A handful of things can make or break a great off-road vehicle, but the two most important things are tires and shocks. Without a good set of tires, you're nowhere. You can't climb obstacles, you can't go fast, you can't make your way through streams or rivers or even light fire roads. You're up a creek.
But without shocks, and good ones at that, you're really screwed.
Shocks are the linchpin that holds the whole off-road vehicle together. Bumps loosen nuts and bolts and screws. You don't have enough articulation to even climb a mole hill. And you're spine becomes that damn thing's suspension. As someone who still aches from a long-since motorcycle crash, my spine's continued health remains important to me and my well-being, so I gotta have good shocks.
Arguably the biggest name in that space, however, is Fox. The company makes everything from shocks that go on a Ford Raptor R, to those on Can-Am's and Polaris', to even shocks on mountain bikes and more. Fox's symbol and name on your machine means business. But that business now has new business daddies, as the company recently shook up its board, and there's some slightly worrying language peppered through the announcement that could predict layoffs.
In a rather dry business-focused release that most overlooked, Fox Factory, the parent company of a host of aftermarket and OEM-supplying companies, states that it's moving to not only remove two board members, add two new board members, partnering with Engine Capital—a private equity firm—but also create a new "Committee Focused on Operational Excellence and Margin Improvement."
For those who don't pay attention to boardroom politics, board shakeups happen more often than you'd think. People come and go, politics wax and wane, and interest depends on the year, the group, and the company's revenue. So two board members "retiring," and two new board members coming in, isn't that big of a deal.
It is slightly odd that one of the new board members is Alan L. Bazaar, who, according to the release and singled out in it, is CEO and Co-Chief Investment Officer of Hollow Brook Wealth Management LLC. That doesn't scream off-road and performance enthusiast focus, really. Something you sorta need when you're talking about Fox and its products. But hey, according to most private equity bros, money is money, and company's are company's, right?
And while I've written about money-managing C-suites with nary a care about the actual product many, many, many times in the past, maybe this one is fine? Who knows. But more worrying in the release is the phrase peppered throughout in that this new committee within the board will look for ways to improve "operational excellence and improve profitability." In my years covering businesses, this phrase usually comes ahead of layoffs.
Speaking on the heels of the announcement, Arnaud Ajdler, Engine Capital's managing partner, stated, "We appreciate [Fox's] Board’s responsiveness and engagement. We believe the appointment of two new directors and the formation of the Transformation Committee reflect a shared commitment to operational excellence. With a sharpened focus on execution and disciplined cost management, the Company is well positioned to drive meaningful and sustainable long-term shareholder value. We look forward to working collaboratively with the Board and management team."
Emphasis mine, as "disciplined cost management" is routinely, "Who can we cut to drive better revenue?" Now, I'm not saying that's what will happen. Stranger things have occurred. But in my reporting career, whenever C-suites and boards start looking for operational efficiencies, cost management, etc, it's never in their bonuses or incomes, but always in making a worse product and/or cutting people.
The release adds, "The Board will form a Transformation Committee chartered to provide oversight of management’s execution of operational improvement initiatives targeting enhanced profitability, working capital efficiency, and disciplined capital allocation." Again, that doesn't sound like people's jobs are safe.
But, hopefully, that's a wrong take and everyone's favorite off-road shock and suspension maker will be fine.
