Schwinn

The Schwinn Bicycle Company was founded by Ignaz Schwinn in Chicago in 1895, and grew to become the dominant manufacturer of American bicycles through most of the 20th century. more...

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The story of its rise illustrates many principles of sound business operations, and its fall, which occurred in the face of the burgeoning of cycling in the United States in the 1970s and 1980s, demonstrates the opposite.

The founder

Ignaz Schwinn was born in Germany in 1860, and he gravitated early to working on the two-wheeled ancestors of the modern bicycle which appeared late 19th century Europe. Frustrated with the unwillingness of local manufacturers for whom he worked to accept his design suggestions, Schwinn emigrated to the United States in 1891, where he found similar difficulties with American bicycle makers. In 1895, with the financial backing of fellow German American Adolph Arnold (a successful meat packer), he started the Arnold, Schwinn Bicycle Company. These were the peak years of a bicycle craze throughout the western world, and Chicago was the center of the industry in America, with 30 factories turning out thousands of bikes every day. Bicycle output in the United States grew to over a million per year at the turn of the century, and Arnold, Schwinn's were recognized as among the finest. Ignaz was not only an ingenious designer and an exacting supervisor; he was an astute businessman as well, so Arnold was able to be the ultimate "passive partner."

This first bicycle boom was short-lived, as automobiles soon replaced bikes as the preferred means of transportation on American streets. By 1905, output nationwide was one-fourth of what it had been but five years earlier, and only 12 bicycle makers remained in Chicago. Competition for parts and for the cooperation of the department stores which sold the bulk of the bicycles became intense. Schwinn saw opportunity where others saw only gloom. He bought out failing firms cheaply, and built a new factory on Chicago's west side. Interested also in motorcycles, he purchased Excelsior Motorcycle Company in 1910, and added the Henderson Company four years later, to form Excelsior-Henderson, one of the country's foremost motorcycle builders. Both businesses thrived while their independent competitors failed.

Surviving the Great Depression

At the close of the 1920s, the stock market crash and resulting economic downturn decimated the American motorcycle industry, taking Excelsior-Henderson with it. Deprived of this income, Schwinn, Arnold Co. (as it remained in name until 1936) was on the verge of bankruptcy. Ignaz' son Frank W. "F.W." Schwinn, now running the company, did his father proud and selected a bold course. Instead of trying to cut corners, he insisted on turning out a product that would distance Schwinn from its competitors. After travelling to Europe to get ideas, the hard-driving F.W. returned to Chicago and in 1933 introduced the Schwinn Aerocycle, the biggest change in bicycles since James Starley introduced the revolutionary "diamond frame" some fifty years earlier. F.W. had persuaded American Rubber Co. to throw out the mold and make two-inch wide balloon tires to yield a more comfortable ride. He added streamlined fenders, an ersatz fuel tank on the frame's top, a chrome-plated headlight, and a push-button bell, and the customers (mostly children) who could afford a $35 bicycle loved it. Such "cruiser bicycles" quickly became the industry standard, as other manufacturers imitated Schwinn's innovations.

Read more at Wikipedia.org