Ibis Announces Termination of Production Cooperation
ROHNERT PARK, CA (November 5, 2001) - Ibis LLC today announced that it has terminated its bicycle frame production cooperation with Strong Frames, Inc. of Bozeman, Montana. The inability of the operation to meet production volume and cost goals was cited as the reason for the termination.
"Our original reason for moving production to Montana was to increase production capacity and reduce costs," said Roger Salameh, Chief Operating Officer of Ibis. "However, throughout the first six months that Ibis funded operations in Montana, the production team was unable to achieve target volumes. Because production averaged only 36% of planned volume, Ibis was unable to meet customer demand for steel frames, and our cost per frame actually increased to a level much higher than our previous cost in California." Ibis had hoped that the cooperation would lead to a joint venture but the disappointing production rates caused Ibis to decide not to pursue a more formal joint venture. "Frankly, we over-estimated the ability of the operation to scale-up to achieve our targets. We recognize that production shortfalls in the spring and summer caused concern among Ibis dealers, and our move to terminate production in Montana and re-establish it elsewhere is aimed primarily at correcting this", said Roger Salameh.
Ibis has re-structured its frame production operations and is currently at full production for steel and titanium frames.