Ski mountain provokes avalanche of lay-offs at Dynastar

Dynastar, part of the troubled Rossignol group, plans to lay-off the majority of its staff at its Sallanches factory in the Haute Savoie from the end of January. The firm has been left with a mountain of unsold skis, more than a third of this year’s output. The lay-offs are partial, workers will be unemployed for 12 days in February and 17 days in March. The unions blame “poor production management” for the measures which will affect 187 of the 272 staff.

According to the union a hundred contract workers had been employed over the last six months. The factory in Sallanches makes skis for the whole group following the closure of Rossignol’s two plants in Voiron at the end of 2008. The days when Rossi could sell a million pairs of a single ski are a dim memory, over the last decade Rossignol has been on a slippery financial slope after failing to capitalize on emerging markets. Production will be cut back from 800,000 pairs of skis to 650,000 for next year.

Rossignol group was acquired from Quiksilver [NYSE.ZQK] by the holding company Chartreuse & Mont Blanc in the autumn of 2008 after a troubled 3 years in which 600 staff were made redundant as losses mounted. Despite efficiencies in ski production with the patented Dynapreg system, Rossignol has been losing 40 M€ annually on a turnover of 300 M€ with a further 300 M€ in debt. Shareholders had rapidly become dissolusioned with Quiksilver’s investment which turned sour after a winter with little snow in 2006-7 and affected by exchange rate fluctuations. Rossignol does 30% of its business in dollars.

Bruno Cercley the managing director of Rossignol until 2005 heads Chartreuse & Mont Blanc but the owners are Australian venture capitalists Macquarie [AU:MQG] and sport good group Jarden [NYSE:JAH] which owns both K2 and Völkl and manufacturers skis in China and Romania.

The original deal was for 100 M€, 75M€ being paid in cash for Rossignol, Dynastar, Look, and Lange. Quiksilver had paid $560.8 million (470M€) for Rossignol three years previously. However with a worsening economic outlook and lack of credit Quiksilver finally agreed to just 40M€ at the end of October 2008.