BRIN: Bell Builds Giro Helmets
An article from
Bicycle Retailer and Industry News
(used with their permission).
Summary: Bell had bought Giro in 1995, and by 1999 had begun integrating its production and other functions while retaining enough design independence to avoid scrapping Giro's valuable brand identification.
Santa Cruz Scares Off Manufacturing
Bell's Illinois Factory Begins
Building Giro's Helmets
by Jill Janov
SANTA CRUZ, CA_Giro Sport Design is doing what other Santa Cruz
companies have already done to cut expenses and boost
margins-move its factory out of town.
Giro, a division of Bell Sports, will transfer its helmet
manufacturing out of Santa Cruz and into the Bell helmet plant in
Rantoul, Illinois. Manufacturing is becoming too expensive in
Santa Cruz. The money Giro saves in production costs will be
invested in marketing, sales and research and development.
In the last few years, Lipton tea and Wrigley gum factories have
done the same, moving factories to cities where it is more
economical to set up shop.
"This is not the right community for manufacturing. We have a
land crunch and that's an issue for companies that want to
expand. Water is a critical issue and the cost of living and
construction are extremely high," said Michael Schmidt, chief
executive officer of the Santa Cruz Chamber of Commerce.
As Giro moves production to Illinois over the next 11 months, the
company will lay off 139 Santa Cruz employees in manufacturing,
manufacturing support and distribution jobs.
Giro announced the layoffs on Jan. 29, giving employees notice
and offering them assistance in finding new jobs. Blair Clark,
Giro's president, thanked the employees for their hard work and
told them that the layoffs are necessary to insure Giro's
"This is by far the most difficult task I have had to do. If the
restructuring eliminates your job, I want you to know that I care
about how you feel and I apologize for this disruption to your
life. I want to thank you for your hard work and I wish you well
in the future," Clark said in a speech to employees.
The Santa Cruz office will remain open for Giro's research and
development, marketing, credit and sales employees. To preserve
the brand, Giro will continue to operate these departments
separately from Bell Sports as Bell officials promised when Bell
acquired Giro three years ago.
In addition, two other divisions will move into the Santa Cruz
office. They include a test facility and an advanced helmet
research group supported by a government grant to research new
helmet materials. Giro also will add additional equipment to test
ski and bike helmets to meet worldwide standards.
Clark said market conditions for helmet manufacturing have
changed since 1989, when prices were stable and growth continued
at 50 to 100 percent a year. When Bell bought its main rival,
Giro, in 1995, competition was expected to decrease, causing an
upward effect on helmet prices. This never happened.
"Market growth is flat, prices are declining, helmets are more
complex and more difficult to manufacture. A helmet that sold for
$125 five years ago sells for $60 today and yet our manufacturing
costs have increased," he said.
The move will end Giro's high production costs in Santa Cruz,
allowing its parent company to produce its helmets in Rantoul
where overhead is lower and production capabilities are greater.
Although Giro expanded its factory by 10,000 feet last year, the
company continues to run at capacity and struggles to meet
"We are spending the same amount on our marketing department
budget today as we did in 1994, yet our sales are twice as high
today. In order to give marketing and R & D greater budgets, we
chose to move manufacturing to Rantoul," Clark said.
Clark declined to reveal how much the move would cut production
and distribution costs, but he said overlapping production with
Bell also will give Giro higher profit margins making the company
Copyright 1999 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.