Monday, December 06, 2004

Back to Your Corner

My little blue bike

When I was 5, my teenaged next door neighbor spray-painted his old bike blue and gave it to me. I learned to ride on it. I remember my mom making a big deal about the fact that it was a Schwinn. That meant much less to me than it did to her. When she grew up the Schwinn bike was a status symbol - a sign of middle-class prosperity. For the last two decades we haven't even heard the name. Here's an interesting article from today's Washington Post about the Schwinn bicycle company and its financial condition in the new world economy.

What happened? At the end of the 1970's, Schwinn started outsourcing to Taiwan. The Taiwanese suppliers learned how to manufacture bikes and discovered that they could sell their own poor-quality copies at a much cheaper price. Schwinn could no longer compete. That fact, coupled with new trends like BMX and mountain biking, signaled the end for a once-proud bike manufacturer. A flexible company might have adapted, but Schwinn stubbornly stayed true to it's traditional American roots. In 1993 they went bankrupt.

That in itself is enough to make you think twice about globalization. What's perhaps more interesting about this story is the broader picture - looking at the Schwinn company as it exemplifies the fate of American manufacturing (and the American middle-class) in the late-20th and early-21st centuries….

What's going on with Schwinn today? Good question. In 2001 a Canadian businessman bought the Schwinn company out of its second bankruptcy. Today, he imports inexpensive low-quality bikes from China and sells them under the Schwinn name. They're a huge hit at Wal-Mart this holiday season.


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