
The Fall of Schwinn (1993) - chrissnell
http://www.chicagobusiness.com/article/19931009/ISSUE01/100018007/the-fall-of-schwinn-pt-1-of-2
======
chrissnell
My father was a Schwinn dealer from 1971 until 1990 or so. He had some great
years with them in the early '70s but Schwinn completely went to hell in by
the early '80s. I still remember my dad on the phone with their finance
department, begging for a bigger line of credit so he could keep bikes on the
showroom floor. They treated him and other loyal dealers like dogs. My father
eventually became a Trek dealer and renamed his store from "Alamo Heights
Schwinn" to "Bike World". Ed Schwinn wrote my father a letter, telling him
that he had "some nerve" to change the name and that he "would never forget
this". A few years later, Schwinn was bankrupt and we became one of Trek's
top-ten dealers in the nation. My dad later heard that the credit manager who
had treated him so poorly was now driving one of those trucks with the
flashing yellow lights that escorts oversized trucks on the interstate
highway.

~~~
chrissnell
So this link was sent to me by my father today and I posted it. He followed up
with some historical documents from his relationship with Schwinn. I'm going
to share them because I think it's a great testament to the hubris of Schwinn
but also to the determination of a young entrepreneur.

My dad's efforts to become a Schwinn dealer:
[https://chrissnell.com/hn/Schwinn_History_of_Alamo_Heights_B...](https://chrissnell.com/hn/Schwinn_History_of_Alamo_Heights_Bicycle.pdf)

Ed Schwinn's letter to dad when he changed the name of the store:
[https://chrissnell.com/hn/Letter_From_Ed_Schwinn_1985.pdf](https://chrissnell.com/hn/Letter_From_Ed_Schwinn_1985.pdf)

~~~
nemo44x
They should have known better to give such a persistent business man as your
father a franchise. His ambition was indicative of someone who would betray
them in their time of weakness. And this is in no way an indictment of your
fathers excellent business skill. A very well informed and aware shop owner
indeed!

~~~
Pamar
I take exception at your use of the word "betray", here.

------
geargrinder
The next interesting chapter of the Schwinn story is about how it was bought
out of bankruptcy by the same investor group that owned the Scott brand. They
moved the headquarters to Boulder, Colorado and became a true quality
manufacturer, at the same level as Trek and GT. They built most of their bikes
overseas but also launched a US-built line called Schwinn Homegrown that
competed well on quality. They also offered more downmarket lines. In the late
90's they were sold to another investor group, one that was more interested in
the high-volume, low quality market and had also purchased the Huffy and
Mongoose brands. So now all that most people know are the crap Schwinn bikes
sold today. But there was a time in the 90's that the Schwinn Homegrown was a
great bike to have (I still have mine). The fitness line has gone through some
additional gyrations. So much of this is about buying a recognizable brand and
squeezing value out without putting anything back into it.

~~~
mikestew
_But there was a time in the 90 's that the Schwinn Homegrown was a great bike
to have (I still have mine)._

I appreciate their efforts, but who the hell was going to buy a Schwinn in the
90s? If you asked most people at the time, they probably would have said,
"they're still in business?" After you convinced them that Schwinn is, indeed,
still in business, you would have had but a tiny chance to convince them that
not all of their bikes were crap. Because crap they were the twenty years
prior. (Yes, there was the Paramount, which wasn't crap, but it was
overpriced.)

~~~
icantdrive55
I grew up with the Schwinn 10 speed. I didn't own one, but they were built
like tanks. I didn't own one because of funds, and honestly--really never
liked them, they were just too heavy.

That said, my friends all had Schwinns. I don't remember any of them failing.
We would "ghost ride" the bikes--basically just rolling them down hills and
watching them crash. We would retrieve the bike, and sometimes adjust the
goose neck, and we were off. Those rims were military steel?

When I was around 10 years old, my friend Peter Stewart and I, did a Centurian
for a local bike shop. We completed 100 miles. It was kind of a big deal for
us back then. My mom's main concern was wearing a helmet. I wore the Bell
skateboard helmet for about a mile--then just tied it to the handlebars. My
mom would have gone biserk, if I didn't come home with that helmet.

What I think about to this day is Peter Stewart's determination to finish that
race. We came in last, but we both finished. It wasen't that much of a feat
for myself, as I was one year older than Peter. I was on my father's Raleigh.
I didn't know it at the time, but the lighter weight bike really helped me.

Back to the race. About 5 miles into the race on a huge hill Peter just
stopped. He got very emotional. I really didn't think we would finish the
race. Back then buddies didn't leave the other behind for any reason. He was
on a Schwinn with all the trimmings. He had the rack, and other stuff on his
Schwinn. Don't remember all the details.

I talked him into getting rid of the rack. We hid it in the bushes. Peter
drank out of his official Scout canteen. He was still emotional. Peter was
smaller than myself, but he was much brighter. (I look back, and Peter was the
only true genius I have known. That's another story, but he was smart.)

When Peter composed himself, we got back to finishing 95 miles.

Peter couldn't have been more than 60 lbs. All I remember is we both couldn't
strattle the bikes comfortably. The bikes were too big for our frames. We
would seesaw when riding. We ran out of water within a few hrs., and then it
was garden hoses. When we told the homeowners our story--they were more than
accommodating. One lady even gave us two Cokes. It was still the best Coke I
have ever had.

Long story short-- we finished. The Owner of the bike store (who sponcered the
race) made sure we crossed the line before he and his buddies went home. We
didn't put him out because they had a barbecue ending, and they were just
finishing their beers when we crossed the finish line at dusk. They even
clapped.

(I lost track of Peter out of middle school. I heard he was living with two
women in the Sierras. I knew he would live life to the fullest. Peter if you
happen to read this I have an inactive contractors licence in CA. Get in touch
with me--if you want? I wouldn't be suprised if you are one of these big wig
Silicon Valley types now, and maybe you remember this event?)

------
dredmorbius
Related: Moen's Law of Bicycles

[https://archive.is/o/jeikh/linuxmafia.com/~rick/lexicon.html...](https://archive.is/o/jeikh/linuxmafia.com/~rick/lexicon.html%23moenslaw-
bicycles)

 _" Good customers make for good products". This is my explanation for why an
ignorant customer base causes merchandise quality to decline, on account of
unhealthy market dynamics, e.g., in retail computer hardware and software. In
the mid-1970s, bicycles suddenly became very popular in the USA. The masses
suddenly entered the market, few knowing anything about bicycles. Many could
distinguish poorly if at all between good equipment and bad; good customer
service and bad. Consequently, poorly made bicycles (which cost less to make)
undercut well made ones (and poor customer service out-earned the good
variety), because superior value ceased to be perceived. Over time, overall
quality of available bicycles declined considerably, almost entirely because
of this dynamic with customers, recovering only after the fad ended, years
later._

 _Quality thrives only when people can tell the difference. When they haven 't
a clue about products and how they work, schlock merchandise prevails. One can
see this process at work in retail computing gear and software: People who
know least about computing always insist most on achieving bottom dollar. In a
way, this is understandable: You want to exercise control over the process,
and, if you're dirt-ignorant about computing, the only place to exercise
control is over price. Gradually, this effect tends to drive good merchandise
out of the market entirely, leaving a generous selection of cheap crud._

(Archive link to pity a creaky old server on a slow link.)

~~~
pm90
The argument that cheap but lesser quality alternatives drown out better
quality but expensive merchandise seems to be much more involved than a lack
of ignorance in the clientele. Why would a flood of cheap bicycles affect the
business of higher-end bikes, when their customers were oh so knowledgeable?

Personally, I think its a very good thing that the market is so sensitive to
the demands of consumers. AFAIK these kinds of fads come and go all the time.
It seems a good thing that people who wanted to just try out bicycling could
do so cheaply; they probably bought a really cheap bike, rode it a few times
and then the fad was over and the bike was forgotten. And so it is for other
merchandise as well.

It seems like the so called quality biking companies were not clear on what
kind of company they wanted to be. Perhaps they tried competing on price and
lost there. Perhaps they should not have reduced their prices but increased
the quality of their bikes and advertised those qualities.

~~~
jdietrich
>Personally, I think its a very good thing that the market is so sensitive to
the demands of consumers. AFAIK these kinds of fads come and go all the time.
It seems a good thing that people who wanted to just try out bicycling could
do so cheaply

It was ultimately self-destructive, because the poor quality of those products
harmed the reputation of the whole industry. A generation of people came to
believe that bicycles were inherently heavy, dangerous and unreliable.

Companies like Oculus and Tesla have wisely chosen the opposite strategy,
producing a premium product that gives the best possible experience. They
understand that you don't get a second chance at a first impression. They know
that it's easier to start with a prestigious product and move downmarket than
vice-versa.

In the bicycle industry, the most successful companies have doggedly stuck to
producing high-quality products and refused to compete solely on price - the
likes of Trek, Specialized and Cannondale. They refuse to tarnish their brand
with cheap crap. They have built strong relationships with good retailers who
can educate customers on the merits of a quality product.

~~~
cma
Oculus attempted it, but quality issues have plagued them. Red haze in the
panels mismatched between eyes causing headaches, variable quality on the
lenses causing some units to have much worse god rays than others, IMU
calibration issues affecting tracking, and more.

And DK2 had a strong chemical latex smell that, in combination with some first
experiences causing nausea, ingrained a long term aversion in users.

Two of the free pack-in games cause motion sickness in many users, where Valve
found a way to cause it almost no one (avoid artificial locomotion).

------
toss1941
"cycling guru Gary Fisher, widely credited with inventing the mountain bike in
the 1970s — a bicycle that Schwinn's engineers literally laughed at."

Classic tale of a mixture of fiscal mismanagement and a company resting on its
laurels.

~~~
InclinedPlane
What I find fascinating is how failing to understand why people are buying
your product can sometimes be more disastrous for the competition. Look at
SUVs, almost nobody bought them to use as Sport and/or Utility vehicles, they
were generally used for hauling stuff and people around town. Precisely the
same things that minivans, station wagons, and extended cab pickups were
always designed for. But minivans and station wagons had by the '90s picked up
a massive uncoolness factor, and pickups had their own unique social
connotations.

Similarly, most people who were buying mountain bikes were not using them on
mountain trails, they were just biking around the city on roads. But a
mountain bike is a bit easier and more comfortable to ride than a road bike
for most folks who don't ride long distances a lot. Also, by the '90s the "10
speed" had lost its coolness factor and mountain bikes were definitely
acquiring a strong coolness factor (just as BMX bikes had during the '80s).

Schwinn's failures remind me a lot of Radio Shack's. At one time a hugely
iconic and market dominant brand, and then a few years later struggling to
stay in business before tipping all the way into the abyss of history. All
because they didn't understand what people wanted and how the market was
changing around them and were disdainful of the competition until it was way
too late.

------
trentnix
Here's part 2 of the article.

[http://www.chicagobusiness.com/article/19931009/ISSUE01/1000...](http://www.chicagobusiness.com/article/19931009/ISSUE01/100018008/the-
fall-of-schwinn-pt-2-of-2)

------
jdietrich
A similar fate befell Raleigh in the UK. They were the stalwart of the British
cycle industry, the fond childhood memory of several generations. Like
Schwinn, it was a combination of poor industrial relations, overseas
competition and management complacency that brought them down.

[https://en.wikipedia.org/wiki/Raleigh_Bicycle_Company](https://en.wikipedia.org/wiki/Raleigh_Bicycle_Company)

------
Animats
They fought unionization, moved their factory to the South to beat the union,
and the new factory was worse than the old one.

------
coverband
Let me guess -- the OP just finished watching the Tom Hanks/Dave Eggers movie
"A Hologram for the King"?[1]

[1]
[http://www.imdb.com/title/tt2980210/](http://www.imdb.com/title/tt2980210/)

------
et-al
On a slight tangent, Richard Schwinn, mentioned in Part 2 of the article, has
a great interview hosted by Georgena Terry of Terry Bicycles. They discuss the
move of bike manufacturing from the States to Asia, largely due to the
aluminum subsidies in China which allowed them to produce a frame for $4 in
1998 (~7 mins in).

iTunes Podcast: [https://itunes.apple.com/us/podcast/terry-
bikecast/id2841440...](https://itunes.apple.com/us/podcast/terry-
bikecast/id284144083?mt=2) (#24 Steel Really is Real)

Original Podcast:
[http://community.terrybicycles.com/media/podcastgen1.3/?p=ep...](http://community.terrybicycles.com/media/podcastgen1.3/?p=episode&name=2010-11-16_schwinn.mp3)

Sadly, I couldn't find a transcript of the podcast, but there seems to be some
excerpts here: [http://community.terrybicycles.com/wordpress/sidesaddle-
blog...](http://community.terrybicycles.com/wordpress/sidesaddle-blog/from-
georgena/a-chat-with-richard-schwinn#.V62ZSSPyu_s)

However, there's a lot of knowledge not mentioned in the blog post and I
recommend listening to it if you're into bicycles and the change of materials
from steel to aluminum to carbon. Richard Schwinn is a bit biased since he
runs Waterford, but he does know a lot about steel.

------
hbosch
I have a fantastic steel Schwinn from the early 90s, with grey splatter paint
and all. A Schwinn Paramount road bike. Actually the whole story behind the
Schwinn Paramount Group is worthy of its own post. The Paramount Group now
makes custom bicycles under their current moniker, Waterford.

[http://waterfordbikes.com/w/culture/paramount/](http://waterfordbikes.com/w/culture/paramount/)

------
bluedino
I'd like to read a story about the people behind BikesDirect.com

~~~
et-al
Have you checked out their About Page?

[http://bikesdirect.com/aboutus.htm](http://bikesdirect.com/aboutus.htm)

Owner is Michael Spratt. He's pretty savvy for buying up old brands like
Motobecane and Mercier and branding them on bikes. The quality of them aren't
great, but they're stll a step up from Wal-Mart, and other department store
bikes. Back around ~2008 during the fixed-gear craze, new riders had Kilo TT
frames because they were $300 fixed-gear bikes and the next level up was
around $700.

I used to read BikeForums.net back in the day and BikesDirect would post on
there occasionally, so he had a community and also answered questions. Here's
a notable post by him on RoadBikeReview:

> Kinesis is the largest frame maker in the orient. Their frames are used by
> just about everyone. They manufacture in a large plant in China and a
> smaller specialty plant in Taiwan. Le Champion frames are from Taiwan. We
> have never seen a defect on a le Champion frame. If your frame is the first,
> it will be replaced for free just like any other customer. I will not sell a
> bike without free lifetime warranty frame defect protection for the
> customer.

> Bicycle Frames are one of the marketing successes of the specialty bike
> business. Manufacturers have marketed the frame as the most expensive and
> technical item on the bike. However, most frames are very inexpensive
> compared to cranks, wheels, shifters, etc. This is not to say the frames are
> not valuable; but the way they are produced brings the cost way down.
> {Frames are the highest markup item sold by any manufacturer; many are sold
> at over 10 times their cost}

[...]

> Bottom line on frames and other components for me is clear. If I can save
> $100 a bike by not running an 800 line and put it in better equipment, I
> will. If I can spec a carbon frame from Taiwan instead of China and pay for
> it by savings on operating expenses, I will. And this attitude has always
> been the same; even before the internet. In the ‘old days’ I used to sell
> full Campy Record bikes with Colnago, Mercian, Viner, etc frames for $995. I
> was about $1000 under other shops; all of the discount was due to high
> volume, excellent buying, and low overhead. {This may also sound like a
> sales pitch; but it is just true. Even if you dislike Wal-Mart as I do; they
> are lower priced on CanadaDry GingerAle than other retailers; Why? high
> volume, excellent buying, low overhead}

[http://forums.roadbikereview.com/motobecane-mercier/why-i-
bo...](http://forums.roadbikereview.com/motobecane-mercier/why-i-bought-
motobecane-72556-2.html)

------
rplnt
Interesting AMA, even for those who don't know much about the bike brands is
from Crank Brothers. It's a big name in MTB scene, and from what I can tell
the company made some really bad products, went to shit, got sold and is now
trying to build itself up again, still as a standalone brand, so they didn't
get bought by a huge "monopoly". At least that's what I gathered from the
discussion there.

[http://www.pinkbike.com/news/ask-us-anything-
crankbrothers-m...](http://www.pinkbike.com/news/ask-us-anything-
crankbrothers-monday-june-27-1000-pst.html)

------
russtrotter
A long but a fascinating read. I'm old enough to remember dreaming of owning a
Schwinn 10-speed as a kid. The dream never materialized as by the time I had
the means it was a whole new world. A plethora of options and bike types ruled
the roost and I had completely forgotten about Schwinn as a brand. Perhaps the
best TL;DR for the article is the line credited to the Specialized founder(s):
"Innovate or die".

