By Judith Crown and Glenn Coleman
Schwinn never showed such marketing agility again, and the family-owned company went into a slow decline, going bankrupt in 1992. The fascinating tale is well told by Judith Crown and Glenn Coleman, who covered Schwinn for Crain's Chicago Business.
Lesson No.1: Don't rest on your laurels. After becoming the top bicycle manufacturer in the U.S., Schwinn grew complacent. It failed to jump on the 1970s' dirt-bike trend or the mountain-bike craze of the 1980s, letting small rivals build themselves into powerhouses.
Lesson No.2: Don't underestimate the value of new equipment and human capital. Schwinn put off modernizing its Chicago plant. In 1980, Edward Schwinn closed it and spent millions on a new factory in Greenville, Miss., a town without a skilled workforce. The plant, a costly disaster, was closed in 1991. All production was moved to Asia.
Underlying almost all of these problems was Schwinn family hubris. Their fortunes secure, few Schwinn heirs prepared for careers. And as the company neared collapse, Ed Schwinn refused to merge or sell. Schwinn failed, the authors conclude, because it lacked a mechanism to change leadership.
The venerable Schwinn name now belongs to investor Sam Zell's vulture fund, Zell/Chilmark, and little of the old company remains. With a less nepotistic and complacent management, Schwinn might have had a less calamitous ride.
By SUSAN CHANDLER
Updated June 13, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.