(Crown and Coleman 1996, p142)“ Ed Schwinn, Jr. broke with long-time managersincluding the well respected Ray Burch and Al Fritz. The likes of a 25-year-oldbrother-in-law was hired to take their place along with a host of financialanalysts and marketing specialists. Amid the good times, Schwinn hit a bump in the road in 1963.After contracting cancer, the company’s long-time owner and president Frank W.Schwinn passed away at the age of 69.
The “Made in Chicago” badge on Schwinn bicycles was alwaysa matter of pride for the company. In its heyday, the factory produced almosteverything in a Schwinn Bicycle but the steel tubing. Up through the 1950s,continual investments were made to upgrade the capability of Schwinn to buildbicycles entirely from scratch in Chicago. Thenew managers would have to deal with increasing competition, an aging factory, and whether to rely on imports as the mainstay of new bicycleproduction. The 1980s would prove to be a critical test for the Schwinn familybusiness. The 1982 film ET (ExtraTerrestrial) illustrates the intensityof the BMX craze.
Appointing an outsider as a chief operating officer oroffering stock to gain much-needed capital for modernization was out of thequestion. Edward Schwinn, Jr. only owned about 3.4 percent of thecompany himself and family members held the rest. Even though he made all the majorbusiness decisions for Schwinn, schwinn electric bike he also had to deal with family politics. Eward Schwinn Jr. wanted to carry on the Schwinn familybusiness tradition but he also was handicapped by the Schwinn family trust. Notuncommon in an era of paternalism, in the 1920s the founder Ignaz Schwinn hadset up a family trust for the company that contained both shares and of thecompany and its name.
A gaggle of boys riding BMX bicycles returning ET to hisspaceship for his flight home evaded police by racing down streets, over curbs,and down hillsides. They eventually came to a police roadblock and magicallyrose in the air avoiding ETs capture. An iconic Hollywood image emerged as theysailed through the air with their bikes silhouetted against a setting sun. Due to the inability to handlethe new lightweight steels, Schwinn began to look for alternative ways to selllighter bicycles. Instead of modernizingto make the new bicycle lines in-house, in the early 1970s, the decision wasmade to import lugged lightweight bicycles from Japan. To take advantage oflower wages and favorable exchange rates, many US companies were beginning to manufactureproducts in Asia.
This financial firm proved equally incompetent in running Schwinn and Schwinn again declared bankruptcy in 2001. In the Twentieth Century, Schwinn Bicycles had come fullcircle from its beginnings. Starting in the 1890s, Arnold, Schwinn and Company were a bicycle manufacturer with none of its own retail sales outlets. Their bicycles were sold in Sears and Roebucks and other departmentstores. This changed in the 1930s as Schwinnbegan to withdraw from selling bicycles through mass-market retailers. Schwinn developed high-cost, high-quality bicycles and started focusing on the sale of its bicycles through local bicycle retailers.
This meantthat the California entrepreneurs had an opening to develop bikes withsuspension for riding on mountain trails. Joe Breeze, Charlie Kelly, Gary Fisher, and Tom Ritchey were avid Repackriders and realized that the old Schwinns being raced on the mountainside coursehad their limitations. Schwinn needed a more decisive manager to deal with thecompany problems faced during the mid-1970s.
During the factory strike, Schwinn turned toa small bicycle manufacturer in Taiwan called Giant. Anything but a Giant, thecompany desperately wanted to produce bicycles for the dominant company of theera. Schwinnmanagers realized that low-cost, high-quality manufacturing in Asia rather thanin the USA was a real possibility. Skip Hess, the founder of Mongoose, was quoted as saying“The (Schwinn) people in Chicago only heard the echo” of this new Trend (Crownand Coleman p. 109, slightly reworded). Heestablished a new company named Motomag that first sold stronger wheels to modifyexisting Stingray-style bicycles.
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 1996). The Varsities and Continentals did prove to be popular amongteenagers who were fairly rough on their bicycles.