Fat City Cycles -What's up?
Anaud Ganpaul
I have been hearing rumours for the last little while that Fat City was going to fold or be sold. If anyone knows what's up with this, I would love to hear any news. I have a '91 Wicked Fat Chance and I wonder if this will affect me in any way. (Sweet bike, by the way!!)
Thanks,
Anaud
Daniel Convissor
Yeah, my 88 Wicked is treating me very well.
I heard they were bought by Serotta. Is that right?
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George Bernegger
Just read in Velo News that they will be made in NY with Serotta but will
keep unique Sales & Marketing staffs. No more Somerville
Keith W. McFadden
[stuff deleted]
G> Just read in Velo News that they will be made in NY with
G> Serotta but will keep unique Sales & Marketing staffs. No more
G> Somerville
Yes, but their framebuilders are all gone....thats why i picked up
one of the last 'Bucks' made in Mass. just a few weeks ago. Things
just won't be the same, sigh :(
keith
--
Keith W. McFadden |
kei...@usgs.gov |
USGS, WRD, Ga. District |
Davin Lim
er.usgs.GOV (Keith W. McFadden) writes:
>>>>>> "G" == George Bernegger <g...@mv.mv.com> writes:
>
> G> Just read in Velo News that they will be made in NY with
> G> Serotta but will keep unique Sales & Marketing staffs. No more
> G> Somerville
>
>Yes, but their framebuilders are all gone....thats why i picked up
>one of the last 'Bucks' made in Mass. just a few weeks ago. Things
>just won't be the same, sigh :(
I understand that there's always an attachment to the "original",
but Serotta is hardly the big mega-conglomerate that will destroy
the quality of the product. Serotta bikes have been recognized
as absolute top-shelf stuff. I can't believe that Fat City's
builders were any better than those employed at Serotta. Time
will only tell if the unique design character of Fat City remains
in the lineup, however. Sounds like Fat Chance bikes are now
under a bit more stable backer - which may keep them around
longer.
-Davin
Gary Helfrich
on the situation in Somerville:
This article appeared in the Boston Globe 6 November 1994
FLAT CITY
Venture capital, high-tech cycling and working-class visions come to a
crossroads in Somerville
By Jerry Ackemm
GLOBE STAFF
SOMERVILLE - This is the story of a little company that thought it
could - Fat City Cycles Inc., a builder of high-tech mountain bikes
with names like Fat Chance, Yo Eddy and Shock-a-Billy.It was all aimed
at a youthful market that paid $1,500 and more per bike - wheels and
handle bars extra - and which regarded these cycles as among the finest
built in America.
But 13 years after founding the firm, owner Chris Chance last month
gave up. Hit first by recession and then by the fact that most people
who want fancy bikes now own them, the specialty bicycle market is in
retreat.
Despite sustained sales of nearly $1.5 million a year, Fat City fell
so far behind that Chance could not pay the light bill, was six months
behind in rent and could barely meet the payroll. "I couldn't go on,"
he said. So he sold out.
Thus, this is also a story about corporate takeover - not the kind that
sent Wall Street into turmoil in recent years, but still with
parallels, including people thrown out of work.
The buyer is Archibald Cox Jr., 54, formerly president and chief
executive of First Boston Corp., now a venture capital investor after
a 1993 shakeup by First Boston's holding company cost him his own job.
The son of the Watergate special prosecutor, Cox is also an avid
cyclist. He is moving the company to a bicycle factory he already
owns, Serotta Sports Inc. in South Glens Falls, NY.
FAT CITY, Page 93
Fat City Cycles comes to a crossroad
FAT CITY
Continued from page 89
To acquire Fat City, Cox reportedly paid $250,000, with another
$100,000 possible later. All will go to creditors who are owed more
than $500,000. And this is also the story of a dedicated cadre of
former Fat City employees, most in their 20s and 30s, who are left
behind. As they collect unemployment they dream of building a new
"elite team" of bicycle crafts people that might revive the magic that
earned their company its reputation.
The love of craft seemed palpable as nine of the former workers rolled
up on their bicycles and crowded into a small apartment the other day
to talk about their hopes to form a collective to keep building
bicycles in Somerville. "All the skills and know-how to build these
bikes is right here in this room," said Susan Kirby, a welder who was
among those laid off last month. "Word will travel fast," added Robert
Mossman, a former director, of sales and marketing. They have
preliminary support from the Somerville Community Corp., the community
development agency that only two years ago bailed out Fat City Cycles
with a $300,000 loan on which it may now collect as little as 26 cents
on the dollar. The ex-employees hoped briefly last week that creditors
would move to block the sale of Fat Chance to Cox, so that the
Somerville Community Corp. might be able to acquire the brand name for
their use in settlement of its debt.
Subsequently shut out of such a deal, William Shelton, the development
agency's chief executive, says that whatever money is recovered still
"will be reinvested for this group.
All these stories came together as Chance and Cox, fearing what
creditors might do, signed the final papers on Thursday. As part of
the deal, Chance will move to South Glens Falls along with his wife,
Wendyll Behrend, Fat City's vice president and chief financial officer,
and one former marketing employee. No others among the company's 20
other employees were hired.
In an interview Friday, during a break in packing machinery and
records for the move, Chance, 40, said Fat City's slide probably began
during its best years, 1990 and 1991. That was when Fat City's plant,
with 30 employees, shipped almost 2,000 bicycle frames a year - about
2 percent of the national market for high-end mountain bikes in a
field that then had about 60 small manufacturers.
Critics were raving about Chance's designs and orders were piling up.
One magazine wrote of his Fat Chance bikes: "They went where no other
bikes could go; they climbed hills other bikes couldn't climb; they
snaked along our trails with nary a tread misplaced." Fat City "was
the only East Coast manufacturer that made what people on the West
Coast thought were cool bikes," said Richard Cunningham, editor of
Mountain Bike Action, another monthly for cyclists.
Seeking a larger plant, Chance went to the Somerville Community Corp.,
which got a $300,000 job development grant from the US Office of
Community Services, a branch of the Department of Health and Human
Services, and loaned it to Fat City at 1 percent interest. The
corporation also arranged for Fat City to move to a larger building,
owned by the agency.
Both the new debt and the newfound space soon outpaced Fat City's
ability to turn out bicycles, Chance said. He faults himself for much
of the trouble. "My gift to the world is not administration or
managing people," he said.
But, beyond his control, there was also the recession. Sagging US
cycle sales were compounded by an even larger economic downturn in
Germany, which Chance regarded as his next big market. Moreover,
because setting up a bicycle company is relatively easy, competitors
were springing up in Europe. "It is, in fact, a very fluid industry,
and Europe is a very fickle marketplace" said William Goodman, a Swiss
businessman who was Fat City's European distributor and who invested
in the company.
By 1993, according to former employees, vendors providing steel tubing
and nuts and bolts wanted cash on delivery. Chance said he told his
employees then that the company was in trouble. With average wages at
$8 to $9 an hour, they say they nevertheless agreed to accept a pay
freeze and work some overtime without pay to tide Fat City over.
But the picture didn't change, according to Shelton, and by last
January the Somerville Community Corp. was worried enough that it
convinced Chance to hire an interim chief executive to track down
problems and seek solutions. Shelton and Chance both said matters
were found to be worse than the books showed. The interim chief
executive left in July.
On the edge of despair, Chance said he shared his problems one day in
July with Ben Serotta, founder of the firm that Cox already owned.
Chance Said Serotta Sports, which makes high-end bikes designed
especially for road riding, was also in the doldrums. He and Serotta
had lunch and discussed their mutual problems, "and I thought to
myself, 'This feels like I am talking to myself,"' Chance recalled.
Serotta suggested that Chance talk with Cox.
Chance says he and Cox moved "fairly along in discussions" through
August, but that the talks were stopped when Shelton offered an
alterative proposal that would avoid moving Fat City to New York -
employee ownership. Initially, Chance liked the idea. "This was kind
of a precious thing, a very personal organization that we were dealing
with, and I felt it would be too hard to create it again somewhere
else," he said. He allowed Shelton to step in as chief executive to
shape the conversion.
But Cox subsequently convinced him that Fat City "was not going to
be able to survive on its own." Besides, his own life was "turning
into something of a soap opera," he said. Creditors, including family
members who had advanced thousands of dollars, were closing in.
Topping it off, the interim chief executive had pressured him to fire
his wife as chief financial officer.
"It was not a nice thing for me to try to do to my wife," Chance said.
"A big part of my decision was based on the fact I was worn out - and I
still am, and will be for several more months."
A deal with Cox, said Chance, "was my safety net." He jumped. And he
says he has no regrets. While bitter about the sale, Chance's former
employees say they hold no animosity toward him. "We've always been
aware of the financial stress," Said Debbie Nadolney, who was Fat
City's production coordinator. Cox thinks their interest in trying to
start over is far-fetched. "They don't have any money," he says
bluntly. But Chance said he understands. "There is a lot of passion
and commitment in the community that we put together," he said. "They
are still trying to live this dream that I can't live any more.
Free-lance writer Richard Fries contributed to this report.