gitane, there is a new website found with bicycle industry information in France:

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News
Cycleurope France: Redundancy Plan for 140 Employees

ROMILLY-SUR-SEINE, France – Cycleurope France is planning to cut 140 jobs at its facility in Romilly-Sur-Seine. This would mean that a big part of the Romilly workforce will be made redundant. Currently about 347 people are working at Cycleurope in Romilly.
According to Tony Grimaldi, CEO of Cycleurope AB: “The social plan was launched at a meeting with the Union and the Workers Committee on January 22. This plan presented a reduction of 140 persons in the Romilly factory. This will secure the financial situation in the company.”
According to a publication in the French magazine ‘L’usine Nouvelle’, the Union CGT insisted that the other Cycleurope plant in Machecoul with its 300 employees is also concerned.
The redundancy plan comes after the November 2006 dismissal of Vincent Mathieu, GM of Cycleurope in France and a move from the Stockholm holding company that created turmoil under Cycleurope’s suppliers. Component makers were told to mail their invoices no longer to the holding company in Sweden, but to Cycleurope in France. The component makers explained this move as an indication of rising financial problems at the French part of Cycleurope, also because credit insurances for the company were dropped. The financial problems are said to be caused by a drop in orders from Supermarkets and Decathlon.

Published @ 30-01-2007
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Source: http://www.bike-eu.com/

More information about the parent company, that owns Cycleurope...which owns Gitane...is found here:

http://www.grimaldi.se/

sandranian · Site Admin

A little about how Gitane came to be a "wholly owned subsidiary" of a large corporation....
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1997 - Monark Stiga acquires the French bicycle group Cycleurope, which includes well-known brands such as Peugeot and Gitane. Monark Stiga buys the Italian bicycle company Bianchi and the Danish bicycle brand Everton Smith.

1999 - In December the Grimaldi Industri Group´s tender offer to buy shares in Monark Stiga is accepted. The bicycle and exercise bike activities (Cycleurope AB and Monark Exercise AB) become wholly-owned subsidiaries of Grimaldi Industri AB. 51% of Stiga AB (lawnmower business) is sold to UBS Capital.

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It is strange that within our lifetime, we have seen the demise of both Peugeot and Raleigh. Cycles Peugeot is now gone altogether in France, which is odd. Raleigh's old factory has been torn down http://news.bbc.co.uk/2/hi/uk_news/england/2519053.stm and http://www.riffdesign.co.uk/radford/raleh/ral.htm. Really a shame that these two greats have gone the way of the Dodo.

lofter

is gitane going to be shut down?what happens to the name.could someone
pick up the name cycles gitane?

Paul Wiseman

Everything is for sale if you have the $$$$. Especially if this company is not doing so well.

sandranian · Site Admin

The Romily facility is where they have their management offices. The Machecoul factory is still alive and kicking, and is, according to reports, Cycleurope France's most productive and efficient operation, which does bode well for the company. They attempted to cut jobs there in 2006, but that attempt was thwarted by the Union, which touted the above referenced facts regarding productivity.

I guess the big issue is that orders are down from Decathlon (a big sporting goods chain) and supermarkets...so the crap bike market. Decathlon just built a new factory, which means that their stores are now going almost exclusively to Decathlon bikes. I don't know if Cycleurope had a deal with Decathlon to build them "Decathlon" branded bikes or not, but I wouldn't doubt it.

According to the industry site, sales of Gitane are strong in the Benelux countries.

There are rumors that Bianchi is to be sold....

Paul Wiseman

I guess you have to look at it from the point of view of the company. If you have a brand that is widely supported by the public, you don't need to spend big time $$ on marketing the brand. If however, you have a brand that is not doing so well, you invest into that brand with a big marketing campaign. What we see is that a pro team is on Bianchi and no pro team on Gitane, and mistakenly believe that Bianchi is doing better than Gitane. The reverse is actually true. You don't spend that much money sponsoring a team just for the love of it. You expect to get a "return." They have to ask the question, will our investment of 2 million euros make us 3 million euros? Or have we reached market saturation with this product? My guess is that gitane is currently enjoying the benefits of sponsoring 3 of the most popular teams during the past 3 decades (renault, systeme u, fd jeux). But this doesn't explain why the "de-branded" their top end bikes this year???????

sandranian · Site Admin

I am no marketing or economics guru...but here is my two cents:

Cycleurope has allowed "the" french brand, Peugeot, to die. They didn't put a penny into it with regards to anything - marketing or otherwise. There may have been a lot of reasons for that, but whatever the reason, they ditched the brand. Bianchi is sold in a number of countries, including the USA. Spending on pro racing as a marketing tool makes more sense when it is for an international audience/market. Gitane is only sold in select regions, therefore they would probably get more bang for the buck by marketing in those select regions.

Then, you have the issue of "type" of bike. Gitane is focused on low end, mass produced bikes. The buyers of those bikes read newspapers and hang out at kids' soccer games...which is probably where Cycleurope is focusing the advertising. Pro racing is a waste of money for them. I think that the higher-end bikes are merely offered to give their long-time dealers a range of bikes to sell. Perhaps there are more "brand-loyal" people than we think. I would imagine that in the future, you will see a continued decline of the brand, until it isn't there anymore, thanks to Walmart/Decathlon type of stores.

I don't think there is any residual effect of the early years. The lot of us, who are interested in the bikes, aren't running out and buying new Gitanes, are we? (I did...but I don't think there are that many of me running around). Bianchi, on the other hand, makes a decent amount of money and is heavily invested in high end bikes. Gitane did not have the money (after Renault pulled out) to put into the "next technology" in bike manufacturing. I am just guessing here...and rambling......

Paul Wiseman

In a nut shell, what you just did is called market segmentation. Which segment of the market buys our product? How do we reach them? USA & Europe high end Italian brand rider is probably a big market for bianchi, and thus worth the $$ invested in pro team. But If Jean and Maree are going to but a 120 euro gitane mtb for little Bernard anyway (because it is a french brand) the expense is unnecessary. Better to focus on where the buyers are. Alternatively, you could cut all the marketing costs to the public and focus on producing bikes for another "brand", like decathlon. This makes life simple as you only have one customer. Until they realise that they can buy the same bike at half the price from china. Then you just go bust. The French unions must be plenty powerful, to keep manufacturing at that scale in a fully developed country. Or perhaps, there is Govt. protectionism at work here? (btw - I'm no marketing guru either, just some basics - happy to be corrected)