The Untold Story: How Cannondale Bike Company Almost Failed in 1994
Cannondale bike company stood out as a symbol of bold engineering and new ideas in the cycling world. The company grew fast but lost much money in 1987, which led to uncertain times ahead. Their first aluminum bike came out in 1983 - a bold choice that others criticized but later became their trademark innovation.
The company's brave approach almost led to its collapse when it looked beyond bicycles. Their ambitious move to create the MX400 motorcycle in 2001 proved costly, with losses reaching $46.6 million. This failed expansion forced the once-proud American manufacturer to file for bankruptcy in 2003. Many people ask "is Cannondale still in business?" The answer is yes, but things look very different now. The current owners moved all manufacturing to Asia in 2014, which ended the company's American manufacturing legacy after the Bedford, Pennsylvania plant closed its doors.
Let's take a closer look at the untold story of how this innovative bike company nearly collapsed in 1994 and the remarkable trip that followed.
The Vision: Cannondale’s Bold Leap into Motorcycles
Image Source: RideApart.com
Cannondale bike company made a decision in the early 1990s that would reshape their future. They had mastered aluminum bicycle manufacturing and decided to venture into a new market: motorcycles. This move was nowhere near a simple product expansion - it marked a fundamental change in direction for a company known only for human-powered transportation.
Why Cannondale wanted to enter motocross
Several factors drove Cannondale's motorcycle ambitions. Foreign manufacturers gained ground as the bicycle market grew more competitive. The profit margins in high-performance motorcycles could also exceed those in bicycles.
Cannondale's founder Joe Montgomery and his team saw the motorcycle industry as a chance to utilize their expertise in aluminum fabrication and state-of-the-art design. Their experience with lightweight, high-performance bicycle frames could revolutionize motorcycle design. The market needed an American-made alternative to the Japanese-dominated dirt bike segment.
Market conditions seemed ideal. The mountain bike boom from the late 1980s had plateaued, and the company needed growth to satisfy investors after their original public offering. Motorcycles seemed the next logical frontier for this boundary-pushing company.
The dream of an American-made dirt bike
A patriotic vision drove Cannondale's motorcycle project: building America's first competitive dirt bike in generations. Japanese brands like Honda, Yamaha, Suzuki, and Kawasaki ruled the off-road segment since traditional American manufacturers declined.
Cannondale aimed to create something revolutionary - not just another dirt bike, but a complete reimagining of the machine. Their Pennsylvania facilities would build these motorcycles, staying true to their "Made in America" marketing approach. This strategy matched their brand identity as an innovative American manufacturer.
Their ambitious plan included an aluminum-framed motorcycle with advanced features that would outperform established rivals. Montgomery's team wanted more than just market entry - they planned to revolutionize the industry, similar to their success with aluminum bicycle frames.
Initial public and media excitement
News of Cannondale's motorcycle program created excitement in both cycling and motorcycling communities. Motorcycle magazines praised the fresh perspective from this innovative company. The motorcycling press showed particular interest in new American competition against Japanese dominance.
The stock market reacted well to these expansion plans. Investors saw Cannondale's move as proof of growth potential. The company's engineering excellence convinced many they could succeed in motorized vehicles.
Trade show prototypes caught everyone's attention. Their distinctive designs with aluminum frames and unique engineering stood out from traditional offerings. Industry experts noted how Cannondale might bring bicycle-inspired lightweight construction to motorcycles.
Notwithstanding that, major challenges lay ahead. The motorcycle industry demanded different manufacturing processes, distribution networks, and customer expectations than bicycles. Cannondale pushed forward with their motorcycle dreams, confident their engineering skills would overcome these obstacles.
Engineering Ambition Meets Reality
Image Source: Motocross Action Magazine
Cannondale bike company's engineering dreams grew bigger than reality back in 1998. The company had done great things with aluminum bicycles. They thought they could take on a whole new challenge with the same creative approach that worked in cycling.
The switch from Folan to a custom engine
Cannondale made a smart choice at first. They partnered with Swedish company Folan to supply engines for their prototype motorcycles. This 25-year-old engine maker knew how to build single-cylinder, 450cc powerplants. These engines could have given Cannondale's first motorcycle venture a solid start.
The practical approach didn't stick around. Cannondale made a choice that would come back to haunt them. They ditched the proven Folan design and decided to create their own custom engine in North Carolina. The company wanted to create something new at any cost. They lacked the motorcycle know-how to pull off such big plans.
Industry experts say sticking with the lightweight Folan engine would have made more sense. "Cannondale could have reworked the Folan 450 four-stroke engine into a powerful, reliable and light motocross powerplant." This would have cost way less than what they ended up spending on their custom design [1].
Backward cylinder and air intake design
Cannondale's standout engineering choice was the backward-facing cylinder design. Yamaha made this work ten years later. The difference? Cannondale missed key technical details like "tuned length" for the exhaust system [1].
Air intake became another headache. Engineers put the air filter behind the number plate near the handlebars. This spot "didn't get anywhere near enough air" [2]. They tried fixing it by adding another air filter under the fuel tank. Riders now had to take off "the fuel tank, seat, and radiator wings" just to clean the filter [2].
Fuel injection and electric start complications
The electronic fuel injection system turned into a big problem. These systems were rare in motocross bikes then. The bike's settings were so off that riders could "ride around the track without ever touching the throttle" because it idled too fast [3]. The engine would also "flame out at low rpm" [1]. This made riding the bike unpredictable and annoying.
The electric start system created even bigger problems. It had no kickstart backup. This turned out badly because "when you stalled during a moto—and you always stalled during a moto—the battery would run down before the bike would restart" [3]. The starter motor's location forced them to make a bulky frame that ruined the bike's feel [1].
These engineering mistakes created several major problems:
- The bike kept breaking down
- Basic maintenance became a huge hassle
- The fuel injection worked poorly
- Starting problems with no backup plan
Cannondale showed what happens when you try to create without proper testing or experience. The current Cannondale bike company challenges design limits, but this story reminds us about the gap between smart innovation and impractical experiments.
Design Flaws That Sealed the Fate
Image Source: Motocross Action Magazine
"EVEN WHEN I KNOW THAT A BIKE IS GOING TO BE BAD, I STILL WANT TO BE THE FIRST GUY TO RIDE IT." — Jody Weisel, Senior Editor, Motocross Action Magazine; veteran motocross journalist and test rider
The Cannondale MX400's problems went far beyond engine troubles. Design flaws made it almost impossible to succeed in the motorcycle market. These issues ended up leading to Cannondale bike company's financial crisis over the last several years.
Frame geometry and handling issues
The MX400 copied problematic geometry from its Honda CR250 inspiration—specifically the 1997-1999 models that Honda later fixed. This created a flawed foundation that led to front-end oversteer and push glitches in corners [1]. Riders found the frame design forced forks to hang down in their travel and caused mid-stroke harshness [1].
The decision to store engine oil inside the aluminum frame backfired badly. This space-saving idea turned the bike's twin spars into scorching hazards. Riders often burned themselves when their arms touched the frame during rides [1].
Weight problems and poor suspension
The MX400's weight surprised many, especially given Cannondale's reputation for lightweight bicycle frames. One rider described it as "an aircraft carrier anchor weight" [4]. The bike's handling remained acceptable to some riders because "that weight has been positioned in the right places to provide a center of gravity that is quite low" [5].
High-quality Ohlins suspension components suffered from poor setup. Test riders had to upgrade from stock 0.47 kg/mm fork springs to stiffer 0.49 kg/mm versions [1]. The rear suspension's no-link shock system used an aggressive rising-rate leverage ratio. This created a "dead feeling" that "thumped through braking bumps" [1].
Difficult maintenance and reliability concerns
The MX400 became known as a maintenance nightmare. Riders had to remove "the fuel tank, seat, and radiator wings" just to reach the air filter [2]. Oil changes needed draining from "four places" including "both frame spars... and the engine oil drain and the transmission oil drain" [6].
Spark plug changes required removing "all plastic, the gas tank, and a frame brace" [6]. The brakes performed poorly too. One test rider noted: "When I first got on the bike I felt like I was going to overshoot every corner" [5].
The motorcycle faced serious reliability problems. Catastrophic failures hit the first Motocross Action test bikes within a week—one had a loose camshaft gear while another suffered from a poorly machined circlip groove [1]. These problems were systemic. "The first batch of Cannondales was so flawed that when an owner complained, he stood a fairly good chance of getting a brand-new replacement bike from Cannondale for free" [1].
The MX400's design flaws made it commercially unviable, whatever amount Cannondale invested to fix them.
The Collapse: How It All Fell Apart
Cannondale bike company's ambitious expansion in 2001 turned into a financial disaster. Their motorcycle venture, meant to break into the American dirt bike market, nearly destroyed the entire company.
Mounting losses and missed deadlines
The financial damage was devastating. The motorcycle and ATV division alone lost $46.6 million [1], with the company suffering 11 consecutive quarterly losses [1]. The company's share price on Nasdaq dropped 83% during this period [1][7].
The original projections missed the mark completely. Scott Montgomery, Cannondale's director of marketing, said: "We originally believed that we could build the motorcycle for $20 million, but we were way off the mark" [1]. The project ended up costing $80 million [1][2][5]—four times what they planned.
The timeline spun out of control too. The company announced the MX400 in 1998, but production delays kept the bike from dealers until 2001 [2]. The company had to stop production within months to fix reliability issues [8].
Media backlash and customer dissatisfaction
The MX400's arrival at dealerships brought harsh reactions from customers. Some publications jumped the gun with praise—Dirt Rider magazine even named it "Bike of the Year" before its release [5]. Riders soon found many problems with the bike.
Customer experiences were terrible. One rider took his new Cannondale to the desert, rode "about 100 yards," and had to push it back to his truck [9]. Another saw oil "seeping out of the bottom end" while waiting in a staging area [9].
Bankruptcy and the end of Cannondale motorcycles
The motorcycle division's problems dragged down the whole company. Cannondale filed for Chapter 11 bankruptcy protection on January 28, 2003 [10][1]. Joe Montgomery, Cannondale's CEO, admitted the "motorsports division was threatening the bicycle division" [10].
The Bedford, Pennsylvania motorcycle factory shut down completely. Production workers furloughed in December 2002 never came back [11]. The bicycle division survived only because Pegasus Partners II bought the assets through bankruptcy proceedings [10][12].
The whole ordeal altered the map of Cannondale bike company's ownership. The bicycle business continued under new management, while ATK, another small American dirt bike manufacturer, bought the motorcycle assets [2].
What Happened to Cannondale After 1994?
Image Source: The Radavist
Cannondale's story took several unexpected turns after its failed motorcycle adventure. The events following 1994 show how this iconic American brand managed to survive despite making some nearly fatal decisions.
Is Cannondale still in business?
Cannondale operates successfully today. The company filed for Chapter 11 bankruptcy protection on January 29, 2003 [13] after its motorcycle division drained valuable resources. This news shocked many since the brand seemed unstoppable before.
Pegasus Capital Advisors stepped in through their fund Pegasus Partners II and bought Cannondale's assets at bankruptcy auction [13]. The new owners made a smart move and sold the struggling motorsport division right away to focus on bicycles [13]. This decision saved the core bicycle business that had stayed profitable even during the motorcycle venture.
Who owns Cannondale bike company today?
The company changed hands several times over the years. Canadian conglomerate Dorel Industries bought Cannondale in February 2008 for about $200 million [13] after Pegasus helped stabilize it. Under Dorel's ownership, Cannondale joined other classic American brands like Schwinn, Mongoose, GT and more [14].
A major change happened when Dutch mobility group Pon Holdings acquired Dorel Sports, including Cannondale, for $810 million in October 2021 [15]. This deal created one of the largest bicycle companies globally with projected annual sales of $2.5 billion [15]. Pon Holdings' bicycle division now has prestigious brands like Gazelle, Santa Cruz, Cervélo, Focus, and Urban Arrow along with Cannondale [16].
How the bicycle division survived and evolved
Cannondale gradually moved away from its American manufacturing roots during these ownership changes. The company moved all production to Taiwan in April 2009 [13]. Dorel Industries closed Cannondale's last assembly and testing facility in Bedford, Pennsylvania by January 2014, ending its run as an American manufacturer [13].
The company kept pioneering new ideas even as manufacturing shifted overseas. They launched their first carbon fiber frames with the Synapse road model under Dorel's leadership [17]. The company also created breakthrough components like the BB30 bottom bracket system in 2000, which many manufacturers later adopted [18].
The Cannondale brand remains powerful within Pon Holdings' portfolio. The Dutch conglomerate aims to lead the global ebike market with 70% of its brands now offering electric models [19]. Cannondale has expanded beyond traditional mountain and road bikes into gravel bikes and other growing segments while continuing to pioneer cycling innovation.
Conclusion
Cannondale's trip from state-of-the-art bicycle maker to bankruptcy and back serves as a powerful lesson about business overreach. The company earned fame for their groundbreaking aluminum bicycle frames, but their ambition ended up exceeding their expertise in the motorcycle venture. This decision cost them heavily - $80 million in wasted investment and their independence.
Without doubt, Cannondale's story shows how engineering excellence in one field doesn't automatically work in another. Their motorcycle division's catastrophic failures came from backward cylinder designs, problematic fuel injection systems, and maintenance nightmares. The company tried revolutionary designs without proper industry experience. The financial drain became unstoppable, and losses hit $46.6 million before bankruptcy became the only option.
All the same, Cannondale's bicycle division survived through ownership changes - first Pegasus Partners II, then Dorel Industries, and finally Pon Holdings. The brand that once proudly built bikes in Bedford, Pennsylvania moved production to Asia. This shift marked the end of an American manufacturing era, yet the Cannondale brand stayed strong through these changes.
This story reminds us that state-of-the-art ideas without practical know-how can destroy even successful companies. It also shows a strong brand's resilience, as Cannondale bicycles continue to thrive today despite the motorcycle venture disaster. Therefore, businesses should see Cannondale's near-death experience as both warning and inspiration - evidence of unchecked ambition's dangers and the potential to rebuild after devastating failure.
FAQs
Q1. Is Cannondale still in business? Yes, Cannondale is still operating today. While the company faced bankruptcy in 2003, it was acquired by various owners over the years. Currently, Cannondale is owned by Pon Holdings and continues to produce bicycles, focusing primarily on mid to high-end models.
Q2. Why did Cannondale struggle financially in the early 2000s? Cannondale's financial troubles in the early 2000s were largely due to their ambitious but unsuccessful venture into the motorcycle market. The company invested heavily in developing a motocross bike, which resulted in significant losses and ultimately led to their bankruptcy filing in 2003.
Q3. What happened to Cannondale's manufacturing in the USA? Cannondale gradually shifted away from US manufacturing. In 2009, they announced the transfer of production to Taiwan. By 2014, Cannondale closed its assembly and testing facility in Bedford, Pennsylvania, ending its era as an American manufacturer.
Q4. Are Cannondale bikes still considered innovative? While Cannondale continues to innovate, their approach has changed. They've moved away from some proprietary designs that caused maintenance issues in the past. Today, they focus on creating competitive bikes across various disciplines, with notable offerings in road, gravel, and mountain biking categories.
Q5. How does Cannondale compare to other major bike brands today? Cannondale remains a respected brand, particularly in the mid to high-end market. While they may not have the same market share as giants like Trek or Specialized, they offer competitive products across various cycling disciplines. Their strengths lie in road, gravel, and certain mountain bike categories, though opinions on their entry-level offerings are mixed.
References
[1] - https://motocrossactionmag.com/the-true-story-behind-the-cannondale-disaster/
[2] - https://www.rideapart.com/features/677773/2001-cannondale-mx400-cycleweird-history/
[3] - https://chainslapmag.com/form-no-function-cannondale-moto-experiment/
[4] - https://www.vitalmx.com/forums/moto-related/how-bad-was-cannondale-mx400-really
[5] - https://www.bemoto.uk/the-pit-stop/rider-community/iconic-bikes-unpacked/2001-cannondale-mx400-motocrosss-most-infamous-failure/
[6] - https://www.atvriders.com/vbb/archive/index.php/t-110078.html
[7] - https://www.latimes.com/archives/la-xpm-2003-jan-28-fi-cannondale28-story.html
[8] - https://motocrossactionmag.com/amp/cannondale-ceases-production-of-the-mx400-nov-6/
[9] - https://www.vitalmx.com/forums/Moto-Related,20/Here-is-my-look-back-at-the-controversial-Cannondale-Motocross-project,1385634
[10] - https://www.roadracingworld.com/news/cannondale-files-for-chapter-11-bankruptcy-protection-due-to-motorsports-division-failure/
[11] - https://www.atvriders.com/vbb/archive/index.php/t-42876.html
[12] - https://bikebiz.com/cannondale-bought-by-its-chapter-11-stalking-horse/
[13] - https://en.wikipedia.org/wiki/Cannondale
[14] - https://www.bikeforums.net/classic-vintage/1281274-cannondale-factory.html
[15] - https://www.reuters.com/legal/transactional/owner-gazelle-bikes-buys-cannondale-schwinn-810-million-2021-10-11/
[16] - https://www.cyclingweekly.com/news/cervelo-owner-becomes-worlds-largest-bike-company-after-buying-cannondale-parent-firm-for-dollar810m
[17] - https://roadbikeaction.com/cannondale-bicycles-40-years-in-the-making/
[18] - https://en.brujulabike.com/cannondale-story/
[19] - https://www.pinkbike.com/news/pon-holdings-buys-gt-cannondale-schwinn-and-more-in-810-million-deal.html
