This strategy would succeed and the Schwinn Paramountwould become part of Schwinn’s enduring legacy for quality and innovation untilthe company’s bankruptcy in 1993. Most of Schwinn’screative energy from 1910 through 1930 went into producing a well-respectedbrand of motorcycle called the Excelsior. In 1917, Schwinn purchased HendersonMotorcycle Company from its owners.
Schwinn sold an impressive 1.5 million bicycles in 1974, but would pay the price for failing to keep up with new developments in bicycle technology and buying trends. In 2001, Schwinn waspurchased out of bankruptcy by a more bicycle-savvy company called Pacific Cycles. Under Durel Sports, the iconic Schwinn brand wastransformed into a bicycle company that sells low-cost models in big-boxstores such as Walmart, Target, and Kohl’s.
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 schwinn electric bike 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.
In 1938, Frank W. Schwinn officially introduced the Paramount series. Developed from experiences gained in racing, Schwinn established Paramount as their answer to high-end, professional competition bicycles. The Paramount used high-strength chrome-molybdenum steel alloy tubing and expensive brass lug-brazed construction.
(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.
With the slide in adult sales, Spalding and Pope joinedhands with some others from the bicycle business to form the American BicycleCompany, a consolidated trust of manufacturers. In the spirit of industrial capitalismat the turn of the century, the goal was to monopolize the market and to put smallindependent bicycle companies out of business. In 1899, the bicycle trust claimed to control75 percent of bicycle sales. Over time, the major players in the trust began tobicker and fight with one another. This combined with declining bicycle salescaused the trust to burn through $80 million in startup capital. The well-financedtrust was a spectacular failure and by 1903, it went into bankruptcy.
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 schwinn mountain bike market these other bicyclesbrands.