Designed in America: Part One

So meaningful.

The other day I found an old mountain bike in the trash at the curb. It was rusty and looked like it had spent most of its life parked outside. It was a low-end Specialized -- a cheap model aimed at teens or tweens -- but I took it home anyhow. I figured if nothing else I might be able to scavenge a few useable parts off of it. A headset, bottom bracket, hub axles and cones, etc. -- all of which I figured were probably in decent shape beneath the rust and grime, as the bike probably hadn't seen much actual use in its lifetime.

After I'd gotten what I'd wanted off of the frame, I was preparing to dump the rest back in the trash when I noticed a sticker on the seat tube. "Designed in California - Handmade in Taiwan." Oh, how meaningful. I've seen these stickers a lot on bikes from the last decade or so, but it got me thinking about how much the industry has changed since I first got serious about bicycles.

Apart from a few top-of-the-line models, some low-volume specialty bikes, or exclusive custom builds, very few bikes sold in America are actually built here these days. That wasn't always the case, and it really wasn't all that long ago when things were very different. But today, many supposedly American bike companies are little more than importers and marketers, designing decals and color schemes for bikes built in China and Taiwan, and bolting on whichever Shimano group fits the intended price range.

Here's another one. Can't miss the red, white, and blue - but isn't it a little misleading?

Obviously, the shift of manufacturing away from the U.S. is something that has swept through almost all industries, but in the bicycle industry I believe the causes of that shift can be traced to several distinct factors: The American Bike Boom, the fall of Schwinn, the growth of importers (like Specialized), and the rise of Shimano. All these factors are inter-related in a number of ways, so any discussion of one is almost certainly going to overlap with others. It's also a subject that warrants at least a multi-post discussion. You've been warned.

The American Bike Boom

In the first part of the 1970s, sales of bicycles in the U.S. shot skyward beyond anyone's best expectations. Sales in 1970 were about 7 million bicycles. By 1972, bicycle sales had doubled to 14 million, peaking at 15 million in '73, then dropping back to 14 million in '74. The bubble burst the following year, with sales dropping back to 7 million in 1975. Although relatively short-lived, one permanent change that happened to bicycle sales through the boom was that adult bicycles became a significant piece of the pie. Prior to the boom, bikes for adults never accounted for more than 10% of the American market, which was overwhelmingly geared toward children's bikes. That percentage of adult bikes would peak at over 70% at the height of the boom, and remain at around 50% ever after.

Isn't a massive boost in sales a good thing for business? Well . . . yes, and no. On one hand, any company selling bicycles in the U.S. was suddenly making money hand over fist - at least for a couple of years. On the other hand, the short-lived nature of the bubble meant that a lot of companies tried to take advantage or get established during the boom and got caught badly in the bust. That rapid boom-bust cycle proved to be a massive shakeup to the whole industry. Those that couldn't ride it out didn't last. Another question to ask is what happened to all those profits that were flowing in the boom years? Were there significant investments in newer factories and updated equipment that would help move the American industry into a new era? Hmmm. . . apparently not. And this next thing might be a big reason as to why.

Manufacturing capacity was seriously put to the test during the boom, and most established bike companies simply could not keep up with the demand with their aging factories and tooling. Huge companies like Schwinn, Raleigh, Peugeot, and others were running at full capacity and quality suffered. The major component makers, such as Huret and Simplex were likewise at full capacity and could not keep up with orders. What this led to was a search for other suppliers of bikes and components, and Japanese companies were ready to fill the void.

Schwinn was the biggest of the American bike companies, and was a major influence on the industry, so their response to the boom is instructional. In order to meet demand, Schwinn started importing some of their bikes from Japan -- built to Schwinn's specifications by companies like Matsushita/National Bike Co. (Panasonic) and Bridgestone. The World Traveler was the first of these imported models, built with a lighter lugged steel frame and Shimano derailleurs, and priced near or just below the popular Varsity. Many buyers probably didn't notice or care that their bikes were built in Japan. It came from Schwinn -- a name synonymous with quality (Interestingly, the first imported models didn't actually say Schwinn on them - at least not prominently - but later models would proudly bear the trusted name). The number of Japanese-built models, and their quality advantage over the American-built bikes, would only increase from there.

Given a choice between updating their Chicago factory, or just importing more bikes from Japan, Schwinn decided to import - and that short term solution to a temporary supply problem ended up becoming a long-term plan for survival.

Other companies would follow a similar path. If not placing their own name on complete bicycles from Japan, they were at the very least building them with Japanese components from brands like SunTour and Shimano. In the previous decade, these companies were just starting to make major improvements to their component lines. Derailleurs were a notable example. No longer content to just produce cheaper versions of old French designs, SunTour and Shimano were both beginning to produce more innovative designs that increased shifting range and reliability - at a lower cost. But up until the '70s, there was a reluctance for bike companies outside of Japan to use these components. The American bike boom happened at an opportune moment for Japanese companies eager to enter the established markets. Suddenly, bikes that previously came with entry-level Huret or Simplex derailleurs were being equipped with Japanese pieces that worked better for less money.

Whereas previously, Japanese bikes and components were not taken seriously by bicycle buyers outside of Japan, millions of buyers during the bike boom were happy to give them a try. With Schwinn's help, companies like Bridgestone and Panasonic both grew tremendously, even though many American customers knew their names for tires and radios, respectively, and probably had no idea who actually built their Schwinn LeTours and Voyageurs. Likewise, Americans became far less skeptical of brands with distinctively Japanese-sounding names like Fuji, Miyata, and Nishiki -- all of which got a boost from the boom.

Giving the Japanese companies this foothold into markets previously dominated by American and European manufacturers was, I believe, the first step toward shifting the bike industry to Asia. Japanese manufacturers showed they could provide better quality at a lower price, and they eventually grew to dominate the industry.