In 1976, he established a new company called Mongoose tooffer a complete line of BMX bicycles. This was a very good move because salesof BMX bicycles in the US surged from 140 thousand in 1974 to 1.75 million by1977 (Crown and Coleman schwinn bicycles 1996). The Varsities and Continentals did prove to be popular amongteenagers who were fairly rough on their bicycles.
The Schwinn Bicycle Company emerged during the bicycle boom of the 1890s, a period where over 200 cycle manufacturers and small shops operated in Chicago alone. The company began operations in a factory at the northwest corner of Peoria and Lake Streets in Chicago. With the collapse of the bicycle market around the turn of the century, the company purchased March-Davis, a competitor which was operating on what was then the city’s far west side, and moved operations there. At this time, very few of the bicycles being produced by Giant bore their own brand name.
Schwinn still was a company that could spot trends andquickly produced new bicycle models. In 1962 an executive at Schwinn named AlFritz noticed a trend in California of boys riding funny-looking bicycles. They had small wheels, long seats, smallframes, and riser handlebars that looked like Texas longhorn steers. With thisunusual configuration, he was surprised to see kids doing instant wheelies andriding on the schwinn electric bike rear wheel for blocks. Schwinn started the decadeselling 500 thousand bicycles in 1960 and reached close to 900 thousand by 1970(Petty 2007).
Schwinn made a last gasp effort to correct the problems withthe Greenville plant. Edward Schwinn, Jr.’s brother Richard Schwinn volunteeredto move to schwinn bicycles Mississippi to oversee the factory. He made significant progress inimproving the quality of bicycles coming from the plant but it was too littleand too late. The new factory in Greenville Mississippi never generated apositive cash flow and also was destined to be closed.
Theirmotorcycles were popular and in the late 1920s, Schwinn became the thirdlargest motorcycle company in the country. Ignaz Schwinn wisely stayed away from the ill-fated trustbecause he wasn’t one to surrender his independence. In the context ofdeclining sales, he knew that to stay in business, his company would have to changeits focus. He took advantage of the bicycle slump to purchase troubledmanufactures.
Frank W. Schwinn made it a point to know the factoryworkers by name. Workers trusted Schwinn and did not require a detailed writtencontract. An element of paternalism was evident between Schwinn and its employeesbut it was always correctly assumed that Schwinn would take care of itsworkers. This tradition was eroded in the 1960s and 1970s with the rise in thevolume of Schwinn sales.
He decided to spruce up the shop and sell only Schwinn bicycles.The change worked and Schwinn bicycles began to fly out the door. The visiting Schwinnmarketing team liked what they saw and took the idea of dedicated Schwinndealers back to Chicago to sell to the boss. At the age of over 70 years old, Ignaz Schwinn decided itwas time to wind down his active management of the company. With the motorcycles in the rearview mirror, FrankSchwinn took on the difficult task of reinventing what remained of the bicycle business.The company would eventually be renamed the Schwinn Bicycle Company. With hisbackground as an innovative motorcycle engineer, he set his eyes on developing futuristicnew bicycle products geared towards children. The stage was set for an era of Schwinncreativity and innovation that would catapult the company into a dominant positionin the bicycle industry.
Frank W. Schwinn had built the company into a bicyclepowerhouse in over 30 years. He introduced a glitzy line of children’s bicyclesthat sold very well from the early 1930s through the 1960s. In the late 1930s,he produced world-class lightweight bicycles—including the Schwinn Paramount—thatwere ahead of their times.
A young EdwardSchwinn, Jr. had created a youth movement among Schwinn management bringing in financialspecialists that had sometimes limited experience in manufacturing. Schwinn also was being challenged by new competitors in nichemarkets such as mountain, BMX, and high-end road bicycles. Japan and Europealso were competing with Schwinn in the US market. This was made worse by Schwinnabandoning its wholesalers who then were freed up to market these other bicyclesbrands.
CNBC recently summarized the current state of bicycle salesin the USA and has the following observation on Schwinn. CNBC quotes Ray Keener, an industry veteran and editor of Bicycle Retailer as saying the following. Chicago was a major bicycle manufacturing center at the height of the “golden age” of bicycling in the 1890’s. Upon his arrival in America, Schwinn quickly found work with the Hill Cycle Manufacturing Company and rose readily to the level of plant manager.