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.
These models were a good fit because they hadvery strong, almost indestructible frames. Unfortunately, the bicycles wereheavy compared to European imports because they could not be used with modernalloys such as chrome-moly. As a result,the Varsities and Continentals made few inroads into the adult market. The bicycle industry entered the doldrums at the turn of the20th Century. Adult ridership of bicycles plummeted as people’sattention turned to motorized transportation. The Wright Brothers started ignoringtheir bike shop in favor of flying machines.
These Varsities and the Continentals were road bicycles madefrom the traditional heavy steels, the same material used in producing the kids’bicycles. They relied on existing factory technology to weld the frame for theVarsity and Continental. The frames were built schwinn mountain bike with innovative electro-forgedwelding techniques which gave the bicycle frame very strong with a smooth lookat the joints. The problem was that this technique could not be used with thenewer, lighter chrome molly tubing.
Finally, he tweaked Schwinn’s“fair market” policies so that retailers could not compete against one another basedon price. As a result, Schwinns became increasingly dated in both styling and technology. By 1957, the Paramount series, once a premier racing bicycle, had atrophied from a lack of attention and modernization.
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.
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.
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.
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.
In the short term, this wouldn’t have anyimpact on the success of the company. He had put in place a competent team ofmanagers that—at least for the time being—could carry on without him. Schwinn was facing increasing competition from Europe startingin the 1950s.