Tenneco Announces Discontinuation of Marzocchi

A few months ago, we reported on the trouble brewing at Marzocchi, and now that trouble has materialized into something much more tangible. Marzocchi's owner Tenneco has just announced the intended discontinuation of its motorcycle and mountain bike suspension business, which employs 138 people in Italy, North America, and Taiwan, citing "continuing market challenges in the two-wheeler business" as the main reason. Tenneco has been actively seeking a buyer for the Marzocchi business as a whole over the past few months, but today it would appear as though that search has not been fruitful.

Reading between the lines, it is clear that the Italian plant (which only produces the moto line) can not be made competitive, and that nobody is interested in buying that business in its current form. A buyer could still acquire the brand and what's left of the assets and resume moto production elsewhere, leaving the Italian staff as the real losers here. They could end up shutting down for good.

As for the MTB side, there are still many possible scenarios as this sad part of Marzocchi's story continues to write itself. A buyer could still snap up the MTB business and carry on from where they stand today, with production continuing in Taiwan and minimal staff elsewhere. That seems to be what Marzocchi MTB itself is saying today, via social media.

What this means for the bike manufacturers speccing Marzocchi OEM product in the short and long term remains to be seen, and where this leaves race teams with 2015 (and beyond) contracts is also not sure at this time. Assuming there is availability of spares, the teams could continue running the products for some time, and if a buyer is found as Marzocchi says, one can hope it will be business as usual for everybody involved. Short term, whether or not the Marzocchi race support truck can continue to function now also remains to be seen.

A letter dated July 22, 2015 sent to distributors and partners seems to confirm the definitive nature of the closure of the moto business, while the MTB side looks to be part of the assets up for sale.

Press Release:

​Tenneco Inc. (NYSE:TEN) announced today its intention to discontinue its Marzocchi motor bike fork suspension business and its mountain bike business, and liquidate its Marzocchi operations.

These actions are subject to a consultation process with the employee representatives and in total would eliminate approximately 138 jobs.Tenneco currently employs 127 people at the Marzocchi plant in Bologna, Italy and an additional 11 people in its operations in North America and Taiwan.

Tenneco intends to assist its motor bike customers with the transition of current production to an alternative supplier and expects to complete the closure by the end of 2015.

"We sincerely regret the impact these actions would have on our Tenneco Marzocchi employees, and thank them for their tireless efforts to improve performance and reduce costs. Unfortunately, it was not enough to overcome continuing market challenges in the two-wheeler business," said Brian Kesseler, chief operating officer, Tenneco. “We are committed to working with our employees’ representatives, and with our customers to make the transition as smooth as possible.”

This intended action is a part of Tenneco’s ongoing efforts to optimize its Ride Performance business globally while continuously improving its operations and increasing profitability.

Tenneco expected to record charges of approximately $27 million related to these actions in the third quarter which includes approximately $17 million of cash expenditures. These charges consist of severance and other employee related costs, asset impairment charges and other expenses related to the closure. The company anticipates improving financial results by approximately $7 million annually, beginning in 2016.

Tenneco is an $8.4 billion global manufacturing company with headquarters in Lake Forest, Illinois and approximately 29,000 employees worldwide. Tenneco is one of the world’s largest designers, manufacturers and marketers of clean air and ride performance products and systems for automotive, commercial truck, and off-highway original equipment markets, and the aftermarket. Tenneco’s principal brand names are Monroe®, Walker®, XNOx™ and Clevite®Elastomer.