BENTONVILLE, Ark. (BRAIN) — HIA Velo, LLC, the parent of Allied Cycle Works, laid off about 15 workers this month as managers adjusted staff levels to demand for its U.S.-made carbon bikes. The workers let go were from a variety of departments but mostly from production.
"It came down to matching production capacity to overhead and what the demand is. There's nothing really complicated about that part of it," said Sam Pickman, Allied's CEO.
"We had gone into the winter expecting a certain amount of growth; we did have growth but not at rate we initially hoped."
Pickman, who was promoted to CEO in January, said announcing the layoffs was "the worst day of my career."
HIA had about 45 employees before the layoffs. Its factory is in Little Rock; in January the company opened an office in Bentonville as well.
Pickman said Allied built and sold about 800 framesets last year and expects to sell about 1,000 this year. The company is pinning hopes on a new model being launched at the Dirty Kanza expo later this week, and a new accompanying IBD dealer program (see related story).
Separately, HIA is facing a lawsuit from its founder and former CEO, Tony Karklins, who was fired last October.
Karklins filed suit against HIA in November. In his most recent complaint, amended in March, Karklins charged that HIA breached his employment agreement by dismissing him for cause when no cause existed, did not pay him for unused paid time off, and had categorized his dismissal as "for cause" to avoid paying his full severance salary, among other complaints.
Under his employment agreement, Karklins would be paid 100% of his annual base salary of $150,000 for two years if he left the company without cause. If he was fired for cause, he would be paid 60% of the base, which he has been receiving.
Karklins charged that after HIA told him they intended to fire him, he attempted to negotiate terms in line with the employment agreement. "HIA refused, its motives now clear — the HIA board intended to push out its founder and renege on its obligations," the amended complaint reads.
In its response to the complaint, HIA denied the charges and said it had given Karklins written and oral notice "of his gross mismanagement and an opportunity to cure. Karklins failed to cure his gross mismanagement despite notice and opportunity," HIA's response reads.
Karklins is asking for actual damages of over $120,000 plus legal costs. On May 27, the court scheduled a jury trial in the case to begin April 27, 2020.
Neither Karklins nor Pickman — who was named CEO in January — would comment to BRAIN about the particulars of the suit.
Karklins had previously told BRAIN that he was close to reaching a settlement with HIA and indicated this week that negotiations continued.
Pickman, while not commenting on the particulars, said "I hope it all gets resolved soon. Nobody likes these things looming overhead."
