Schwinn Question
- Thread starter DougTimme
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This text from Schwinn history on Re Cycle has them starting in 1988, but I couldn't find anything saying how long they used the plant there.
"Next, Schwinn made the colossal error of acquiring a dilapidated bicycle factory in Budapest, Hungary. The cost for controlling interest was more than $1 million. This was a year after 1987’s record breaking $7 million profit. The plant needed to be overhauled. It was outdated in every way. The ceiling leaked. There was a lot of money to be saved on labor, but after that, it wasn’t even an improvement on the Chicago factory that Schwinn had closed. Hungarian labor proved to be lackadaisical in the crumbling former Eastern block. In 1988 the average Hungarian could make more money on the black market than as a legitimate worker for Schwinn. 1987 proved to be Schwinn’s best year. Without another banner year, the company couldn’t purchase the number of bikes from the Hungarian plant that it had projected.
Volume at the Budapest factory was too low to reap the benefits of economies of scale. Schwinn, the largest bike seller in America was juggling production from Giant, China Bicycles, the Hungarian plant, and its own Greenville factory in Mississippi. The company that should have been commanding the deepest discounts from materials and parts suppliers was losing money because it had splintered its manufacturing so poorly. In Europe for instance, the Budapest factory was a minor player and couldn’t command discounts from suppliers. Costs stayed high. Sales stayed low. Quality was never on par with Giant’s bikes. A recall from a faulty brake in 1991 cost Schwinn $1 million by itself. Schwinn would never recover. "
"Next, Schwinn made the colossal error of acquiring a dilapidated bicycle factory in Budapest, Hungary. The cost for controlling interest was more than $1 million. This was a year after 1987’s record breaking $7 million profit. The plant needed to be overhauled. It was outdated in every way. The ceiling leaked. There was a lot of money to be saved on labor, but after that, it wasn’t even an improvement on the Chicago factory that Schwinn had closed. Hungarian labor proved to be lackadaisical in the crumbling former Eastern block. In 1988 the average Hungarian could make more money on the black market than as a legitimate worker for Schwinn. 1987 proved to be Schwinn’s best year. Without another banner year, the company couldn’t purchase the number of bikes from the Hungarian plant that it had projected.
Volume at the Budapest factory was too low to reap the benefits of economies of scale. Schwinn, the largest bike seller in America was juggling production from Giant, China Bicycles, the Hungarian plant, and its own Greenville factory in Mississippi. The company that should have been commanding the deepest discounts from materials and parts suppliers was losing money because it had splintered its manufacturing so poorly. In Europe for instance, the Budapest factory was a minor player and couldn’t command discounts from suppliers. Costs stayed high. Sales stayed low. Quality was never on par with Giant’s bikes. A recall from a faulty brake in 1991 cost Schwinn $1 million by itself. Schwinn would never recover. "
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