Breaking Away
By John Greenwald
Huffy bikes on a roll
When U.S. Gold Medalists Steve Hegg and Connie Carpenter-Phinney pedaled to victory in last summer's Olympics, Huffy bicycles were a big winner too. The largest U.S. bikemaker, Huffy had invested two years and more than $600,000 to design and build the special cycles that Hegg and Carpenter-Phinney rode. Now Huffy is using its Olympic achievement to pump up Christmas sales. "I don't think anyone envisioned our success from the Olympics," says Huffy President Harry Shaw III. "A year ago, people thought we were crazy."
Huffy's aerodynamically designed Olympic cycles, which carried the Raleigh name, were dubbed "Funny Bikes" because of their small front wheels, large, solid back ones made of plastic, and boomerang-shaped handle bars. "They were the first attempt at a radical departure in bicycle design," says Huffy's Michael Melton, technical director of the U.S. cycling team, who developed them. In Los Angeles, the Funny Bikes' riders pedaled to five medals.
Some children may find a Funny Bike under the Christmas tree next week. Huffy has introduced a new model, the Olympian, a red, white and blue bicycle that looks like the Olympic model and sells for about $150. The company rushed the first 6,500 Olympians to retailers in time for the holiday season.
The victories at the Los Angeles Games were just one link in the chain of successes that Huffy has been forging. Since it lost $2 million two years ago, the Miamisburg, Ohio, company has been on a roll. Last year it earned $8.8 million on sales of $272 million. The firm kept its momentum going by earning $1.21 million in the first quarter of fiscal 1985, up from $1.16 million during the same period a year ago.
Founded as a sewing-machine company in 1887, Huffy has been aggressively expanding beyond its traditional line of children's bikes. The company took its boldest step in 1982, when it bought the U.S. manufacturing and marketing rights to Britain's Raleigh cycles. The popular Raleighs, equipped with up to 18 speeds, are designed for adults and typically sell for about $220, vs. $90 for standard Huffy models. Gaining access to the fashionable British bikes was vital to Huffy. While Raleigh and other high-priced brands represent just 25% of the U.S. market, they account for 40% of the total value of the bikes Americans buy.
The Olympic publicity came at a time of renewed fascination with bicycles. Health-conscious Americans, especially joggers whose knees can no longer take the pounding of running, have been turning to bikes for exercise and fresh air. As a result, U.S. bicycle sales rebounded to 9 million units in 1983, and should reach 9.7 million this year.
The bad news for American firms, though, is that all the 1984 growth comes from imports, especially from Taiwan. While U.S. bikemakers expect to sell 6 million cycles this year, down from 6.3 million a year ago, imports will jump from 2.7 million in 1983 to 3.7 million in 1984. Foreign-made brands now account for nearly 40% of U.S. bike sales.
Huffy has launched a variety of counterattacks against the foreign onslaught. On one hand, the company and other U.S. bikemakers are seeking Government protection from imports and an end to what they call the illegal sales of Taiwanese bicycles at artificially low prices. On the other, Huffy is producing its Raleigh line in Taiwan. Said Company Vice President Barry Ryan: "We fought imports from Day 1, and we'll continue to fight. We're psyched to the point where we can beat them, and that's what you need to win." It also helps to have some Olympic gold-medal promotion. --By John Greenwald.
Reported by Elizabeth Taylor/Miamisburg
With reporting by Elizabeth Taylor