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Spokesmen Cycling Podcast
EPISODE 246: “The bike world has never seen anything like this”: Jay Townley on Bike Boom 2020 vs Bike Boom 1970-4
Sunday 7th June 2020
SPONSOR: Jenson USA
HOST: Carlton Reid
GUEST: Jay Townley
LINKS
Bicycling Booms During Lockdown—But There’s A Warning From History — Forbes.com
MACHINE TRANSCRIPT
Carlton Reid 0:13
Welcome to Episode 246 of the spokesmen cycling podcast. This show was engineered Sunday, June the seventh 2020.
David Bernstein 0:24
The spokesmen cycling roundtable podcast is brought to you by Jenson USA, where you’ll always find a great selection of products at amazing prices with unparalleled customer service. For more information, just go to Jenson usa.com/thespokesmen. Hey everybody, it’s David from the Fred cast cycling podcast at www.theFredcast.com. I’m one of the hosts and producers of the spokesmen cycling roundtable podcast. For show notes, links and all sorts of other information please visit our website at
www.the-spokesmen.com. And now, here are the spokesmen.
Jay Townley 1:08
“These are unprecedented times.
As long as I’ve lived i’ve never seen anything like this,
As long as you live, you’ve never seen it like this. The bike industry the bike world has seen nothing like this.”
Carlton Reid 1:23
That’s bike industry veteran Jay Townley talking about bike boom 2020. I’m Carlton Reid welcoming you to another long lockdown special of the Spokesmen Cycling Podcast. Jay Townley’s perspective is second to none because, for a start, he’s a data freak — still crunching numbers after 63 years in the industry — and he was also up close and personal with the market-dominating American bike company during the 1970s bike boom, the annual sales figures for which have never been bettered, not even during the mountain bike years. Jay worked for the Schwinn Bicycle Company for 24 years — he was the youngest vice president who wasn’t a member of the Schwinn family. Over the years he went on to hold many other positions and is still the go-to-guy for divining trends from bicycle-shaped spreadsheets so I was glad to be able to pick his brains about both bike booms. Many sectors of the economy have been badly affected by lockdowns, social distancing and quarantines but after like five or more years of poor bikes sales — what Jay calls a “funk of flatness” — April and May this year just exploded, with widespread reports of bikes selling out, well, like toilet paper as some media outlets would have it. Shimano’s stock price hit a record high at the end of May with bike part sales from this bellwhether brand going through the roof. It’s now a market-leading behemoth but Shimano was once a minnow. The Japanese company started its steady rise to domination in the 1970s when Kozo Shimano visited Schwinn on a speculative sales trip, hoping to sell derailleurs to an America that was only really starting to ride with these European devices. You can hear the inside skinny on that scoping sales trip on today’s show because Jay was there, front and centre.
So hi, I’ve got Jay Townley with me today. Jay has been on the show.
A number of times before so anybody who’s listened to Jay will know that we go through his long history in the bike industry for people who are new to the show. Let’s let’s go through that history. So first of all, Jay, is it terribly rude of me to ask you your age? How old are you, Jay?
Jay Townley 4:18
It’s not rude at all. I’m 76 years old.
Carlton Reid 4:22
And you are. I’m a veteran of the bike industry. So what does that make you? I mean, is there a super veteran class? Why? How long have you been working in the industry, Jay?
Jay Townley 4:33
I started in a bike shop in 1957.
went to work for Hazel Park, bicycle and skate exchange in St. Paul, Minnesota.
And worked there actually a part time full time on the east side of St. Paul.
Throughout through a couple of years of college and I got
Mary did that process and ended up going to work for Schwinn in 1966. So my relationship with that shop was over a long period of time.
And the two owners were I would consider brilliant because and I don’t need to go into the detail other than to tell you that they ended up founding The Park Tool Company.
Um, they were starting to make a limited, actually they’re making hooks to hang bicycles in 1964 65. But they they ran them together.
Building a very large building.
on the same street, we were located on white bear Avenue on the east side of St. Paul, but out toward where the new expressway was going on.
And so they built a large facility that had room in the back a very
large manufacturing area in the back where they continued the building out The Park Tool Company while they ran Hazel Park cycle centre which on the retail side became two stores. And at one point was schwinns largest dealer.
And so they they were very good at the retail business. But then as The Park Tool business grew,
they sold the retail stores to two employees, two different employees.
Carlton Reid 6:32
It’s still existing or it’s long gone?
Jay Townley 6:38
Know the buyer the retail the retail stores are gone.
The last one closed. Oh my must be over 20 years ago.
However Park Tool thrives and is owned and operated by Eric Hawkins who you may have met at.
He comes to England once a year. For the
A large gathering of one of the large one of the distributors
in the UK but their distributor obviously for Park Tool but Eric Hawkins is the son of one of the phones
Carlton Reid 7:12
that was because I want to talk to you today about the bike boom. So Hazel Park was clearly before the bike but when you’re working for them and Park Tool was was a wee bit before the bike boom too. So that was quite prescient to make a bicycle Tool Company before the bike boom hits flack for years beforehand. So they must have like been written you know, all
all boats rise up with the rising tide. So all bike companies that point kind of did good.
Jay Townley 7:45
Yes, yes, absolutely.
Carlton Reid 7:49
So tell me about the boom then. So because you when the boom actually hit you are a Schwinn executive.
Jay Townley 7:58
Well, I started
As I said in 1966
I well remember 1971 because if you go back a few years 1968 was a record year for the industry at about 7.5 million units total.
Schwinn held its first national convention of authorised Schwinn dealers in Chicago, at the Conrad Hilton Hotel and 1968, which I have vivid memories of.
But it was the first time that Schwinn had gathered all of its dealers in
in one place with one big show that lasted three or four days.
And I was at the time I was sales promotion manager. I was very much involved in the process of producing the show that at the time featured Bob Kishan who you probably don’t know is Captain
kangaroo,
the from CBS fame but he was he was the personality that Schwinn advertised with on television for many years.
And so, the bike boom, was kind of a big surprise. We had done this 1968 the industry’s spiked at 7.4 million. Then if you look at the charts, it went down to about 7 million in 69. We were trying to figure out what was going on in 1970 was about 6.8 million.
And we were starting to get worried what was happening out in the market and then came 1971. And Schwinn was sold up by May of that year and the the industry in 1971 sold 8.8 million units.
You know, well in excess of the 68 record of 7.5 million.
And we were scrambling we honestly the industry when we weren’t sure
What was going on?
But
at the time, the Schwinn bicycle company was a domestic house that was a make to order house.
So we ran this big factory for the day, by the way, is considered small now but it was a big factory in the time at the time and every dealer order that came in was scheduled for production and shipped to a dealer within two weeks.
So I’m sure this is the way Raleigh operated at the time and Nottingham received dealer orders and it built bicycles to the order the dealer
loaded them up mostly in trucks, because there were very few dealers are big enough you could put them into in the rail cars. But we ran this, you know, build to order operation. So when they came in, in 1971, the big surprise
The Schwinn sales department jack Smith was the sales manager came up with a plan. He and his staff
that the then vice president marketing Ray Birch or longtime Schwinn marketing VP, Ray Birch, who was the boss of the marketing division
agreed to an allocation plan.
So in 1971, when this all hit, we were trying to figure out what was going on and we were sold out in May.
The The plan was based on algorithms of the day, and it was a the dealer sales of the previous year
were the factor that was went into the formula so that the dealer would receive that percentage share of schwinns production at capacity for the year.
The dealer didn’t have to take that
they could
refused portions of it but
every quarter jack Smith’s department sent out to the authorised dealers after Of course May. So we’re into the last half of the year but this continued on through 1974. Every quarter the dealer received their allocation
and their shipping schedule and they would adjust it if they wanted less, and in most years, they didn’t, they took everything that was available. And so we also were able to adjust the mix
which is the you know, the,
the mix between the low price of the high priced bikes. In the in the way we sorted through and ran the numbers for the allocation.
Some of this was also based on the popularity because what was selling were in our line where the 27 inch wheel, your rail you’re equipped 10 speed lightweights
are vital.
He’s our Continentals and our Superiors. And so that’s what was in demand. That’s what dealers wanted. That’s what consumers wanted. And so we would make sure jack would make sure that he did what he could to adjust. And then that all went downstream to the to the production planning people and to the purchasing department. So you can imagine this operation
that was
relatively used to the way things were going, had been surprised in 1968. That was the first year Schwinn made and sold a million bicycles.
And so you had two years of down market and then 1971 comes out of nowhere
exceeds market expectations by a good margin. We’re sold out by May. And so we’ve got this allocation system that we’re operating on. And Schwinn then moved to expand.
Carlton Reid 14:00
Today it’s a three month turnaround because at least because you’ve got to get the orders in and Asia, it’s going to take three months to get them back on the water to get them here but but at that time could Schwinn have a much shorter timeframe because you are making the bikes we we were making the bikes Carlton and we also were purchasing worldwide. So
Jay Townley 14:26
we in order to make the Varsity and the Continental that I described and the Superior which were 10 speed derailleur equipped, lightweight bicycles 27 one and a quarter inch tires and appropriate wheels we
had to buy on the world market because the domestic suppliers while they could support the middleweight bicycles that had come into vogue after World War Two. And we’re the bicycle
Bicycle industries answered to the English lightweight.
With all due respect
the chief competitors in the in the period after world war two were the 26th.
One an eighth inch American sizing, obviously, but one of the 26 inch lightweights that you were used to in England
that were primarily made by Raleigh, and were imported into the US under the Marshall Plan or the successors to it.
And so, they were coming in at very low duties to the US market. And the answer that the American industry had
when when we the war ended, the industry was making balloon tired bikes to an eighth inch
tired. They’re called balloon tyred bikes and
as a
kid that’s what I got my first bike was a Schwinn Phantom, which was one of these you know, big balloon tyre bicycles.
Carlton Reid 16:07
The paper boy bike.
Jay Townley 16:09
Thank you the paper boy bike, the black Phantom, you know the, so they were up against the English lightweight.
And the answer the industry came up with was Frank w Schwinn, literally who was a great engineer. Second generation was running the operation at the time, literally designed the middleweight the one and three quarter 1.75
compromise between the lightweight and the balloon
and he gave all the patents and designs for the middleweight
bicycle to the industry for free because he wanted to combat the the influx of English lightweights. So, I’m the middleweight was born.
So my second bike was a Schwinn speedster bought from the bike shop. I ended up working for my father, my father traded in our digital ad. He had the balloon tire bike, and he said it was time for the middleweight which I begged him to get.
So
over the evolution in the period from 63 to 67, probably after I arrived at Schwinn
Al Fritz, and Frank Brilando, down in the engineering department, and you’ve heard Al Fritz’s name before I’m sure you’ve done some interviews around l.
Al Fritz and Frank Brilando came up with this with the state with this thing, right.
Um, and so that became from the middleweight that became the next big thing in the market.
And that quickly led to Frank Brilando convincing Al and Frank
W Schwinn and eventually Frank leash when his son to do a line of lightweight by extrude driller equip lightweights, the varsity, the Continental 26 and 27 inch lightweights, equipped with 10 speed derailleurs.
and Frank was a former Frank’s passed away a couple of years ago. Frank was a former Olympic cyclist,
or a professional cyclist, and also a very brilliant degreed engineer.
And Brilando laid out for Al Fritz, in about 1962 63. This idea for a an American made derailleur equipped, true lightweight at 27. Hide 27 inch real high pressure with a drill here. And a lot of people didn’t know what trailers were.
They weren’t made here. You couldn’t get the hubs you needed here. You couldn’t get the gangs or the cogs you couldn’t get anything.
The base components.
But Frank because he rode on the last Olympic team, beef before World War Two, and the first Olympic team after World War Two, Frank was that good. And he when he served in the war, he served in the Pacific Theatre in the engineering Corps.
Frank was such an athlete that he made both Olympic games before and after the war. So he stuff and he was a road racer as well as a track racer. So l then went to schwinn’s purchasing division that was buying mostly domestic stuff. And in 64,65, they started to bring in large quantities of derailleurs from Huret, who is no longer in business, but a French firm, Maillard cogs and hubs, Weinnman for brakes out of Switzerland in Germany. And at the time, the Japanese were just starting to ramp up
The bike business and a fellow named Kozo Shimano showed up in, in the Schwinn purchasing waiting room.
And closer before he passed, told many stories about with his broken English trying to sell his drill user as hubs. But Schwinn was right at the point where it started to import.
First modest then very large quantities of these components required for these sophisticated lightweights and they were just at the right time, because they were bicycles that were not for 1213 year old kids. If you were big, you could write them but it was a multi frame your choices of 1921 24 to 2527 inch frame 27 inch high pressure wheeled drill your equip lightweights and as this bike boom took off,
It was adult bikes
primarily, and Schwinn through Brilando. This brilliant engineer
made a determination that we would use our design derailleur,
our design cog, our hubs, etc. They were Schwinn approved. So we didn’t just put a here a derailleur on or a simplex derailleur or a Shimano derailleur. As the bike boom ramped up, you were getting dealers in the market. We’re getting Schwinn varsity with a driller that was at the time, a Schwinn design that could have been made by hurray in France, by Shimano or by Sun tour,
with brakes that could have been made by Weinnman because again, they were going to prove design Weinman in Europe, Shimano or Dia Compe, and so on.
We were doing so much volume that what Frank did was
engineers designed the componentry and approved it and then we were able to get multiple services around the world high quality services
to make the same componentry.
So,
to your scenario, yes, we went in the course of this bike boom from the period starting in 19. Well, prior to this, we were we were bringing in and making these varieties in 6968 69. But when the bike boom hit, Schwinn purchasing was able to branch out and use all available services on a global basis to bring in the component tree and you’re correct, then we were dealing with the
long lead time scenarios of getting this component tree from Europe, Japan, into the US market into this factory, because we were still making bicycles to order for dealers.
Carlton Reid 23:01
Now this point, I guess I want to point out for people but there’s no Specialized, there’s no Trek. There’s no Cannondale. There’s none of these brands that we now associate with with the American bike market and that it absolutely took over the world when mountain bikes came along. So Schwinn was in at this period was in such a dominant position and not a monolith, you could say.
Jay Townley 23:27
That is a correct way to describe it. We,
in the 50s, when I was working in the bike shop rainberge, had been hired by Fw Schwinn in the 50s.
from a company called Wizzer in Detroit, and Frank w brought Ray in specifically to clean ups when distribution
and what Ray did was taking something that he was aware of that was new. He developed a franchise so
Before franchising was popular, there was before McDonald’s. There was in the marketing world,
in academia, the the development of the idea of the franchise. So Reebok brought franchising to Schwinn. And when I worked for Hazel Park and after I came to work for Schwinn in Chicago,
bicycle shops that carried Schwinn product were franchise dealers.
So there were requirements you had to meet. There were you had to be of high quality you had to give service you had to stock parts. And Schwinn went through a process of winnowing out
the
well, it’s been written this way and again in these times I hate to use the term at the funeral parlours.
Which by the way back in the day, funeral parlours were also intended to be for sale, housing, household furniture sellers,
but
When I think when I came to work there, they had 15,000 dealers on the books. And they’d started a winnowing down.
And the bike boom accelerated that process. But
what we had was a core of authorised dealers. So there was a semblance in order to the process, there was service training, there was sales training. There was store design assistance, which again is a long story unto itself, but this was all evolving, just prior to this bike boom, and then during the boom years, and
this is all because Ray Birch again another brilliant guy.
I would say certifiable genius, raid, developed franchising. And then he also was the architect of the Schwinn distribution system, which evolved again, just prior to the bike boom, but was primarily a product
Have something else that we cover in another call which is the Schwinn antitrust case.
Because at the time overlapping all of this
from the period 1958 to 1968. Schwinn went through the law at the time the longest antitrust suit with the federal government on record, and ended up in 68 winning in the Supreme Court. And the end result of that was the twin was able to keep its
franchise dealers called authorised dealers at the time, but keep its franchise dealers because the whole legal dispute was over schwinns legal right to put a dealer on or take them off. And in turn Schwinn also was encouraged by the Supreme Court to integrate forward IE own its wholesale distribution.
And so that was in full process when this boom hits
So Schwinn had the beginnings of the modern distribution system we know today in the bike business, that every one of these other names you mentioned and adopted, has adopted up to this point. And that’s simply brands manufacturers owning wholesale distribution centres around the country around the market. And then a system where you have authorised dealers now, that they’re the product of what re developed as the franchise dealers. Again, there’s a long history as to how that occurred. But you’re quite correct. The the Schwinn bicycle company had all these pieces together and was the premier brand, if you will, the more than the luxury. It was the premier brand in the US bicycle market. And going in we probably had a 25% market share.
So the competition that evolved during the bike boom
is one of the key changes to the to the American bicycle business because of the who they were the competitors to Schwinn that evolved during the bike boom.
Carlton Reid 28:03
and with the competitors before, Specialized, Trek, Cannondale, who are the main people in say the late 60s, early 70s?
Jay Townley 28:25
The primary competitor domestically was Ross.
And then you had there were nine domestic manufacturers. In addition to Schwinn, there was a group that sold the mass versions of the Huffy, Murray, Ohio. There were a group including Columbia, and Ross that were selling to the bike. The bike trade as it was called the bike shops competing with Schwinn.
And then there were private label manufacturers. I don’t remember all the names, but there were there were at least nine domestic houses
Import was only at the top.
You know, it was the Peugeot the, if you will today it would have been the Pinarello. Those
those those brands that came in when the boom started
were for the aficionados for the for the few racers there were in the country, the Peugeot’s course rally.
And the import was a very small piece of the market. The primary competitors that Schwinn had were the Colombia’s the Ross’s and, quite frankly, their systems were not as sophisticated. They didn’t have the authorised dealer networks or the franchise dealers, they didn’t have the distribution.
They did not have the product development. So they didn’t have their el Fritz’s Frank Brilando’s repurchases and later john Nielsen, who developed
The parts and accessories programme for Schwinn.
So they didn’t have the talent and certainly didn’t have the product to compete with what Schwinn was, had developed up through the 1970 period. And was there ready to take on the bike boom starting in 1971 now it’s during the boom that all changed as to who those foreign competitors were.
Carlton Reid 30:28
So do you think the boom is in effect given us the industry we have today in that the Trek, Specialized, Cannondale all those those those brands, they all come up roughly post boom, I mean, but have come up because of the boom. So you’ve got Sinyard Mike Sinyard Specialized, you know, he gets in the industry at the end of the bike, boom, like 74, 75. And same for Trek. So it was the boom that changed the industry?
Jay Townley 30:58
I would agree
Mike is a good example Mike Sinyard
you know you’ve heard his story he went and figured out how he could bring in foreign componentry and had this wonderful VW bus he travelled around southern and northern California selling out of his bus camping Nola and you know and other high end componentry
Trek actually got its start here right during this period but trek got it started as a retailer
trek trek did not manufacturer till oh I think after the boom but Dick Burke was partnered with bevel hog
and one other guy, French Tom French and they started a they imported bikes lug frame lightweight bikes and started a chain of bike shops that ran from Wisconsin all the way down into southern Illinois, all the way down to Urbana.
A guy that knows the history of all this is of course john Burke because his father Dick was the the architect. But also Ray keener
worked for the retail store down in Urbana and so he knows the history but yeah trek got it started in the bike business as a bike shop owner and importer. And then that evolved to just toward the money in the financial piece
came out of the bike boom but led to very shortly thereafter the bike boom led to the the bicycle manufacturing process, and the Trek name. So you’re correct. Your your analogy, or your you’re looking at the bike boom as the incubator
for what became schwinns competitors in the bike brand standing today, along
With what came after the the mountain bike you know the evolution of the mountain bike and so on but yeah Trek, specialized their origins the seeds in the beginnings were out of the bike boom
Carlton Reid 33:13
so today Schwinn still exists you know it it’s gone through multiple owners multiple bankruptcies
no longer makes in this country apart from like one bike they’ve got now made by Detroit bikes coming up being sold through Walmart but the other companies that you were mentioning that you know don’t exist I mean, I think huffy was making basketball stuff, wasn’t it and then Ross say doesn’t exist as a mainstream brand anymore. So these new upstart companies came in, how come Schwinn couldn’t just survive
through through till now, as a as a you know, in effect a Schwinn owned company what happened to the family
What happened to the brand that that that made it fall by the wayside?
Jay Townley 34:05
Well, that’s a long story.
Carlton Reid 34:07
Sorry, it is a long story. I apologise. Can you somehow condense it without going into into the various machinations around the failures at the top of the company?
Jay Townley 34:18
Yeah, I think I can. The it starts with Frank v. Schwinn third generation was the head of the company.
For the development years his father passed in 64. Frank W. Schwinn passed away from cancer in 1964.
Frank v took over the company. Now, Frank Francis Valentine Schwinn has been sure cheated by a lot of people.
Because it was Frank v that had the insight
to
not only guide the company forward
But he was a he was a master at making or creating a situation where rainberge Now remember, I’m saying these guys are certifiable geniuses. And I think that’s true, I can back it up. I worked for Ray and then later work for Al Fritz, who became executive vice president of the company.
Frank v. Schwinn, not only figured out how to get rate and elder work together, but he also
took a third really dynamic, smart guy, john Nielsen, who, who had brought into the company to develop parts and accessories,
which goes with the wholesale business.
And john was a very unique personality came from Denmark from a bike manufacturing family. Without going into the background, he’s very imposing man. He was almost seven foot tall
and
was at a really interesting personality. But f Frank, Frank v was able to get
all three of these guys to work together plus some other geniuses he had floated around the manufacturing side.
And he kept him going in the same direction in harness,
not not fighting and stalling out the company. So when Frank had is down the road when Frank had his heart attack and had to retire,
that genius for collaboration in our corporate structure just never came back again. not to that extent. I mean, I watched Frankie work for many years, and I served on the executive committee
for long enough to know what you know how he was able to make his executives work together and how he called dissent and dealt with it and he did it with a gentle hand is a very smart man.
So it starts with the generational change and the fact that that Frank v Schwinn was very much
involved in keeping the company stable and moving in a direction taking the best ideas from these guys.
The
simple fact is that,
at the end of the bike boom, Schwinn went through trouve. Two very traumatic periods, it survived one and didn’t survive the other.
And during the bike boom, one of the things we did was imported about a quarter of a million bikes sold under the Schwinn approved label.
We bought those bikes from national Panasonic and from Bridgestone in Japan. But because of the parts division, we were very much aware of a guy called Tony low, or named Tony, Tony lo and his wife, his first wife.
started a company called specs, which was a Taiwanese
trading house for parts and accessories.
And john Nielsen in developing the Schwinn parts and accessories programme,
immediately found Tony and he introduced Tony Lo to Alfred’s
and this was prior to King Liu coming on the scene and Tony and King getting together. So in other words, we had connections remember, we were importing from every major brand, including capital for our Paramount lines
in the world in order to produce bicycles during the bike boom. So we had our feelers out our connections out, we were we were viable. We were a big deal, because we were a big buyer.
Schwinn overbuilt during the bike boom.
the manufacturing group, rightly so said
We need more capacity, we built a third plant in Chicago to make just frames and forks or just frames primarily. And you might recall that one of schwinns great attributes and then one of the problems that it had after the bike boom is the frame it made.
It was heavy. It was heavy because it was a unique flash welding process, the only manufacturer to use it in North America.
And it required the use of a 1008 carbon steel.
So it was 18 gauge. Now what I’m planning about probably in about here is it was heavy.
Because of the process, you couldn’t you could not make a lug frame bike out of it. I suppose you could, but it would be extremely difficult.
We knew how to make lug frame bikes because we made pyramids. You know, we made top of the top of the line bicycles for the Olympic teams and for professional athletes.
additive racers, but they were hand built. They were one offs. They were built, their custom bikes were built to order.
So we know how to do it. We just didn’t know how to mass produce it.
At the end of the bike boom. And when you look at your charts
in 1975, the market dropped from 14.1 million total units important domestic. Last year, the bike boom 74, 75, the market was 7.3 million. It sheared 50%.
And it stayed down in 76,77, 78.
We didn’t need the capacity, we were running three shifts. We had over 3000 workers in Chicago, and we had three plants.
So the mindset at the time was in Frankie fought this
He basically said you guys got to get real about this but the the drivers in the the vice presidents and the guys in the company said it’s going to come back it’s going to come back. And so when the suggestion was made, let’s get rid of the plug the third plant, let’s bring free manufacturing back into the original to plant operation, etc, etc.
It was ignored. The manufacturing guys had a lot of sway. God bless them. They were fine people. But what they were advocating was no no wait, wait, it’ll come back.
Well, it never came back.
So we we did some of the right things. One was we immediately started to
a manufacturing programme to develop lug frame lightweight bicycles to lightweights.
You might remember the Le Tour line
and that was done properly. You know, to make
Good luck frame by Frank Ryan. Those people worked on this we actually had developed robotics.
We we had developed robots to do the manufacturing of blood frame bicycles and they were superb.
I saw them up front and personal they were they were great, but didn’t come in time.
And we got pushed in the late 70s because again manufacturing kept saying no, no, no
to the to the the rest of the arguments from the rest of the executive committee to downsize and get real about the market.
And
we
came within a hair’s breadth of a chapter seven.
If you know the difference in US law between bankruptcy chapter 11 and chapter seven is liquidation.
Carlton Reid 42:52
Hmm, Chapter 11. You can be rescued and you can do stuff with it. But chapter seven, you can’t be
you can’t
Jay Townley 42:59
So this was about the pushing this this was the late 70s.
We had no choice and at the at the time the management had changed. I’m leaving a lot out because a fascinating story is the one occurred in between but
is fascinating Is it is it boiled down to
the company needed to find a way to survive. We had at that time new leadership, Frank had had a heart attack was sidelined. His son Edward, his son, his nephew, Edward R, Jr. His brother Edward son, was president of the company because that’s the way the company was organised.
The Schwinn trust legally required that the President be a male heir. So, and it was young but good.
He tried some modern stuff.
We did get to the downsizing too late.
In the process the company
went from make to order to make to stock.
So in other words we produced from the plant and shipped to warehouses. We didn’t no longer made
Product to Ship the dealers that led to a whole series of other problems that replaced the problem of the of the over expansion of manufacturing. And bottom line was we were going to come back
Carlton Reid 44:31
before we kind of get on to that just go back with a bit because you you mentioned something about that’s, that’s fascinating.
It almost is the same problem that happened to Raleigh in many respects as well. And that is and you just mentioned it there is that had to be a male heir. I mean, to me, that’s just phenomenally incredible. If you’re going to run a business, then you have the best people in to run that business. But what you’ve just said there was what
In fact, any old fool could come in. So do you think I’m not saying that anybody was a fool here but do you think that was one of the reasons Schwinn failed in that it was basically had a monarchy it didn’t have it wasn’t you get the best people in it was you had to get a Schwinn person in
Jay Townley 45:21
well it to an extent that’s correct.
I’m sure
that Richard Schwinn Edwards brother who’s still in the business,
he might or might not agree. I don’t know Edwards retired now, but
I’m not sure if they would agree. But yeah, you had a Schwinn trust. That was written by very, very good lawyers at the turn of the century.
And it was still legal
in, you know, the decade of the 70s and 80s. So
from the standpoint of
have, you know that been the Genesis? Yeah, it means like a monarchy, that each of the generations he should the successive generations has got to be pretty good in some way, shape or form. And Schwinn had been really good for three generations.
In different degrees, Frank v was not an engineer, his father Fw was,
and so on. But brilliant in different ways, but but also this ability to bring in talented people and make them work together.
Rather than, you know, the the revolving door thing. So yeah, there’s a great burden, in this case type of hierarchy. I don’t know today, obviously, I’m not aware. I don’t know today, if you could still do this kind of trust. But at the time, it was still legal. And yeah, that you probably would look at that as one data point of several things that eventually led to what we have today.
Which is a Schwinn in name only.
That’s all by its owned by Dorel. It’s a division of Pacific. It’s still a good bike, but it’s manufactured again, it’s not the same company, it’s four times removed.
The, what occurred when we were faced with the chapter seven situation because of this, you know what we were, um, we were sitting on a million square feet of manufacturing, and at the time, about 1800 employees.
And the then leader of the management side was a guy named john Barker,
who is a whole story himself. He was Chief Financial Officer, became executive vice president was brought in, in the latter part of the 70s along with Bill Austin, a name who you’ll remember
But they the two of them convinced Edward over and above the objections of his his brother in law, Peter Davis who was in the company at the time, in charge of strategic planning.
He convinced him that we had to shut down domestic immediately cut the bleeding, and we had to go offshore and import our products. We had to find people to make our bikes.
I was in the room when Barker
had a meeting with the banks.
And the big bank for decades it sat on the Schwinn board for years,
was the Northern Trust in Chicago.
And I remember vividly sitting behind john as he as he leaned across the table and explained to them what he was going to do if they didn’t hold off for six months, and that was he was going to declare chapter seven and they’d be out
All the investments they’ve made.
They backed off, they gave us six months.
Then he turned to me and he said come up with a plan to do it. So without going into the detail, I was the corporate officer who shut down Chicago and moved the product.
And at the time, you will remember the Airdyne
the exercise product, I assume you do the airdyne out of Chicago The airdyne was a loss at the margin line of $50 a unit
a loss at the margin line means that you could make more and still lose money. Hmm. We took it to Taiwan along with all our bikes not all of our bikes didn’t go to Taiwan but the bulk of them did.
We We We resourced in six months, giant built a plant dedicated to just making our fitness equipment
When we started to bring air diamonds in from giant slash Taiwan into our system,
the $50 loss at the margin line
was totally reversed and it was a $50 profit
for the house. Now remember, we sold it to a sales company. This goes back to the brilliance of that plan. We sold it to a sales company for a profit, who sold it to a dealer for a profit.
So
going off shore and turning our whole bike line and fitness line into breakeven to profitability, then fed a system
that was just a moneymakers. The best way to say it, it was you know, we then all of a sudden flip the switch.
And we were making money on the bikes. We were bringing in good high quality Schwinn products.
imported from a giant to our wholesale distribution system, who bought them from us on the books, who sold them to authorised dealers who bought them from the wholesale houses who we owned. So, you know, it was like triple dipping to this. This is our boom, this is like getting to this.
Carlton Reid 51:21
So, let me ask you a question. Were you making money during the boom?
Jay Townley 51:28
Yes, yes, but it wasn’t as
it wasn’t as powerful. It wasn’t as much money as we made.
After we shut down the plant, because during the boom, to run three shifts with 3000 people
and make bikes on this allocation system.
We were importing
Just in huge quantities,
there was a lot of waste in other words in the manufacturing system still is profitable. The reason I know is that in the six months I was given to shut down Chicago. Part of what I did after letting go 1800 UAW employees
is I rain maintain a crew that every morning I would meet with and they would go into the plant and they collected everything we could find. And we categorised it because we had to, we had to sell it. And what we found were shipping crates, air freight shipping crates,
full of componentry from these various people that we were buying stuff from to make bikes that have never been opened.
And so, we in in hindsight,
we were as we we made order out of this, you know, chaos
that was cleaning out this, you know, sector
Anything if you’ve ever experienced cleaning out a closet, just imagine cleaning out a million square feet of manufacturing and finding all this stuff in storage.
We were able to, to our amazement, determined that, you know, they were air freighting purchasing was doing his job. It was airfreighted and stuff we needed to make bikes. But then in turn, the production control system was broken, was not automated.
It wasn’t your MRP systems up today. It was manual work. And the stuff got lost in warehouse and so you were paying all these premium prices to get stuff in, that ended up sitting on the books. And we didn’t discover all that until we really had to shut down the operation and clean things up. So
there were great inefficiencies during the boom that restricted the quality of the of the profit. There was a lot of money made but there could have been more when we got to the system that was developed after the shutdown manufacturing
It was much more transparent. And it was easier for us to if you will manage the process. And so we made more money after them than during.
Carlton Reid 54:16
Hmm. So anybody who’s been paying attention to the dates here, will realise that it was 69, 70,71. That’s where it’s ramping up.
It was gone by 74, 75. And we’ve missed out a year there. So we’ve missed that 1973. And of course, 1973 is the year that everybody assumes created the boom, and that was the oil crisis. But of course me and you know, it wasn’t the oil crisis that created the boom. So you tell me, I know this because I’ve written a book about it. But you tell me in your words, where you think the boom came from, and then why did it disappear?
Jay Townley 55:00
Well, it came from different catalysts different
things in the economy. So the original boom started in 71. And came out of a number of factors. The industry, going back into the early 60s had really gotten together on I remember he had internet and domestic manufacturers plus a bunch of wholesalers. They were all in a group called the bicycle menu. I’m sorry, the bicycle Manufacturers Association because they were part of it.
Be a bicycle Industry Association.
And each of the groups BMA, bicycle manufacturers, bicycle wholesalers, retailers, all are contributing monies into the bicycle Institute.
As a domestic bike manufacturer, those nine manufacturers were contributing a dime a bike
and that money was being
Well spent, because during the Eisenhower years, there were several things that occurred and that was promotional bikeways and bike paths. There were at least two full time bike advocates paid by the industry, Keith King Bay, and I cannot remember what the other one was out there, we were getting headlines. And as circumstances, you know, evolve, I can’t a heart attack.
And, you know, you may not remember Dwight David Eisenhower, but, of course, he was a great hero in World War Two. He was a great hero to the American people. So when he had this heart attack, it was a big deal and he had a cardiologist, Dr. White.
And Dr. White was an avid cyclist. So now all of a sudden, you’ve got Dr. White Tony Knight, who is a golfer to get on his bike. Well guess what kind of bike he got.
I mean, he got a Schwinn bike, obviously
It was the leading bike. But meanwhile, Ike gets better. And, and the country’s applauding, and Dr. White is now pictured for months, riding his bicycle to the hospital writing it and Dr. White was of advanced years them.
So it was it was kind of an Einstein effect.
It was this
older
MD, who had in the eyes of the public, saved our beloved president who was by Eisenhower, he was beloved
and gave him this new lifestyle. At the same time bikeways bike paths are being promoted, that the industry is getting a lot of visibility.
And there’s a lot of interest in physical fitness and health enhancement which is part and parcel
All of that along with the demographics. A whole new generation was coming a lot. We call them baby boomers today. But this is the younger lead of the baby boom generation. And so in 71, as I describe it, you remember 68 was a blip, went up to 7.5 million. Then the market went down and 69 went down and 70, 71 was the start of the bike boom.
And the market went to almost 9 million – 8.8 – was a huge increase. And that I do believe in hindsight was driven by the market factors of health enhancement enjoyment. The bicycle was getting popular among the older Baby, I’m sorry, the not older, younger, baby boomer, you’re talking 17 18, 19 year old
and you had that driving the market
as you get into the 72
73 period Now, keep in mind that
Eisenhower, you know, eventually is is termed out term limited. And we end up with a pretty chaotic situation in the in the economy that moves into the 7273 period and the oil embargo, when the industry actually hit 15.3 million. And these are all 20 inch wheels and larger By the way, all these numbers that I’m quoting, this doesn’t include it. Kids bikes because the industry didn’t count them in those days. They only call it 20 inch wheels and larger so these numbers are all 20 inch wheel The larger the 15 point 2.8 million in 1973, Carlton, it has never been achieved. Again, by the US industry. We’ve never come close
now exactly how 2020
When it comes out, we haven’t seen numbers. But you got to look at the whole year.
Up to this point 73 has never been exceeded before.
What happened in 73 was an oil embargo and lines.
cars were lined up at gas stations, gas stations put out red flags, when they were out of gas white flags when they had gas. Many states like California, it was every other day based on your licence plate. The odd numbers were you know, one day the even numbers were another day. So you had another factor in 70 and the 72 and 73 that drove this. Keep in mind also in 7273, you had wage and price control. Something that this country’s hadn’t seen since this was under Nixon,
wage and price controls simple.
Nobody could raise prices, nobody could pay more money to labour
Prices couldn’t change all the way through retail wholesale to retail manufacturing, you just could not increase the price couldn’t lower it couldn’t increase it you had to keep it frozen
and wages were frozen.
So you also had in the mix as you get into the 72, 73 period 74
bicycles today in the US you’ll see these these news articles that say bicycles or like toilet paper. Back in the 72, 73, 74 period, it was bicycles are like gas cans.
Because people are really having a problem they were going to the gas station getting a can of gas. So the bicycle became like a gas can and that’s the way the press looked at it.
mixed in with this, these these economic issues of wage and price control.
Bicycles just became, you know, not only it was an affordability issue became more viable like they are today is for transfer.
So it started out as
a demographic shift, and a response to advertising and promotion of bicycles as good for you. And a lot of fun to bicycles being an alternate and a means an alternative to the car. And something you could do to conserve gas and use if your automobile was on a gas, you could get some rubies.
Carlton Reid 1:02:32
You’ve got all these amazing factors, many of which are still applicable today. And you’ve also got the like the environmental factors, select the Earth Day factors which were coming in at that point in time as well. So you’ve got all these amazing factors and then you have the the accelerant of the the Arab Israeli oil embargo. How on earth did the bike boom fizzle out? You had all these amazing things going for the end of the industry. What
But what happened? Yeah?
Jay Townley 1:03:03
Well, if you look at the charting again 1974 at 14.1 million 20 inch wheel and larger 1975 7.3 million,
a 50% 49.9% shearing of the market.
What economists will tell you when they look at that, and the years that succeeded is saturation.
Go that’s the that’s the first thing that that you’ll look at with something that’s this large that in the boom years, from 71 to 74. We pumped the market full
with large numbers in the market. We didn’t have the population you have today. So the per thousand penetration was pretty high.
And you got to a point where several things occurred. One is saturation.
But also the pressures of
the wage and price control, the artificial restrictions on the market, the oil embargo, the fear of war, the fear of losing the the flow of oil all disappeared.
So whatever drove it in the beginning
and drove it in the middle. In the end, all those factors changed. When we got to 1975, probably aided and abetted, or maybe driven by the fact that we simply have saturated.
We just saw only bikes per thousand that people were going to buy anymore. It took a while. And if you look at the market, from 75 forward, it is a slow build.
You know, it’s an increase, but there’s nothing like we experienced in the boom. And as I said, 73 has never been repeated by the American industry and maybe
Something in the in the quarter from April, May, June. Maybe not. Again, you gotta look at it as a whole year.
I tend to think no
2020 will not exceed
the spike in 73 and 20 inch wheels and larger. It’ll be awesome, but it just is just not gonna it’s just not good. It’s no I What I’m saying is it’s not another bike boom.
Carlton Reid 1:05:27
Jay, I definitely want to pick you up on that. But right now we’re gonna go for an ad an advert break. So take it away, David.
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OK, Carlton let’s get back to the show.
Carlton Reid 1:07:02
Thanks David and we’re still here with with with Jay Townley, Jay is absolutely the man to go to to talk about the 1970s bike boom because he was absolutely there. He was one of the architects of the boom he was seen as sitting in the boardrooms with with sales projections going off, left right and centre being exceeded and then of course the bike boom, then collapse as Jay was talking before the break. And then Jay then talked about the today’s buy boom. So that’s where I want to start off Jay. So you were saying there when I rudely cut you off was you don’t think this will be anywhere near and I kind of agree with you there because we have only got well shortly coming up one quarters figures and we need at least in effect four years of the boom to get it near because the bike boom back then was a multi year thing. But where do you Where do you see the boom fitting into the industry now because
Again, it comes to pretty much of a surprise.
Jay Townley 1:08:03
Yeah, it came as a surprise, but I guess it It shouldn’t have
in retrospect, and that’s unfortunately, what a lot of looking at the numbers is, is, is looking back. I’m the,
you know, the demand for bicycles in the unfortunately the era of COVID-19
is totally different than anything we we experienced in the 70s.
And it starts with social distancing.
And the ability of folks to get from point A to point B without getting on a means of transportation that’s got a crowded environment.
So that’s part of this in the cities, whether it’s London or New York, or Minneapolis or Chicago.
You’ve got a situation where folks
are really aware that
social distance seed means you got to maintain six foot distances. And that hasn’t changed in all the discussion. And you can’t do that on a crowded bus or a crowded subway train. So what’s the alternative? And the automobile was not an alternative for a lot of reasons. So the bicycle became an alternative, particularly if walking was was not what could be used on a frequent basis. So that’s a different piece than we’ve had in the past. I don’t think it’s necessarily a bad piece, but it’s a different piece. You also had a quarantines that you know, extended into 11, 12 some of them are still going 14, 15 weeks.
People in stir crazy, particularly again in the dense pop
related areas. So getting out and walking is good. But getting on a bicycle and enjoying the front of a bike, social distancing while you’re getting some exercise, being able to do that with the family certainly became very attractive.
And the other piece that goes with what you and I have seen in our markets of new bikes being just you know, sold out.
I was talking to Brad who’s one of my partners on California yesterday, and he said that the targets and Walmart’s are still
there’s no bikes in the bike sections. I’ve seen the same thing here in the Midwest. Mike frets are other partners seeing the same thing in the Chicago area market, so it’s low to high. Bradley’s working right now at a giant store and a trek store
and enjoying the dickens out of it but he said that you know, mid to low priced and kids
bikes, there’s nothing and and then you get to the other issue of the shortage which we can discuss if you’d like as a separate, separate topic, but
this doesn’t have the makings
of a sustainable bike boom because of the components, the the drivers. And when we get to the end when we get to the light at the end of the tunnel,
the good news is beginning to mount so I think it’s going to be a better market.
If you aren’t aware of it, the US House of Representatives Transportation Committee just passed out its bill
on the five year transportation bill. The Senate did its version of this
some time ago, and the League of American Bicyclists has done an excellent overview of what the bike
World got what the advocates in the bike world got in essentially on the House side
with the leadership now in the two committees involved with Earl Blumenauer, Representative Blumenauer, who has been a great bike advocate now being a committee chair,
the bike world got just about everything that wanted to ask for, including more money. That doesn’t mean it’s gonna get it. But that’s when it got in the bill.
Surprisingly, the Senate version that came out months ago
is a very well funded generous effort to the transportation community, including just about everything the bicycling world was looking for.
How that will end up we don’t know. But what I’m saying is that the members of Congress at least in these very convoluted, disruptive times, both chambers
have looked favourably upon what it’s going to provide if it can for funding for bicycling going forward and also for the features of that funding, how it’s used.
So I take that as great news in a very sad time. So that the the government is maybe arguing about a lot of other stuff, but at least there’s agreement
in our representative side in providing more money, more services, more detail on how you use those services, what you do to improve the the whole of the cycling walking world
Carlton Reid 1:13:39
none of that was to do with COVID of it none of that was this is all
No, just come about, quite separate to that.
Jay Townley 1:13:46
Correct. So, whether it was influenced or not, it could have been, but no, it came about separately. So now you back up to the influences of the COVID 19. End
Society in the market today on top of that, and I think we’ll end up with a more viable and larger market.
A electric bike certainly will play a bigger role in the US, as they have in Europe, they haven’t yet in the US, but they will. Because the word coming back, you know, as to what consumers are saying, You got a lot of a lot of older US consumers that have not ridden bikes before, or we call them late and cyclists they have ridden in years, that are getting back on bikes, and they’re finding the electric bike is a neat way to get back into the active cycling world. and not have to be in the greatest of shape. You can work your way up to it. I mean, there’s all sorts of pluses electric bikes are fun, face it. There’s fun as a regular bike to the people that that are
not used to riding or haven’t ridden in years. So I think you’ve got multiple factors.
in society, in the demographics, and now in the the advocacy and governmental support side, that will all end up with a net gain when we come out of the the current crisis
Carlton Reid 1:15:19
just let’s just step back a bit first, and that I asked you about just your two or three word description of say the previous five to 10 years. So, it was a it was a big shock to the industry. That you know, the industry is one of the few industries that actually prosper during Coronavirus crisis. But it wasn’t surprised it was April when it hit. So as far as I can tell people were not reporting fantastic sales in January February March, April it picked up and then may it went ballistic. We know
That’s when people just start selling out of everything. And as far as we can tell, it’s been a fantastic June as well. But go go before that. So how would you describe the industry in health terms in the previous five years?
Jay Townley 1:16:15
Alright, um, in the previous five years flat
Carlton Reid 1:16:20
2019 I would say depressed.
Jay Townley 1:16:22
But yeah, it’s depressed flat. The period through 2018 going back five years was flat, no growth 2019 was down.
And that’s not that’s not been talked about a lot. But imports are down 25%
in units by 18%. In dollars. The US market was down 19 to 20%.
So what hasn’t been talked about is the devastating effect of punitive tariffs on the American bike industry and
2019
So, what we saw after March 15
going forward, and particularly as you say, April, May, was all of this response to social distancing to getting later in April going in go I’m sure I’ve made getting into June. The reaction to the quarantines or the lockdowns
all came in 70 days,
came out of a market where
in 2019
was a bad year. It was a bad year, brought about by as I said the only factor
that impacted the market in 2019. That could have brought about these severe drops were the punitive tariffs.
I don’t know if you follow the numbers but
Import and this again goes to the simple fact that in round numbers 95 to 96% of all American bicycles in this market are imported
90% of imports came from China
from the PRC
so no matter what the mechanics are of how you deal with that, look at Yeah, there was there were low numbers from Vietnam, negligible numbers from Cambodia, Thailand, and still negligible numbers from the European community.
So, we had up we had a market that was the is dependent on import.
Domestic is 5% or less, including the domestically made e bikes, or assembled, they’re not manufactured here but
assembled. So the market
Prior to the march 18, March 15 event going through the that quarter was down prior to that it was flat
with no growth.
Sad to say. So that’s the facts.
Carlton Reid 1:19:18
Not not completed, agree. I mean, it was a depressed market and it has been for a good number of years. So this has come as a complete shock, a complete bolt out of the blue, but something that is absolutely necessary for the health of the industry because it’s had a number of years. And the perception out there is that the industry has been booming for many, many years. And the reality is very, very different. So now we actually genuinely have an actual
genuine boom.
Jay Townley 1:19:50
Yeah, it’s it’s a different boom than the 70s. But it Yes, I mean, did you look at it for what it is
It’s a genuine boom. Um, one of the factors, most interestingly to me is bicycles that have not been written for years
are being taken into bike shops from they’re being dug out of garages. They’re being taken out of basements, brought down from attics, taken into bike shops and the owners are saying, Please fix these tires make this bike work, I want to write it.
So the American consumer is not just buying new bikes from any source they can give them. But they’ve got bikes and they’re taking them into bike shops and wanting them repaired. If you quickly check with shops that you know, in the United States, I think you’ll find the bulk of them are no longer taking service work because they’re extended out so far that they just have to stop for a while and catch up.
Carlton Reid 1:20:52
Yeah, come back in September.
Jay Townley 1:20:56
Well, I I’m sure I’m sure it’s extended
I don’t know if it’s September or not. But yeah, it is a long time. I mean, again, Brad, who’s one of my partners, says one of the shops he works for is doing just that. They just are refusing
to take any more work and telling people you know, call us or email us. And we’ll let you know when our service queue opens up and we’re able to take more service but right now we can’t take service work. So clearly that the impetus we know absolutely the you know that the 70s by boom was multifactorial, came out of nowhere. This one, we absolutely know what why it’s come about it’s a it’s a virus. It’s an absolutely one factor that has led to this. But because of that, if if family, I’m saying this as an episode, it’s a bad thing. But if the economy comes back, if cars get back on the road, if we survive this crisis, of course, we all want to do that.
Carlton Reid 1:22:00
But that does that not mean that the bike industry goes back to how it was in the depressed state of 2019?
Jay Townley 1:22:10
it answered your question. That’s where I come up with the no I think it’ll be a net gain in that I agree with you 100% that cyclists that are out there now and we get to the end of the light at the end of the tunnel, and that you know, that is to me the the Coronavirus is contained. There is treatment and there’s a cure. So people be can be confident in knowing that they can they can get a vaccine.
And
cars get back on the road, just as they have we’ve seen this occur in China. That’s going to scare some of the cyclists that have gotten out and enjoyed the low vehicular traffic are going to get scared off the road.
They’re going to be scared
for their kids
as car traffic builds up, but and karma, but some of the communities like Seattle that have already
made it clear that Yeah, we get back to a new reset. And we’ve got society back up and operating in the economy operating again. We are we are already dedicating more road space more miles to pedestrian and non vehicular to human powered transportation. This is where this is where the pop ups are coming up so the pop up cycleways are getting put in in many cities around the world not just America but around the world. And so you think that is going to be that’s a that’s a highly positive thing because some of those may stay they may become permanent. That’s Yeah, that’s by right now looking at the the cities that have said they are permanent.
net gain.
There will be cities where they exist today as pop ups the New York as an example. I can’t see them keeping all the miles they’ve opened up. But Mayor de Blasio is going to keep some of it. He may. But if he doesn’t Seattle has lost it Angeles is making
is having discussions about keeping some of it. I think what you’ll see is a net gain across the board. And it’s a net gain in use a net gain in
the embracing of the style, the lifestyle, and the buying habit and the use habit. Now, it’s not going to be what I don’t think it’s going to be what it is today.
It’s going to be some lower number, but that will be a net gain plus the fact that much to my surprise, the Congress of the United States is currently showing support
And I sat through the LAB webinar
that Karen Whittaker, their vice president Governmental Affairs ran yesterday, explaining the House bill that just came out Monday.
That’s going to the floor. Now there’s again, there’s a lot of things that could change. It’s Washington. It’s the Congress. It’s the legislative process, but it’s the most aggressive financially. And from the standpoint of cycling and walking communities, getting what they’ve asked for, it’s the most aggressive legislation she’s ever seen. And Carol’s Karen’s been around a long time. So why
it’s more money. It’s more emphasis. It’s more logical approaches to making this work at the state level. It’s correcting errors. And this with the fact that the Senate did this surprising piece of legislation
Some months ago,
I mean, everybody was astounded that follows this at what the Senate did. And then it’s very quietly SAT.
As they say, no matter what comes out of the political picture, if these two chambers keep moving in the same direction, and we end up with a net improvement in the amounts of federal monies available and how that money is spent, that adds to the net gain theory that we’re going to see a net improvement in the bike market. Now, Carlton, you and I both know that we’ve studied this, you know how flat the market spend in the last five to 10 years. In the US.
The E bike was on the verge of changing pieces of that when the tariffs yet
and they’re not off by the way, the the E bike in the US was on the exceptions list. But now we’re in the midst of all of the the ramifications of this
Supply Chain issues,
which, again, the industry faces going forward. But when that all settles in,
you’ve got the potential here for a net gain, not a boom, but a net gain. and that in turn would contribute to a projection for the future that’s more hopeful and, and from a practical standpoint, more improvement in use of the bicycle, more bicycle riding participation, then we had prior to, you know, the pandemic.
Carlton Reid 1:27:38
So just to put this into perspective, and into into percentage terms, the 1970s bike boom, which is roughly four years, so 45 million bikes were sold over that period in time it basically doubled the market,
year on year.
Were talking to you your prediction for this year.
This bike boom is perhaps I’m going to put words into your mouth here. But we’re going to see a doubling of the market maybe for two to three months, but then it’ll settle down after that. Whereas the 70s by boom, was a year on year doubling, which, which is a hugely different factor.
Jay Townley 1:28:19
Yeah, I think essentially,
with a qualification that you know, what we’ll be, I’ll need to see some more numbers. But based on what’s occurred up to this point, I will accept what you’ve said as a good summary of, you know, what I laid out at this point. So yes, the, the short term for the bike business could be a doubling.
I tend to think it’s going to be a little less than that, but it’s going to be an uptick and improvement, statistically when we get to the end of 2020
In the 2021 going forward is going to have some growth to it so that we can work our way slowly out of this
funk of flatness that the business has been in, historically over the last decade.
Carlton Reid 1:29:18
So in in my book, Bike Boom, when I interviewed you for that you talked about or I was asking you about the cycleway, the bikeway
ethos that was growing in the US at that time. And you said that, in effect, if the US had two years more of the same kind of growth, so 50 million bike sales per year, for another couple of years, then all of that incredibly impressive, you know, hundred thousand mile of bikeways through the whole us. All of that would have then come to fruition. You’d have seen a completely different United States of America. If you’d had another couple of years.
of the bike boom going forward. So can you put that into perspective for today is is there an equivalent that we need to see a certain number of weeks months number of bikeways put in to make sure that we actually consolidate the growth that we lost in the 1970s by a boom when it just you know, halved overnight?
Jay Townley 1:30:23
Yeah, I I think that
we’re we look back at it’s a it’s it’s easy to theorise about what happened in the past. But
going forward, as I say, net gain.
I think that’s more probable at this point than not.
And
there are more factors, including something we have not discussed.
Some very smart folks have made it very clear that while we may have ignorant
Science during the Coronavirus. We can’t afford to do that relative to the sustainability or the climate crisis.
It’s becoming more
the climate crisis is coming back as being talked about in we see it more discussion now, relative to what it will what role it will play relative to the pandemic and the end of the pandemic.
I think that’s a factor that will play into
the net gain.
In bicycle usage, I think that metric to look at Carl in the US going forward is bicycle riding participation.
Um, it’s not bikeways and bike paths or the mileage of same.
Um, I think that again, I could be wrong, but I think what we need to focus on is bicycle riding participation.
Which last according to the National sporting goods Association, who
you can argue about whether their, their, their panels or the the methodology they’re using is absolutely the right one. I like their numbers because they got 30 years of history using the same methodology. So you got good trend lines, good solid trending.
bicycle riding participation, according to the SGA. In 2019 was up marginally. It was up like one and a 1.8%.
It was up the previous year about the same.
So you’ve had writing participation creeping up in a flat period. Then we have this decline in 2019 driven by I think by tariffs going to the tariffs, but the bottom line is market was off. 20 to 25%.
And bicycle riding participation scooched up a little bit.
That game. So that’s the metric that gives me hope that all of the economic and social factors, the the factors that that are being driven by demographics
are going to move forward and create a net gain for the bike business. I would watch that metric because I think it’s also indicative of these people. The good citizens digging bikes out of basements and getting repaired right now. Because bicycle riding participation is agnostic as to where you buy it, or you get it. It’s just that you got it. You’re riding the bike is more it’s more butts on bikes.
And I think that is the number we should be looking at. And it also by the way, includes rideshare.
It doesn’t care if you own it, just rode it. So all
That’s the number and I think we’re going to see all these factors marginally increasing, not just because of the factors coming out of the Coronavirus, ie social distancing concern about writing in cheek to jowl with mass transportation.
But you’ve got a younger generation of Americans in particular, who are absolutely dedicated
to seeing this the climate crisis met and defeated
and they’re becoming a political voice as well in this country.
So, they are folks that will be able to vote with pocketbooks.
I hate to say this, but but they also if you look carefully are a large percentage of who are participating in the protests.
There’s a change there’s a change in the demographics of this country that we’ve been told to pay attention to and
Those demographics are, I believe, going to help with the net gain. And I’m sorry for this long convoluted explanation, but I think they’re going to contribute to this next gain net gain in bicycling and bicycle use human transportation use. And I think the metric we look at is but his bicycle riding participation. And in a bad year in 2019, it was up 1.8%
Which to me says, Yeah, it’s there. Now Coronavirus, all of the issues of this very sad and disruptive series of events. But I think the metric who watch at the end of 20 2020 as we get to 2021 is what’s bicycle riding participation during the year. How does it How does it look relative to the trend, the 30 year trend that you could you could use the nsca data for so.
Carlton Reid 1:35:59
We’ve been around a long time, Jay, you, you definitely longer than me. But we both probably weren’t I we definitely weren’t expecting this to happen. So we were both incredibly astounded and and gratified that it has. So to round out today’s conversation ID and to fill people in really on where you’ve got all this fascinating information from because we heard about your your shooting background and your bike shop background. But tell us to end the display show about what the company that you run today are you have been running for a number of years. So you’re I described it in in my book as a data freak. So you’re providing statistics to the industry. So tell us about that and where people can find out the information. So give us your website address.
Jay Townley 1:36:50
Okay, well, today, I am a partner in Human Powered Solutions.
and my official
working title is Resident Futurist.
But my, my, I like that, yeah, my responsibility is data and stats.
And to use that employ that to the extent I can to really have the conversation we just had to to look at what does the future look like?
Unknown Speaker 1:37:20
Our website is www.humanpoweredsolutions.com.
Jay Townley 1:37:28
And we are at this point in the midst of working on and promoting a consumer survey, a primary consumer survey, a syndicated survey product
where we’re working with the industry to get subscribers to a multi wave survey that will go out at minimum three times in the next 12 months to survey a big enough bloc of consumers
That we’ve got a 2% accuracy, or reliability in the survey work. And what we’re trying to define are really asking consumers,
you know, have they bought a bike? How do they use it? Where do they get it? Is it used, you know all the questions of how they acquired it? And then what’s their intention going forward? And then react that in about six months?
And then react them in 12 months?
Carlton Reid 1:38:29
And you answer that that’d be fascinating at any anytime. But now it’s going to be doubly doubly fascinating because we’ve got this huge influx of new people in and it’ll be fascinating to see how many of the people that you you managed to grab who are brand new, and how many will still got in six months time that’ll be incredibly useful to know.
Jay Townley 1:38:52
Exactly. And that’s the reason we’re doing it is. These are unprecedented times.
As long as I’ve lived in ever seen anything
thing like this.
As long as you’ve lived, you’ve never seen anything like this. The bike industry, the bike world has seen nothing like this. And we as folks that like stats and data, we’re used to looking at the past. And what we’d like to do is talk to consumers about not just the immediate past, but intention for the future.
But measure that and compare it over six month timeframes through the first half of 2021. And for exactly the reasons, Carlton, that, you know, you perceive that this is this is the only way we’re going to get a real handle on a lot of the dynamics that are occurring, including the difference between, you know, the economy, in the economy and the economic influence of factors, the environmental factors, the age factors of the demographic drives in the United States, and how
planners in our business can really begin to think about what the consumer is intending to do and react to consumer intention.
Carlton Reid 1:40:11
today that has been absolutely fascinating. Thank you. This is gonna be a longer than normal normal show, but then again, we’ve discussed the 1970s we’ve discussed Coronavirus coming up to date now and and I just love that quote before were you saying you’ve never seen anything in your lifetime, like this? And that’s that’s saying something because you were right there at the epicentre of the 1970s bike. Boom. So, Jay, thank you ever so much for being on today’s show.
Jay Townley 1:40:37
You’re more than welcome.
Carlton Reid 1:40:39
Thanks to Jay Townley there and this has been another longer lockdown special of the spokesmen cycling podcast brought to you in association with Jenson USA. As always show notes and more can be found at www.the-spokesmen.com. Thank you for listening to today’s
Show. The episode I promised with Chris Boardman, Superintenddnt Andy Cox and Professor Rachel Aldred — minus Chris Boardman — will be along just as soon as I figure out a way to engineer it.
Meanwhile, get out there and ride.
