A Short History of Vintage Schwinn Bicycles - Doug Barnes

Friday, April 30, 2021

A Short History of Vintage Schwinn Bicycles

1980s Bicycle with Rider
Schwinn Lightweight Bicycles, 1983
(Photo: Schwinn Bicycle Company 1983)

My interest in Schwinn bicycles started in childhood. As a child, I never owned a Schwinn bike but I learned about them from others in my neighborhood. These bicycles had a reputation of being very rugged. Families not only passed them on from one son or daughter to another but sometimes they survived and were used by subsequent generations. I also worked in a Schwinn bicycle shop in the 1970s and I became very familiar with the Schwinn brand of bicycles. I recently rebuilt an old 1983 Schwinn Le Tour and the article had been quite popular.   

Also, this is a long read despite the title.  I use the term short history because so much "long history" has been written about Schwinn.  Schwinn Bicycles lasted as a family company from the 1890s until 1992. It was then taken over first by venture capitalists and today is owned by a bicycle company that manages such brands as Cannondale, Iron Horse, Mongoose. Richard Schwinn wanted to stay in the bicycle business but was prohibited from using the family name. With a partner, he purchased the custom manufacturing Paramount factory in Waterford, Wisconsin, His company still makes high-end bicycles today under the Waterford name.  

This is the full history of Schwinn as a family company from 1895 to 1992. I also have separate posts for different time periods that are the same as those in this article.  The reason for them is that many people don't want to read the whole history or search through an article for the time period of interest.

Company Founded during the 1890s Safety Bicycle Boom

In 1861, Ignaz Schwinn had a decision to make. He was managing a bicycle factory in Germany that he had helped build with Henrick Kleyer. He had landed the job with Kleyer because of some of his tinkerings with new safety bicycle designs. Things did not go smoothly in his new job and he had a dispute with Kleyer supposedly over a coaster brake design. He realized that in his current job he would never have control over the creative process for building a bicycle. This meant he probably could never advance beyond the position of factory manager. He made the bold decision to immigrate to the United States to pursue his creative passion for building innovative, quality bicycles. He packed up all his worldly possessions and along with his wife, sailed for the USA.

Once he arrived in Chicago he worked for a series of bicycle companies. He still felt that he was being held back. In 1894 he had a chance meeting with a fellow German immigrant named Adolph Frederick William Arnold. Arnold had an inkling that bicycles would have a bright future.  Having first made his money in the meatpacking business and later as a successful investor and banker, Arnold could see the promise of collaborating with an innovative bicycle factory manager like Ignaz Schwinn.  The consequence was the Arnold Schwinn and Company was formed in 1895. With a strong investor and an experienced manager, Arnold Schwinn & Company was off and running. 

vintage 1890s bicycle
Possible Schwinn First Bicycle, 1895
(Photo: Famous Schwinn-Built Bicycle Brochure, 1895)

The publication in 1895 coincides with the same year Schwinn was founded by Adolph Arnold and Ignaz Schwinn. This publication with the name Famous Schwinn Built-Bicycles very likely was marketing the original bicycles sold by the new bicycle company founded by the two founders. The brochure contains four interesting safety bicycles, including two for racing and two for everyday use.  The racing bicycle is stated to be just 19 pounds. Because of the development of the safety bicycle, women had become avid bicyclists in the 1890s. The Schwinn women's everyday model has a rear fender and webbing seemingly designed to prevent skirts from getting caught in the wheel or the chain.  

The 1890s was the period of time when bicycles began to look like, well, bicycles. This catalog highlights Schwinn's version of safety bicycles that were all the rage in the late 1900s. Safety bicycles were quite popular with women. In many circles, they were even credited for securing women's right to vote. Sure enough, Schwinn has a model called the World Ladies' Standard Model No. 34. The catalog also contains cycles they call doubles, triples, and quadruples.  Yes. Schwinn made a four-seat bicycle in 1899. 

Four seat bicycle 1890s
Schwinn 1899 Four Seat Bicycle
Image: Schwinn 1889 Bicycle Catalog

During the 1890s, the bicycle boom was in full swing. As opposed to the awkward big wheelers, the new safety bikes with chains, adequate brakes, and easy steering were simple to ride. No requiring special skills to operate, the "mechanical horse" was seen as the way of the future. Many of the nation's roads were actually improved during this decade because of the desire to have more friendly places to ride a bicycle.  Manufacturers of bicycles, including the Wright Brothers, flourished in an age when the bicycle was considered a liberating invention that would change the world.  At the turn of the century and the advent of more reliable motorcars, the bloom started to come off the bicycle rose. The wild and wooly days of fast-paced innovations and booming sales were about to come to an end. Schwinn would have to adjust to a changing world or join the ranks of struggling bicycle manufacturers.

A Turn towards Motorcycles from 1900 to 1930

The bicycle industry entered the doldrums at the turn of the 20th Century. Adult ridership of bicycles plummeted as people’s attention turned to motorized transportation. The Wright Brothers started ignoring their bike shop in favor of flying machines. Henry Ford rode a bicycle to a factory where he manufactured his first motorcar that looked like two bicycles joined together. He and others like him working on the first cars would sound the death knell for the 1890s adult bicycle boom.

At the time, A. G. Spalding and Alexander Pope, both major bicycling manufacturers, realized that adults were quickly moving away from riding bicycles. With the slide in adult sales, Spalding and Pope joined hands with some others from the bicycle business to form the American Bicycle Company, a consolidated trust of manufacturers. In the spirit of industrial capitalism at the turn of the century, the goal was to monopolize the market and to put small independent bicycle companies out of business.  The venture almost worked. In 1899, the bicycle trust claimed to control 75 percent of bicycle sales. Over time, the major players in the trust began to bicker and fight with one another. This combined with declining bicycle sales caused the trust to burn through $80 million in startup capital. The well-financed trust was a spectacular failure and by 1903, it went into bankruptcy.

Ignaz Schwinn wisely stayed away from the ill-fated trust because he wasn’t one to surrender his independence. In the context of declining sales, he knew that to stay in business, his company would have to change its focus. He took advantage of the bicycle slump to purchase troubled manufactures. His partner Adolph Arnold could see that bicycles were no longer a growth industry. In 1908, he agreed to sell all his shares in the company to Ignaz Schwinn. On his part, Schwinn never gave up on the bicycle side of his company but he recognized that to survive his company would have to diversify.  

Ignaz Schwinn knew his company had a problem.  In the first decade of the 1900s, the sales of bicycles to adults had eviscerated. The remaining bicycle sales that remained during the slump were to children. Making matters worse, Schwinn had to sell its bikes through department stores such as Sears and Montgomery Ward. These retailers competed based on price and didn’t care much about quality because there was no appetite for parents to purchase long-lasting bicycles. Bikes did not have to last very long because children quickly outgrew them. Also, young kids are rough on bicycles and they were ready for the scrap heap once they were ready to move on to a larger size.  

Ignaz Schwinn saw the writing on the wall.  He would have to diversify to keep his company alive. He made a bet on a new type of cycle—the motorcycle. Most of Schwinn’s creative energy from 1910 through 1930 went into producing a well-respected brand of motorcycle called the Excelsior. In 1917, Schwinn purchased Henderson Motorcycle Company from its owners.  Their motorcycles were popular and in the late 1920s, Schwinn became the third largest motorcycle company in the country.

Vintage bicycle on grey background
Schwinn Excelsior Bicycle 1917
(Image: 1917 Schwinn Catalog)

A nice side benefit of purchasing Henderson was they also produced a line of bicycles that could be integrated into the Schwinn portfolio. In a sense, entering into the motorcycle business saved Schwinn as a bicycle company by getting through a very rough patch of declining sales. The motorcycle division of Schwinn took up all the creative energies of the company, and the bicycle division limped along barely surviving its plight.  But by purchasing new bicycle companies during industry consolidation, intentional or not, Schwinn was positioning itself for the next phase of its bicycle business.

The good times of the roaring twenties led to the Great Recession. The bubble burst and all companies, including the motorcycle industry, came under great financial strain. Ignaz Schwinn was heavily invested in the stock market and the plunge in the value of stocks left him with few financial resources.  Thus, in 1931, he called together a group of his closest associates. He realized the time of Schwinn competing in the motorcycle business had come to an end.  He could not find a buyer for the motorcycle business, so at the meeting of his senior staff, he said, “Gentlemen, today we stop.” Schwinn abandoned the motorcycle industry and in an unlikely gamble turned its focus to bicycles. 

At the age of over 70 years old, Ignaz Schwinn decided it was time to wind down his active management of the company. He turned over business operations to his son Frank. With the motorcycles in the rearview mirror, Frank Schwinn took on the difficult task of reinventing what remained of the bicycle business. The company would eventually be renamed the Schwinn Bicycle Company. With his background as an innovative motorcycle engineer, he set his eyes on developing futuristic new bicycle products geared towards children. The stage was set for an era of Schwinn creativity and innovation that would catapult the company into a dominant position in the bicycle industry.

Gamble on Promoting Style and Quality in the 1930s

Frank Schwinn, who was the son of the founder, returned from a research trip to Germany in the early 1930s.  On the trip, he saw sturdy balloon-tired bicycles surviving Germany's rough cobblestone roads. In the US, most bicycles at the time were made from poorly welded low-quality steel and had thin tires that hadn't changed since the early 1900s. They were produced for quick sales by mass retailers who could care less about durability. The trip set off what some may call a bicycle revolution in the US, spurring Schwinn to develop a wide-tired bicycle that looked like a mini-motorcycle.  

Schwinn Introduces New Balloon Tire Bicycles, 1933
(Image: Schwinn Catalog 1933)
After the early 1930s tour of Germany, Frank Schwinn developed a new line of high-quality bicycles for kids and marketed them through retail bicycle shops rather than mass retailers. The new bikes were called autocycles or motorbikes. These new bicycles were a radical departure from others produced during the same period. Just to be clear, these bikes are not motorized. They were distinguished by motorcycle-inspired features such as the front "knee action spring fork" and coaster brakes. Schwinn was so confident about the durability of these bicycles, the company offered an--unheard of for the times--lifetime guarantee. This line of durable, high-quality bicycles became very popular and reinforced the reputation of Schwinn as being a force in the business. Sales increased 20-fold during the 1930s.  

1940s Bicycle Displayed in Museum
Schwinn Autocycle, Circa 1940.
(Photo: Doug Barnes at Bicycle Heaven, Pittsburgh)
As a testimonial to their durability, in the 1970s these long-forgotten 1930s bicycles were rediscovered by the inventors of the mountain bike in Marin County, California. Looking for a sturdy bike to race down a mountainside trail, they modified these old classics to deal with mountain terrain. As a precursor to the mountain bike, the 1930s Schwinns fit the bill. The autocycles and motorbicycles had sturdy frames, front suspension, and internal coaster brakes. The inventors rode and raced these bikes down a dirt mountain fire road that now is known as the famous Repack Course on Pine Mountain. The course got its name because of the necessity to repack the overheated coaster brake grease after each race. 

Toward the end of the 1930s, Frank W. Schwinn had shaken up the bicycle industry and firmly established his company as a dominant manufacturer.  The trifecta of producing high-quality bikes, designing them to look like motorcycles or airplanes, and selling them through independent dealers rather than department stores had catapulted Schwinn from subservient to large retailers to an independent leader in the bicycle industry. Many of the innovations in the children's line of bicycles originated with the experience of selling motorcycles in the 1920s. With the Schwinn motorcycle business now becoming a distant memory, many of the same Excelsior and Henderson engineers were recruited to design bicycles with an attitude.

Frank W. Schwinn was not satisfied that he had changed the children’s bicycle market.  He wanted to make an even larger mark on the bike industry.  After another trip to Europe in 1935, he was delighted to see adults riding bicycles. He was especially enamored with the sturdy internal 3-speed roadsters he had seen gliding over the streets of England. He decided that Schwinn should enter the adult bicycle market with a unique twist.

Frank Schwinn and his engineers got to work after his trip to Europe. The team began to develop a new line of adult lightweight Schwinn bicycles. Determined to once again reshape the bicycle industry as he had in the early 1930s, Frank W Schwinn hired one of the USA's best-known bicycle race mechanics name Emil Wastyn. With this collaboration in place, he learned that the manufacturing process had to be radically realigned to produce bicycles for adults. Under the supervision of Frank and his new lightweight bicycle engineers, Schwinn began to produce light chrome-moly lugged frames along with finely machine bicycle components that such as sprockets, hubs, cranks, and headsets.

Schwinn Paramount Racer, 1939
(Image: 1939 Schwinn Lightweight Bicycle Catalog)

As chronicled in the 1939 Schwinn catalog, Schwinn made the bold claim that, 

With the production of these super-fine lightweight touring and racing bicycles, the United States of America takes its rightful place among the leaders of the fine bicycle manufacturing nations of the world.

 In 1938, Schwinn christened the top-of-the-line lightweight bicycle the Paramount. The Paramount was destined to be an iconic product but the line was never very profitable. Frank Schwinn understood that the Paramount was a market leader that would set a high standard for all Schwinn adult bikes. To market these bicycles, the company sponsored a successful Schwinn Race team to participate in the popular 6-day races of the day. They also financed an attempt at breaking the world speed record and succeeded.  On a Schwinn Paramount in 1941, Alfred Letourneur rode close behind a specially designed motor vehicle and he set the world speed record at an incredible 108 miles per hour.

Schwinn Paramount World Speed Record, 1941
(Schwinn Catalog, 1949) 

The Paramount was never the most profitable product for the company but it firmly engraved the Schwinn name into the annals of bicycle history. One goal of the Paramount line was to market the Schwinn brand as producing bicycles of the highest quality. This strategy would succeed and the Schwinn Paramount would become part of Schwinn's enduring legacy for quality and innovation until the company’s bankruptcy in 1993. 

The 1930s was a period in which Frank W. Schwinn established himself as a creative force in both his company and the bicycle industry.  The decade started with an emphasis on motorcycles and ended with Schwinn firmly established as the highest quality bicycle maker for both adults and children. The innovations of the 1930s, such as the balloon-tired children's bikes, front suspension, front drum-style brakes, and the Paramount Racer set the direction for  Schwinn to next several decades. 

WWII Pause and Pivot to Marketing in the 1940s

The war years hit Schwinn hard. The company was not under financial duress because new government contracts to support the war replaced bicycle sales. The problem was that at a time when Schwinn was gaining momentum producing new models and its own parts, the company was required to hit the pause button. Most manufactures in the USA were required to shift their focus from consumer goods to assist the war effort and Schwinn was no exception. To erase any doubt about its patriotism, Schwinn as a company founded by a German-born immigrant gladly embraced this role. The company became an early recruit by the US government for the war effort. In 1942 Schwinn pivoted completely from bicycles to war materials. 

Schwinn Manufactures Own Crankset, 1941
(Image: Schwinn 1941 Catalog)
Schwinn did retain some marginal government contracts to produce plain bicycles without Schwinn’s high-quality chrome for use by the military.  Schwinn also produced some prototype bicycle products for the war effort but none ever gained favor among the military brass. A folding bicycle was developed that could be dropped behind enemy lines to provide mobility for paratroopers.  The 30-pound folding bicycles were impractical to parachute into a war zone and they never were deployed. So the Schwinn factory that previously built bicycles was kept busy producing artillery shells, frames for radar, tripods for machine guns, and parts for airplane cockpits. 

In the era of Rosie the Riveter, the composition of Schwinn’s workforce also changed. Male and some female Schwinn employees were reporting for overseas duty in large numbers. Schwinn adopted a policy to encourage the family members of those leaving for military service to fill their vacant jobs.  Many mothers, wives, and sisters began working on the Schwinn’s factory floor as their loved ones headed for the military conflicts in Europe and Japan. During the war years, women became the main workforce for Schwinn.

The end of the war brought with it better times both for Schwinn and the country. The post-war years were an era in which new families were being started. Soldiers returning from the front lines wanted nothing more than to pick up the pieces of the time they had lost while they were in the military. The resulting baby boom was followed by a surge of new spending on houses, radios, refrigerators, washers, and consumer items.

During this fresh start, Schwinn turned its energy towards marketing during this period of growth of consumerism. At Schwinn, the engineering culture established in the 1930s had laid the groundwork for producing a variety of new high-quality bicycles. Now in the latter part of the 1940s, the company with its stable of high-quality products was poised for the coming increase in demand generated by the return of war veterans. The question was how to sell them.  

The seeds for how to market Schwinn products were spread during the 1930s. Frank W. Schwinn was eager to reduce the company’s reliance on large retailers and had begun investing resources in developing direct relationships with small bicycle dealers across the nation. The consequence of this shift was that Schwinn had a pipeline of information about consumer preferences from those on the front line of bicycle sales. By the end of the 1940s, Schwinn had reduced its relations with large retailers and focused on its relationships with bike shops.  In 1939, Schwinn even produced a Hollywood bicycle model, one of the first to be specifically designed for and marketed to women.

Schwinn Woman's Bicycle 1949
Schwinn Hollywood Model Kicks Off Film Star Marketing Campaign in 1939
(Image: Schwinn Illustrated Catalog, 1949)

Selling bicycles through smaller shops meant that that Schwinn had to develop its own marketing strategy. Schwinn boldly stepped out of its engineering comfort zone and recruited many of Hollywood's top stars to promote their innovative bicycle lines. The luminaries featured in the 1946 poster catalog included Dorothy Lamour, Roy Rogers, Ronald Reagan, Jane Wyman, Janis Paige, Barbara Stanwyck, Joan Crawford, and Bing Crosby. 

1940s movie star with bicycle
Dorothy Lamour Promotes Schwinn, 1941
(Image: Schwinn Catalog 1941)

With a line of quality bicycles and a marketing strategy fine-tuned to consumer demand in place, during the late 1940s Schwinn was off and running. With the Hollywood stars endorsing Schwinn products combined with its reputation for quality, their bicycles began flying out of stores.  Schwinn increased sales to 400,000 bikes by the late 1940s and by 1950 had a 25% market share of bicycles sold in the USA.

With the manufacturing capacities in Europe and Asia decimated, the company became one of the dominant bicycle manufacturers in the USA. Within two decades that included a pause for World War II, Schwinn did not miss a beat. Frank W. Schwinn had changed a failed motorcycle business and a floundering bicycle company into a powerhouse that was on its way to becoming an American cultural icon.

Becoming a Cultural Icon in the 1950s

Frank W. Schwinn was making all the right movies. His vision for the company was either prescient or just plain lucky. Starting in the 1930s, he turned towards building stylish bicycles with flashy chrome and marketing them to kids.  He also introduced a line of state-of-the-art lightweight bicycles for adults that were way ahead of their time. In an era of inexpensive cookie-cutter bicycles sold by large retailers, he gambled that consumers would pay for style and quality. He pivoted Schwinn’s reliance for sales through large retailers towards independent bicycle companies that were more in tune with consumer bicycle needs. Finally, he tweaked Schwinn’s “fair market” policies so that retailers could not compete against one another based on price.

By the beginning of the 1950s, Schwinn was poised for takeoff. The company was not alone. With the post-war baby boom in full swing,  the whole bicycle industry was ready for growth.  In 1946 when soldiers returned from overseas, three and three-quarter million babies were born, one of the highest levels in decades. This number would increase to over four and one-half million by 1955.  All these children were primed and ready to ride bicycles produced by Schwinn and other manufacturers.

For the children of the 1950s, bicycles were more than just a toy. For them, the bicycle was a critical means of transportation and gave them the first taste of freedom from their parents. Children could independently ride around their neighborhoods, to a friend’s house, to pick up baseball games, or to just hang out. With the increasing suburban sprawl creating longer distances but safe low traffic volume streets, bicycles became something of a childhood necessity.

Schwinn in the early 1950s had a 25 percent share of bicycle sales, a level higher than any other brand. During the ensuing years, competitors would begin catching up with Schwinn. But with overall bicycle sales increasing, this was not a problem. Schwinn still increased its sales steadily from around five hundred thousand bicycles in 1950 to over one million by the late 1960s.

Schwinn Advertises Sales Dominance of the 1950s
(Image: 1957 Schwinn Catalog)

Schwinn also was in the process of refining its bicycle marketing strategies. The company hired an innovative marketing specialist named Ray Burch to liven up and better target their advertising. To better understand consumer demand, Schwinn also made it a point to listen to suggestions from its high-volume dealers.

Single-brand, authorized car dealerships were all the rage in the 1950s. Schwinn decided a similar model would work for bicycles. Schwinn began moving towards the idea of “Total Concept Stores” which eventually became “Authorized Schwinn Dealerships.” By happenstance, this had been a position advocated--but not fully adopted--by Frank W. Schwinn in the 1930s. It was not until the 1950s that his desire to break from large retailers would come to fruition.

The idea of moving towards dedicated bicycle dealers was reinforced by a visit of Ray Burch and his marketing team to a bike shop in California owned by George Garner that was selling Schwinn’s like hotcakes. A World War II veteran living in California, he had purchased a shop that sold a wide variety of products including bicycles.  He got tired of selling model airplanes and other nickel and dime items. 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 Schwinn marketing team liked what they saw and took the idea of dedicated Schwinn dealers back to Chicago to sell to the boss. 

The marketing team also did their research to back up their impressions. After painstakingly going through sales records, they found that 27 percent of Schwinn retailers accounted for 94 percent of sales (Crown and Coleman, 1996). To make matters worse, Schwinn marketing materials such as the catalogs at the end of this article were sent to small shops that sold less than one Schwinn per year.  

Freezing out other retailers was not an easy decision. They represented a significant share of Schwinn’s sales. For instance, B. F. Goodrich sold many different products including Schwinn bicycles. In one notable conversation with his marketing team, Frank W. Schwinn said, “I guess you’re going to lose me that (B. F. Goodrich) account.” At the time B. F. Goodrich had 1700 different locations selling Schwinn bicycles. He also was friends with Alfred Sloan of General Motors who had developed a single-brand dealership model for selling cars.  He accepted the advice of his younger managers and the “Authorized Schwinn Dealer” was born.

Schwinn also was not idle in developing new bicycle models. They launched the extremely popular Black Phantom in 1949. This was not much different than the earlier autocycle, but they added some fancy styling features that made it popular among consumers. The Black Phantom was advertised as having all the popular options, such as a spring fork, chrome fenders, horn button on tank, built-in fender light, and white wall tires. The model became quite popular during the 1950s and today they are a collector’s item. 

The Black Phantom Was Introduced in 1949 and Was Instantly Popular
(Image: Schwinn Catalog, 1952)

Schwinn was facing increasing competition from Europe starting in the 1950s.  The European bikes were lighter and featured 3-speed internal gears. True or not, they also were perceived as being somewhat fragile.

To meet this European competition, Schwinn developed a line of middleweight bicycles.  The top of the line middleweight was the Corvette, a name mimicking the popular sports car.  The lightweight bicycles were still not selling very well and in 1954 middleweight bikes like the Corvette, Jaguar and Panther filled the void for older children and young adults. 

1955 Schwinn Corvette and Middleweight Bicycles Introduction
(Image: 1955 Schwinn Catalog Front Cover)

These middleweight bikes became an immediate hit and led sales barely one year after their introduction. They were marketed as being just as nimble as their European counterparts but more reliable. Because of their popularity, Schwinn had created a whole line of bikes for those that were not enamored with the stylish, yet heavy, balloon tire bikes.

Schwinn had hit on a winning strategy. To meet the increased market demand of the 1950s, Schwinn increased and more finely tuned its advertising and marketing reach, expanded the availability of a wide range of high-quality bicycle models, and concentrated sales to clean, modern stores. Competition would soon come, but in the 1950s Schwinn became the bicycle of choice for many Americans. The popularity of Schwinn would make it a national icon and carry it through the next several decades. 

Good Times Roll in the 1960s

Schwinn was poised on the runway and ready for takeoff. After years in the making, in the early 1960s the three legs of a strategy to improve sales were finally in place. These included investments in innovative marketing techniques, strengthened manufacturing capacity, and improved efficiency of the company’s dealer network. Frank W. Schwinn had begun implementing all these changes ever since the 1930s. In the 1960s, they had come to fruition and Schwinn was ready to “Let the good times roll” (Crown and Coleman 1996).

Schwinn increased sales by about 15% per year during the 1960s.  Schwinn started the decade selling 500 thousand bicycles in 1960 and reached close to 900 thousand by 1970 (Petty 2007). The company also was not resting on its laurels because it was busy introducing popular new models.  There were some clouds on the horizon, but they would not materialize until much later. 

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. In the short term, this wouldn’t have any impact on the success of the company. He had put in place a competent team of managers that—at least for the time being—could carry on without him.

Frank W. Schwinn had built the company into a bicycle powerhouse in over 30 years. He introduced a glitzy line of children’s bicycles that sold very well from the early 1930s through the 1960s. In the late 1930s, he produced world-class lightweight bicycles—including the Schwinn Paramount—that were ahead of their times.  In the 1940s he recruited Hollywood and television stars to promote Schwinn as the best bicycles in the world. 

Frank W. Schwinn also was constantly innovating on the factory floor by investing in new manufacturing techniques. He also turned Schwinn from a private label maker of bicycles sold in retail stores to an iconic national brand backed by an exclusive dealer network. His contributions were not only beneficial for Schwinn but also for the entire bicycle industry.

Schwinn 1960s Dealership and Sign
(Image: 1966 Schwinn Catalog)

Frank V. Schwinn took over the role of his father.  He was a hands-off manager and let others manage their divisions. He began emphasizing marketing and financing at the expense of modernizing the factory. He felt most comfortable in finance and sales but now had to run the whole company. This approach had some success in the beginning but over time it began to take its toll on Schwinn. 

Schwinn still was a company that could spot trends and quickly produced new bicycle models. In 1962 an executive at Schwinn named Al Fritz noticed a trend in California of boys riding funny-looking bicycles.  They had small wheels, long seats, small frames, and riser handlebars that looked like Texas longhorn steers. With this unusual configuration, he was surprised to see kids doing instant wheelies and riding on the rear wheel for blocks. 

With thoughts on a new model, Al Fritz brought the California components back to Chicago to develop a prototype. Everyone at Schwinn who rode the prototype was amazed that such an awkward-looking bicycle could handle so well. The factory quickly cranked out a new line of bikes to satisfy what they rightly anticipated would be a new bicycle craze. Al Fritz came up with the name Sting Ray. The Sting Ray was an instant hit 42 thousand were sold by 1964.

New Schwinn Sting-Ray Craze in 1965
(Image: 1965 Schwinn Catalog)

By the end of the 1960s, the beginnings of an adult bicycle boom had begun. With the 1950s kids now entering early adulthood and the environmental movement in full swing, road bikes were starting to become very popular. Schwinn had been making lightweight bicycles for decades without much sales success. Given this experience, they should have been well positioned to develop new lightweight models for adults. They had a middleweight line that was aimed primarily at teens.  New models for adults called the Varsity and Continental had been developed in the early 1960s but with their dropped bars were not very popular.

These Varsities and the Continentals were road bicycles made from the traditional heavy steels, the same material used in producing the kids' bicycles. They relied on existing factory technology to weld the frame for the Varsity and Continental. The frames were built with innovative electro-forged welding techniques which gave the bicycle frame very strong with a smooth look at the joints. The problem was that this technique could not be used with the newer, lighter chrome molly tubing.  

The Varsities and Continentals did prove to be popular among teenagers who were fairly rough on their bicycles.  These models were a good fit because they had very strong, almost indestructible frames. Unfortunately, the bicycles were heavy compared to European imports because they could not be used with modern alloys such as chrome-moly.  As a result, the Varsities and Continentals made few inroads into the adult market. Only 1 in 20 Schwinn bicycles were purchased for use by adults.

With favorable exchange rates, European and a trickling of Japanese manufactures began to sell large numbers of bikes in the USA. By 1970, European imports reached about 2 million bicycle sales compared to close to 1 million by Schwinn.  Despite the popular models bought mostly for children and teenagers, the market share of Schwinn bicycles sold in the USA continued to shrink from an all-time high of 25 percent in 1950 to 12% by the end of the 1960s (Petty 2007).

After the death of Frank W. Schwinn, the three legs of the stool that had built Schwinn bicycles began to wobble. With catalogs featuring places like Disneyland and 20th Century Fox, marketing continued to be a Schwinn strong point. However, management had begun to ignore the need to retool its factory. Manufacturing techniques were beginning to become outdated. Sales were still at all-time highs, but with the market share declining, Swhinn’s dominance in the bicycle industry was on the wane.

Schwinn 1966 Catalog Features Disneyland
(Image: 1966 Schwinn Catalog)

Due to the inability to handle the new lightweight steels, Schwinn began to look for alternative ways to sell lighter bicycles.  Instead of modernizing to make the new bicycle lines in-house, in the early 1970s, the decision was made to import lugged lightweight bicycles from Japan. Schwinn was not alone in this practice.  To take advantage of lower wages and favorable exchange rates, many US companies were beginning to manufacture products in Asia.  As an example, Radio Corporation of America changes its name to RCA Corporation to recognize its manufacturing of a large range of products and expansion into other countries.  

The seeds of an end to the Schwinn family dynasty as a bicycle manufacturer had been sowed after Frank W. Schwinn’s death in the early 1960s. The company's struggle to maintain pace with the rest of the bicycle industry would turn into reality in the 1970s. Many were quick to blame the generation of family managers after Frank W. Schwinn but the rise of low-cost manufacturing in Asia was challenging for all American companies.  “Made in America” was giving way to made in Japan, Taiwan, and eventually China. Schwinn was still a force in the early 1970s, but the bloom was coming off the rose of an iconic American company. 

Slow Response to New Trends in the 1970s

Schwinn was riding high. The bicycle sales boom in the early 1970s meant that they could do no wrong. Bicycle sales for children continued to be strong. Schwinn had a slow start in producing the new popular 10-speeds but picked up steam by successfully selling the new Varsity line of bicycles to young adults. In 1971 Schwinn hit a new high in bicycle sales of 1.2 million bicycles and this included 326 thousand 10-speed bicycles (Pridmore, 2001). This amounted to a whopping 25% market share in 1970.

Schwinn Varsity Sport, 1974
(Image: 1974 Schwinn Catalog)
Despite the increasing sales, in the early 1970s Schwinn was well aware of the storm clouds on the horizon. A major challenge was that Schwinn was facing increasingly stiff competition from European manufacturers such as Raleigh. Despite the challenges facing Schwinn, the increasing sales in the early 1970s convinced the company brass that they were making all the right decisions.  This overconfidence made Schwinn somewhat slow in reacting to 1970s emerging trends in the bicycle industry. The troubling signs were recognized by Schwinn. By 1977, the company saw its sales of 10-speed bicycles fall from 25 to 14 percent as foreign companies began to edge their way into the US market.

Schwinn and Raleigh Compete for Adult Bicyclists in the 1970s
(Image: Doug Barnes of 1971 Raleigh and 1983 Schwinn Badges)

The first trouble for the company came with the death of the long-time chief executive Frank W. Schwinn in 1973. This set off a round of management changes that continued for the rest of the decade.  First, the iconic owner's son Frank V. Schwinn took over control of the company.  This was a logical choice because, under the supervision of his father, Frank V. Schwinn had been an effective manager. However, he was not a hard driver like his father.

Frank V. Schwinn had a more relaxed management style and relied heavily on seasoned managers such as Al Fritz and Ray Burch. Frank V. Schwinn reasoned that the existing crop of managers had met decades of earlier challenges and there was no reason that this trend could not continue. Thus, during the rest of the 1970s, the company was in the hands of Frank W. Schwinn, a non-confrontational manager that tried hard to accommodate opinionated managers and shifting family alliances.

Unfortunately, Frank V. Schwinn had a heart attack in 1974 not long after being appointed as head of the company. He would be in charge of the company until 1979 but psychologically never would get over his brush with death.

Schwinn needed a more decisive manager to deal with the company problems faced during the mid-1970s. The company was in the middle of dealing with growing imports. Frank V. Schwinn had to decide whether his company should continue a “Made in America” tradition that had served it well for several decades. He also had to deal with an aging and antiquated Chicago factory.  Despite all of these problems, Schwinn was still a major force in the bicycle industry in the USA throughout the decade.

Schwinn's State of the Art Factory, Circa 1940s
(Image: Made in Chicago Museum Website, Access 2021)

During the mid-1970s, the American bicycle industry was evolving from a business of supplying bicycles only to kids to also providing them for adults. Schwinn should have been ready for this trend because Frank W. Schwinn had tried to steer his company towards adult bicycles as early as 1939.  He had introduced the Schwinn Paramount with expectations of a boom in sales that never materialized. 

In a twist of fate, just as adult bicycle sales were exploding, Schwinn did not have the desired lightweight models available in high volumes for its customer. The factory had invested heavily in electro-forged welding machines that were not suitable for modern types of steel.  Breaking with their “Made in America” tradition, Schwinn temporarily solved this problem by importing bicycles from Japan and Taiwan.  Schwinn was not alone as many other US manufacturers were beginning to outsource manufacturing to East Asia.

Schwinn imported its first Japanese-made bicycle model as early as 1972.  Al Fritz had traveled to Japan to dictate the specifications for the new Japanese-made Schwinns. What emerged were two well-made bicycles worthy of the Schwinn name. One used the historic World label, a moniker first used by Schwinn in the 1890s. The second model was named the Schwinn Le Tour, a road bike destined to become a classic.  

First Advertisement of Schwinn "Approved" Le Tour
(Image: 1974 Schwinn Catalog)
The new Japanese-made bicycles were not advertised in the Schwinn catalog until 1974. Even then, to mask the bikes’ Japanese origins, the World and the Le Tour were advertised as “Designed in the USA.” The range of models produced in Japan would expand during the coming years. By 1977 Schwinn was importing 200 thousand “Designed in the USA” Schwinns. 

Schwinn also was slow to embrace this new type of bicycle emerging from a trend in California. In California, teenagers and pre-teens were fitting new seats and handlebars on their Stingrays to use them for both tricks and racing. The trend caught on and they were called BMX bicycles.

Schwinn was aware of the trend but saw it as a flash in the pan. Frank Schwinn was hesitant to enter the BMX market due to safety concerns. Schwinn also worried that they could not put a lifetime guarantee on bicycles ridden to their limit on BMX courses. Crashes and mangled bicycles were part of the rough and tumble world of BMX races.

Skip Hess, the founder of Mongoose, was quoted as saying “The (Schwinn) people in Chicago only heard the echo” of this new Trend (Crown and Coleman p. 109, slightly reworded).  He established a new company named Motomag that first sold stronger wheels to modify existing Stingray-style bicycles. He even sold some as accessories through Schwinn bicycle shops. In 1976, he established a new company called Mongoose to offer a complete line of BMX bicycles. This was a very good move because sales of BMX bicycles in the US surged from 140 thousand in 1974 to 1.75 million by 1977 (Crown and Coleman 1996).

The 1982 film ET (ExtraTerrestrial) illustrates the intensity of the BMX craze. A gaggle of boys riding BMX bicycles returning ET to his spaceship for his flight home evaded police by racing down streets, over curbs, and down hillsides. They eventually came to a police roadblock and magically rose in the air avoiding ETs capture. An iconic Hollywood image emerged as they sailed through the air with their bikes silhouetted against a setting sun. In earlier years, Schwinn would have been all over this new craze.

Highlighting BMX Craze, Bicycles Carry ET to his Rocketship Ride Home, 1982
(Image: 1982 Film ET)
After seeing industry sales of BMX bicycles rise, Schwinn finally did an about-face in the mid-1970s. The company began producing the Scrambler in 1975. The Schwinn catalog (Schwinn 1975, slightly modified) states, “The new Schwinn Scrambler is a specifically designed model with heavy-duty construction and built-in BMX features.”

Schwinn's First BMX Style Bicycle is the Scrambler, 1975
(Image: 1975 Schwinn Catalog)

In 1980, this was followed by a higher quality BMX bicycle called the Sting. Schwinn was able to squeak out a 7 to 8 percent market share of BMX bicycles by 1980 but this was too little and too late. By then, other upstart manufactures of BMX bikes had captured the market and established their names. Schwinn’s BMX bicycles were left in the dust.

Another change in the bicycle industry confronting Schwinn was a mountain bike craze emerging in Marin County, California. In a second ironic twist, the creators of the mountain bike in trend-setting California were modifying old 1930s Schwinns because of their durability and coaster brakes.  Races down a rugged fire lane were taking place on a course they called Repack. They rode the old Schwinns hard and fast. What emerged from these races was a new style of bike that we know today as the mountain bike.

Schwinn was not convinced that the mountain bike craze would turn into sales opportunities. They couldn’t have been more wrong. This meant that the California entrepreneurs had an opening to develop bikes with suspension for riding on mountain trails.  Joe Breeze, Charlie Kelly, Gary Fisher, and Tom Ritchey were avid Repack riders and realized that the old Schwinns being raced on the mountainside course had their limitations.

Joe Breeze on Repack and a 1949 Schwinn Autocycle with Drum Front Brake
(Image: Charlie Kelly's Website, Accessed 2021)
The limitations of the old Schwinn ballon-tire models spurred an intense period of experimentation and modification.  Eventually, they began designing better bikes and components such as beefed-up brakes and suspension systems tuned to mountain trails. The popularity of the mountain bikes would eventually become a tidal wave in the 1980s and Schwinn was ill-prepared to meet the challenge and did not field a competitive mountain bike model until the High Sierra in 1984.

As if this wasn’t enough, Schwinn would be challenged in nearby Wisconsin by a new company called Trek. Sounding more like a hiking company, the company decided to build “Made in America” lightweight bikes to satisfy the growing demand for bicycle touring. They featured lightweight steel and brazed lugged frame construction.

In the late 1970s, Trek with its narrow range of specialized bicycles was no threat to mammoth Schwinn. Trek kept waiting for Schwinn to put the hammer down on them by building a line of competitive lightweight bicycles, but it never happened (Crown and Coleman 1996). This gave Trek some breathing room to diversify from its original touring bicycles to other models that would be in direct competition with Schwinn.

Trek at one point even made an overture to buy Schwinn in the early 1980s that was summarily rejected.  The creativeness of the new company would continue during the ensuing decade when Schwinn was dealing with internal organization problems.

In 1979, Frank V. Schwinn relinquished his authority to manage the company to Ed Scwhinn, Jr, a 30-year-old great-grandson of founder Ignaz Schwinn. After just less than a decade running the company, Frank V. Schwinn had enough and wanted to retire. He would retain the title of chairman and chief executive until he died in 1988 but Ed Schwinn, Jr. would take over day-to-day management of the company.

A young Ed Schwinn, Jr. as the heir to the Schwinn family business would have to be very quick on his feet to meet all the challenges confronting the company. Schwinn had a bicycle line that was identified as a children’s product.  The Japanese were increasingly making inroads into the American market.  Upstart niche bicycle manufacturers abounded. The Chicago factory was aging and in need of being upgraded or replaced.  On top of all this, the Schwinn family wanted to retain full control of the company and therefore did not want to bring in private investors to pay for needed manufacturing upgrades.

A Young Edward Schwinn, Jr. Takes Over in 1979
(1983 Schwinn Lightweight Bicycles Catalog)

Ed Schwinn, Jr. quickly ordered a management shakeup, The new chief executive surrounded himself with financial specialists.  According to old-timers, “Regression analysis clashed with the glad-handing old boy school culture. (Crown and Coleman 1996, p142) “  Ed Schwinn,
 
Jr. broke with long-time managers including the well respected Ray Burch and Al Fritz. The likes of a 25-year-old brother-in-law was hired to take their place along with a host of financial analysts and marketing specialists.

Schwinn had been managed by one person for over 40 years. Now Schwinn had to deal with the turnover of two chief executives in the space of 8 years. Ready or not, a youth movement was underway at Schwinn. The new team running Schwinn was young and brash.  The question would be whether the new management team assembled by a young Ed Schwinn, Jr. could prepare the company for the coming decade.

Sales had decreased to 900 thousand bicycles by 1980. The new managers would have to deal with increasing competition, an aging factory, and whether to rely on imports as the mainstay of new bicycle production. The 1980s would prove to be a critical test for the Schwinn family business.

The Tumultuous 1980s

Edward Schwinn, Jr. has been roundly criticized for the demise of Schwinn Bicycles as a family company. Although not all of his decisions were stellar, the blame was somewhat unfair.

Family businesses rarely last longer than the three generations, so the surprise is that the Schwinn family-owned bicycle company lasted so long.  Jonathan Ward (1987) in his work on family business succession indicated that 30 percent of businesses last through the second generation. This figure is reduced to 13 percent by the third generation. Only 3 percent of family businesses are still alive and kicking by the fourth generation (Zellweger, Nason, and Nordvist 2012).  Edward Schwinn, Jr. was a fourth-generation president of a family business.

Although these figures are a bit dated, the odds of family business survival are generally accepted to be low for several reasons. The charisma of the early founder fades and business conditions change. The next generations often have other interests. Successors may not be qualified for the job. Finally, nepotism and family feuds are inevitable. 

Schwinn was not the exception to this rule. The Schwinn family bicycle company was very strong for two generations.  The third generation Schwinn manager Frank W. Schwinn did not have the drive of his father.  

Second and Third Schwinn Generations: Father Frank W. Schwinn (Center)
with Sons Frank V. (Right) Edward, Sr. (Left), Late 1940s

(Image: Made in Chicago Museum ND)

The fourth-generation manager Ed Schwinn, Jr. placed too much emphasis on financial models and was not interested enough in modernizing the family factory.  He also had to deal with a bicycle industry in the throes of manufacturing globalization. These conditions would challenge even the most nimble companies.

Eward Schwinn Jr. wanted to carry on the Schwinn family business tradition but he also was handicapped by the Schwinn family trust. Not uncommon in an era of paternalism, in the 1920s the founder Ignaz Schwinn had set up a family trust for the company that contained both shares and of the company and its name. The stock shares of Schwinn were then passed down to the oldest son of each generation. The consequence was that by the 1980s, the stock of the company family trust was divided up among  16 family members. 

Schwinn Catalog Cover, 1980
(Image: Schwinn Catalog, 1980)

Edward Schwinn, Jr. only owned about 3.4 percent of the company himself and family members held the rest. Even though he made all the major business decisions for Schwinn, he also had to deal with family politics.

The sometimes unhappy family shareholders felt entitled even though they were not contributing anything to the company. Although they did not take large amounts of cash flow from the company, a big problem was that the family wanted to keep Schwinn entirely under private control. The Schwinn family did not want to dilute their shares by offering stock to the public or other major investors. Appointing an outsider as a chief operating officer or offering stock to gain much-needed capital for modernization was out of the question.

The first trouble for Schwinn came in the early 1980s with a factory strike in Chicago. The “Made in Chicago” badge on Schwinn bicycles was always a matter of pride for the company. In its heyday, the factory produced almost everything in a Schwinn Bicycle but the steel tubing. Up through the 1950s, continual investments were made to upgrade the capability of Schwinn to build bicycles entirely from scratch in Chicago.

The factory floor in Chicago was an amicable place to work in the 1940s and 1950s. Frank W. Schwinn made it a point to know the factory workers by name. Workers trusted Schwinn and did not require a detailed written contract. An element of paternalism was evident between Schwinn and its employees but it was always correctly assumed that Schwinn would take care of its workers. This tradition was eroded in the 1960s and 1970s with the rise in the volume of Schwinn sales.

Schwinn Bicycle Assembly in Chicago Factory, 1945
(Image: Made in Chicago Museum, ND)
As Schwinn cranked out more bicycles, the new hires to produce them were quite different from the original Chicago workers. The original Polish, German, and Irish workers were being supplanted with blacks, Hispanics, and Koreans (Crown and Coleman 1996). Older workers fondly remembered the old system in which they were personally rewarded for their accomplishments.

The new Schwinn workers rightly worried about their job security. In this environment, outreach by unions to organize the factory was met with a positive response by the workers. After the death of Frank W. Schwinn, the communication gap between the factory and Schwinn management widened. This culminated in a 1980 vote by workers to unionize the Schwinn factory. 

Both Edward Jr. and Frank V. Schwinn felt betrayed by the workers. When approached to negotiate a contract with the new union, Schwinn management stonewalled. The strike was settled in 1981 and the union made modest gains in salaries and benefits. The dye had been cast in the minds of the Schwinn managers. The vote to unionize had reinforced Schwinn’s desire to close the Chicago factory. The factory was closed in 1983 but it would be a pyrrhic victory for Schwinn (Crown and Coleman 1996).

With the winding down of the Chicago factory, in the early 1980s Schwinn increasingly looked to overseas manufacturers for bicycles.  During the factory strike, Schwinn turned to a small bicycle manufacturer in Taiwan called Giant. Anything but a Giant, the company desperately wanted to produce bicycles for the dominant company of the era. Once Giant got its toe in the door, Schwinn was quickly won over. Schwinn managers realized that low-cost, high-quality manufacturing in Asia rather than in the USA was a real possibility.

Giant further endeared itself to Schwinn during the strike by delivering on a promise to pick up the slack in manufacturing capacity. Giant agreed to provide Schwinn with an additional 80 thousand bicycles. By 1984, Giant ratcheted up production to 500 thousand bicycles for Schwinn which accounted for about two-thirds of Schwinn sales (Crown and Coleman 1996).  To a financially-oriented manager like Edward Schwinn, Jr., once the quality of the Gaint-produced bicycles was confirmed, reducing costs while at the same time eliminating the headaches caused by the Chicago factory seemed like a no-brainer.  Schwinn was hooked. 

Despite the successful imports, Schwinn was not ready to give up its “Made in America” branding. While winding down the antiquated Chicago factory, in 1981 the company opened a new bicycle production facility in Greenville, Mississippi. The company had high hopes for the new factory. The region was anti-union so they imagined that their labor problems would be solved. Thoughts of putting an expanding new company called Trek out of business with high-quality “Made in America” bicycles swirled in their heads.

Debates raged inside Schwinn about whether to abandon its “Made in America” identity. Low-Cost Mississippi seemed like the solution. Schwinn eventually decided to produce its high-quality bicycles in the Greenville factory and low-quality bikes in Asia. This was a reasonable strategy and similar to one being followed Trek.

1983 Schwinn Le Tour Made in Greenville, MS Factory but with Chicago Badge
(Image: Doug Barnes)
The dreams did not pan out. The Greenville plant was trouble from the very beginning. Attracted to the site by the low-cost labor, Schwinn had not factored in logistics and the availability of skilled workers. In the early to mid-1980s, sending derailleurs, brakes, and freewheels from Asia to a town in rural Mississippi without an interstate highway was no easy task. The bicycle industry of the 1980s required skilled welders and metalworkers. Such skilled workers were not easily found in Greenville. Additionally, Schwinn management joked that it was easier to get to Taiwan than to Greenville.  One bicycle retailer questioned, “How can you run a plant in Mississippi from Chicago?” (Crown and Coleman 1996, p. 222)

Schwinn made a last gasp effort to correct the problems with the Greenville plant. Edward Schwinn, Jr.’s brother Richard Schwinn volunteered to move to Mississippi to oversee the factory. He made significant progress in improving the quality of bicycles coming from the plant but it was too little and too late. The new factory in Greenville Mississippi never generated a positive cash flow and also was destined to be closed. Trek and Specialized were snapping at Schwinn’s heels. In retrospect, the failure to upgrade the Chicago factory to make high-end bicycles was a profound mistake.

Schwinn was not idle in developing new bicycle models. After being late to the party, Schwinn finally developed a mountain bicycle that could live up to its reputation. They first rolled out a mountain-style bicycle in 1982 called the Sidewinder. Sidewinders were nothing more than modified Schwinn Varsities or Continentals with large tires and regular handlebars.

Schwinn Sidewinder, 1983
(Image: Schwinn Catalog, 1983)
In 1983 Schwinn finally offered a high-end mountain bicycle. The new chrome-moly mountain bikes were called the Sierra. This was followed in 1984 by an even better bike called the High Sierra. Both models were built for Schwinn by Giant in Taiwan. Sales went through the roof and dealers had a hard time keeping them in stock (Crown and Coleman 1996, p. 172). The High Sierra and sales doubled for three years in a row.

Schwinn Sierra and High Sierra, 1984
(Images: Schwinn Lightweight Bicycle Catalog, 1984)
Schwinn had a lot of competition in the business of mountain bicycles. Specialized had a head start on Schwinn by introducing the Stumpjumper in 1982. Trek would follow with their popular multitrack bicycles first introduced in 1990.

In 1983 Schwinn also produced its first catalog dedicated exclusively to BMX bicycling. They introduced the Predator series the same year.  All predators had chrome-moly tubing. This finally established Schwinn as a maker of high-quality BMX but it was too little and too late.  Mongoose and Diamondback had become established competitors in the BMX market.  

First Schwinn BMX Catalog Cover, 1983
(Image: Schwinn BMX Bicycle Catalog, 1983
Schwinn diversified into the bicycle exercise equipment and put veteran Al Fritz in charge. Given the 1980s youth movement at Schwinn, it seemed that the young managers wanted nothing more than to get Al Fritz out of their hair. Fritz surprised them all by developing the very popular Schwinn Air-Dyne.

The Air-Dyne was an innovative machine relying on specially designed fan blades instead of a traditional wheel to provide resistance to pedaling.  At the same time, it created a gentle breeze for the rider. Schwinn sold a high of 67,000 Air-Dynes in 1986 with a high price tag of $595.  The profits from the Air-Dynes helped keep Schwinn afloat during a time of declining bicycle sales.

Schwinn Air Dyne, 1985
Schwinn Lightweight Bicycles Catalog, 1985
Schwinn also had visions of grandeur. They had an opportunity to purchase a 45 percent share of a factory in Hungary for about $1 million.  At the time of the purchase in 1988, this was a venture that Schwinn could not afford. The  Hungarian factory was old and would need investments to bring it up to speed.  Schwinn was tempted into buying the factory because the company wanted to become a global player in the bicycle business.  The idea of purchasing the factory was to make bicycles for Europe and to expand the reach of Schwinn bicycle sales. 

The factory in Hungary was partially successful in producing the Schwinn Woodlands, but many of the imported bikes had to be warehoused due to quality issues.  For a company struggling with cash flow and being supervised closely by its banks, this was not the time for Schwinn to gamble on becoming a global player. Schwinn pulled the plug on the unsuccessful venture in 1991 just one year before bankruptcy.

Schwinn saw its relationship with its Taiwanese manufacturer Giant turn from a partner to a competitor.  Giant helped save Schwinn during the 1981 strike at the same time that it was launching its new bicycle brand label. By the late 1980s, Giant started to aggressively market its own bicycle brand in the USA and increasingly became a competitor to Schwinn.

Schwinn saw the writing on the wall with Giant. The company began to diversify its Asian manufacturing. To accomplish this, in the mid-1980s Schwinn purchased a one-third share of a China Bicycles factory in Hong Kong (Crown and Coleman 1996). The goal was to reduce its reliance on it main Asian manufacturer Giant. With the Hungary and Hong Kong ventures and with the Greenville plant, Schwinn planned to be secure a bicycle supply base that was not overly dependent on one manufacturer.

Schwinn’s “Made in America” reputation undermined its ability to pivot its entire production offshore. The “Schwinn Approved” label did not fool any customers. They understood that Schwinn bikes made in Asia were just like all the other imports. The “Made in America” quality branding no longer distinguished Schwinn from its competitors. In retrospect, the move to manufacture bicycles in Asia was a necessity given the growing globalization of manufacturing but it didn’t fit in well with Schwinn’s branding. Schwinn had started the decade as an entirely “Made in America” company and ended it with 80% of its bikes imported from Asia under the “Schwinn Approved” label.

"Schwinn Approved" Imported from Asia Voyageur, 1980
(Image: Schwinn Catalog, 1980)
Because of an antitrust case, in the mid-1980s Schwinn began establishing a direct supply chain to dealers that cut out its wholesalers. These wholesale suppliers turned to other brands including Giant and others that would compete with Schwinn. The increased competition along with a downward trend of bicycle sales in the late 1980s put Schwinn in a precarious position.

Looking back, Schwinn had suffered from a thousand cuts during the 1980s. Schwinn was juggling a lot of balls to keep the company afloat. This included the closing of a longtime factory in Chicago, starting a new factory in Greenville, Mississippi, buying a 40 percent share of a plant in Hungary, and purchasing a one-third interest in a factory in Hong Kong. Spurred by the era of globalization, by the end of the decade Schwinn outsourced most of its manufacturing to Asia.

Schwinn also was being challenged by new competitors in niche markets such as mountain, BMX, and high-end road bicycles. Japan and Europe also were competing with Schwinn in the US market. This was made worse by Schwinn abandoning its wholesalers who then were freed up to market these other bicycles brands.

Schwinn also didn’t want to part with all of its tried and true children’s market and this meant that bicycle shop inventories proliferated out of control with too many bicycle models. Selling children and adult bicycles was an awkward mix for Schwinn dealers. During the late 1980s, all of these companies were competing for a shrinking piece of the bicycle pie. Bicycles sales declined by 20 percent from about 12.6 million in 1987 to 10.7 million bicycles in 1989 (National Bicycle Dealers Association, 2021).

In the face of all these challenges, Schwinn would have been required to get many things right to stay as a family business. A young Edward Schwinn, Jr. had created a youth movement among Schwinn management bringing in financial specialists that had sometimes limited experience in manufacturing. The new team was not up to the job.

At the end of the 1980s, bikes coming in from overseas piled up in Schwinn’s warehouses. Eventually, Schwinn was not able to pay the Asian manufacturers for these unsold bicycles. The bankers perceived the trouble at the Greenville factory and the misadventure in Hungary as a hit to their confidence that Schwinn could manage its financial woes. This combined with lower Schwinn bike sales set in motion a series of actions that put the company under financial stress starting in the 1990s.

Family Business Bankruptcy in the 1990s

Schwinn as a family-owned bicycle company ceased to exist after it filed for bankruptcy in 1992. The last catalog produced by the Schwinn family company also was in 1992. Bicycles coming after that date have the Schwinn nameplate but have no other relationship to the original family company. 

In an interesting twist of its bankruptcy history, the Schwinn name was owned by a separate family trust and was not the property of the bicycle company. This was an impediment to selling the company because no investor in their right mind would buy a company mired in debt and then have members of the Schwinn family start making bicycles again in a new business under their own name.   

With the dire financial position of the company, the Schwinn family did not expect to get anything from the sale of the company in bankruptcy court. To get the family behind a sale, a venture capitalist offered to buy the Schwinn name from the family trust in a separate transaction from the purchase of the company and its debt. The money for purchasing the Schwinn name would go directly to family members. The amount of $2.5 million was offered and it was grudgingly accepted by the family. So after 100 years of sweat, tears, and bicycle innovations, the family received a paltry sum to keep the Schwinn name alive. 

In 1993, Richard Schwinn, the great-grandson of the company founder Ignaz, along with his partner Marc Muller was able to purchase the Schwinn Paramount design group and production facility in Waterford, Wisconsin. Focusing on broader markets, the new managers of Schwinn had no use for the Waterford plant which specialized in high-end bicycles. They did contract with the new company called Waterford Precision Cycles to build the Paramount for several years.  Once sales turned out to be disappointing the new owners of Schwinn discontinued the arrangement. 

Due to the bankruptcy agreement, Richard Schwinn was not allowed to use his last name or Paramount to brand the new bikes produced in the iconic lightweight bicycle facility. Today, his company still makes top-of-the-line bicycles in the same factory under the name of  Waterford Precision Cycles.  

The venture capital group that purchased Schwinn out of bankruptcy in 1993 was Zinn-Chilmark. The financial company bought both the highly indebted Schwinn company and its historic name.  Venture capitalists often are not good at running companies and the Schwinn case was no exception. In the ensuing years, the Schwinn name was sold by a series of companies until finally it was purchased by the Canadian company Dorel Industries. Besides Schwinn, today Dorel markets many familiar brands of bicycles including Cannondale, GT, and Mongoose.

References

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Petty, Ross, 2007. “Peddling Schwinn Bicycles: Marketing Lessons from the Leading Post-WWII US Bicycle Brand," Biennial Conference on Historical Analysis and Research in Marketing (CHARM), Carleton University, Ottawa, Canada.

Pridmore, Jay and Jim Hurd. 2001. Schwinn Bicycles. St. Paul, Minnesota: MBI Publishing. 

Rauf, Don. 2017. Schwinn: The Best present Ever. Guilford, Connecticut: Lyons Press

Schwinn Bicycles. 2021. "A Look Back: Who Was Ignaz Schwinn." Schwinn Bicycle Post, accessed May 2021.

Shaddox, Tom. 2000. "The Schwinn Varsity (1960-1986)." Sheldon Brown Website. Accessed 2021. 

Storch, Charles. 1993. “Schwinn Saga: Good Bikes, Bad Breaks,” Chicago Tribune, Chicago, Illinois.

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Zellweger,Thomas, Robert Nason , and Mattias Nordqvist. 2012. “From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation” Family Business Review, 5(2) 136–155.

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