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The Schwinn Balloon Tire Era

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Arnold, Schwinn & Company began experimenting with the horseless carriage (automobile) as early as 1896. They continued building prototypes through 1905, but nothing was ever put into production. Ignaz put his engineers to work designing motorcycles. Rumor has it that revolutionary designs were almost entirely complete when Excelsior Motor Manufacturing & Supply Company of Chicago declared bankruptcy. In 1911 Schwinn paid a half million dollars for the struggling Excelsior and started building motorcycles. The Excelsior did well and in 1914 Schwinn built the largest motorcycle factory in the world right in the middle of Chicago. In 1917 Schwinn purchased the ailing Henderson Motorcycle Company of Detroit and moved it to Chicago. Schwinn was suddenly ranked among Harley-Davidson and Indian in motorcycle manufacturing. They were the third largest motorcycle manufacturer in the country. Bicycle sales became an afterthought for Ignaz Schwinn.

The 1920s was not exactly the decade of the motorcycle, but Schwinn did well enough. Unfortunately he also did plenty of speculating on the stock market. Schwinn and company were hit hard by the crash of 1929 and by 1930 Schwinn had combined their R&D departments for bicycles and motorcycles. It didn't help. The Great Depression looked very bleak as the American economy came to a grinding halt. With shrinking margins and no prospective buyers in 1931, Excelsior-Henderson simply ceased production. Ignaz, 71, retired. Or rather, Ignaz Schwinn, German immigrant and bicycle mogul slowed down about as much as he was able to tolerate. His son Frank W. began running the daily operations as Vice President, but Mr. Schwinn continued to have final say on major investments. Ignaz was the public image of Schwinn and he retained the title of President for 17 more years.

Frank W. Schwinn, 36, turned his attention back to bicycles. Manufacturers had become little more than middlemen, assembling components as a bike made its way from parts makers to the big department stores. Most bikes carried the name of the retailer rather than the manufacturer. At one point, Schwinn was putting more than 100 different head badges on their bikes. Bicycles had become toys and the department stores selling these toys merely asked for lower costs. Moreover, children did not demand performance in the way that their parents had. Cost cutting became the rule, rather than innovation. Ignaz didn't make toys and Frank W. didn't want to. Besides, Schwinn had idle motorcycle engineers to put to work. They came up with a wider tire (actually, they borrowed it from Germany where the "balloon tire" was taking on cobblestone roads quite successfully).

As the bicycle industry crumbled under the weight of the Depression, Schwinn forged on ahead. Frank W. successfully played suppliers off of one another in order to get someone (Firestone) to make rims that would fit a wider tire. And he had to order enough tires (10,000) to make it worth Fisk Rubber's time to make a custom 2 1/8 inch wide balloon tire. Frank W. was determined. Schwinn released the first balloon tire bikes in 1933, a tire that could roll over broken glass without a thought. In 1934, the Schwinn Aero Cycle-designed after an airplane fuselage-had a tougher frame and cost double what the competition was charging. Furthermore, it was designed as a thing of beauty. Its styling (a word not used when discussing bicycles up to then) made bicycle esthetics as much of a selling point as performance. The department stores, where most bicycle sales took place, wanted nothing to do with the high-end ride. Schwinn got the Chicago Cycle Supply Company to distribute the new bicycle and told them not to sell to the department stores.

Frank W. was looking ahead. He had grand ideas for bicycles and he planned to lead the way. He gave the underdogs something exclusive. Schwinn gave the independent dealers-used to getting the scraps from the department stores-something the mass merchant sellers didn't have access to. And they returned the favor in spades. In 1932, the industry put out 194,000 bicycles into the U.S. In 1934, Schwinn sold 86,000 units by itself. In 1935 Schwinn put out 107,000 units. Schwinn broke 200,000 in 1936. Schwinn began fostering relationships with independent dealers, something that would bring impressive sales, but it would also help carry Schwinn through the lean times. And by the 1940s, production had reached almost 350,000 units annually. Schwinn had breathed new life into an old product.

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