He's never considered going public, saying he has the same philosophy about IPOs that his father did: "I don't need the money and I don't need the headaches. What Burke is proudest of, though, is having nurtured a company culture that's fitness- and health-focused, independent-natured, and centered around a "do-the-right-thing" mentality.
He loves to tell the story of a customer-care representative named Jed Gunn:. Around 5 p. A FedEx truck that had been carrying their high-end mountain bikes to the national championships in Missoula, Montana, had burned to the ground. Jed called a Trek dealer in Montana and asked if he could take on a massive task: assemble a bunch of bikes overnight.
He got a yes, and got eight mountain bikes shipped from California. Do the right thing. You don't need to ask. It's just one of the stories from the company's history told in a page book--a tome that began as the marketing department's brand guide, but is so rich in stories of hospitality, giving back, and company culture, that Trek's management is pondering distributing it to its retailers, and perhaps even customers.
It includes a item glossary of Trek-isms, a mix of sports metaphors, standard business jargon, and a few that are unique to the company. Numbers 48 and 49 in the glossary hark back to the early days of the company, when Richard Burke, on a whim, bought the red barn in Waterloo to create a bike-making company from scratch. They read: "What would The Big Guy do? Top Stories. Top Videos.
After a conflict with cofounder Burke, Hogg left Trek in to start his own bicycle company in California. In spite of the changes, Trek continued to grow at an impressive rate. In the company introduced its first aluminum road bike, Model Its first carbon composite road bike, Model , hit the market the following year. Ten years of startling growth did not come without problems, however.
As Burke explained in a Capital Times Madison, Wisconsin interview, "In all fairness, Bevill [Hogg, company cofounder] was more of a dreamer than a manager.
Unsold inventory began to pile up, and as a result the company was losing money. With morale nearing rock bottom, Burke decided to take over the day-to-day management of the company. He instituted a "back to basics" approach, emphasizing sensible business practices and quality service.
His new mission statement had four components: "Produce a quality product at a competitive price, deliver it on time in a positive environment. Burke's new approach began to pay off quickly. Improved efficiency and marketing, combined with Trek's ongoing reputation for turning out quality products, breathed new life into the company's sagging bottom line.
Sales doubled in each of the next three years. In Trek successfully introduced a new line of mountain bikes, and their popularity helped the company sell a total of about , bicycles in Trek continued to find innovative ways to make money during the last years of the s. In the company introduced a line of bicycling apparel. The following year, Trek entered the stationary bicycle market with Trek Fitness bikes. In the Jazz line of children's bicycles were introduced, and the company opened subsidiaries in Great Britain and Germany.
Within five years, international sales accounted for about 35 percent of the company's business. By mountain bikes made up nearly half the bicycles sold in the United States, and Trek was prepared to claim a strong share of those sales. The company sold , bikes altogether that year. During the first part of the s, Trek remained at the technological forefront among bicycle manufacturers. Throughout the s, the company had succeeded in developing advanced materials that enabled it to maximize the lightness and strength of its bicycle frames.
Using the OCLV process, Trek was able to make the lightest production frames in the world, weighing in at a mere 2. Meanwhile, another expansion project took place at Trek's Waterloo plant, which now measured , square feet. During the early s, the bicycle industry in the United States experienced a bit of a sales slump.
To compensate, Trek looked to boost its sales in other areas. The company continued to emphasize international growth during this period. Sales in Japan, for example grew by about 40 percent per year from through Trek also concentrated more on sales in Europe, where it was gaining a solid reputation among bicycle buyers who had long thought of American bikes as heavy, clunky monsters built for kids.
In addition, the company began to focus more on the sale of bicycling accessories. Beginning in , Trek assembled helmets at a new plant in Oconomowoc, Wisconsin, out of parts purchased from other companies.
And you're going to have to rethink your business. If you want to do business the way you want to do business, those days are over. This is a new world and the customer and the economy are going to influence how you play the game. You tell me someone else who has a product that can help with social distancing, can help with the health crisis, and is good for the environment. That's a really good space to be in.
I think more people are going to be interested in the environment. People are seeing the environmental benefit of not having our streets clogged with cars all day long. Besides good sales of entry-level bikes and kids bikes, we're also seeing more and more people buying online. Do you think this crisis is going to accelerate the move to online sales? I do know people want to test ride a bike, people want a bike that is professionally assembled, people want advice.
And I'll tell you the good bicycle stores are doing better and better. People want to talk doom and gloom. They say bike shops are going out of business and the internet is going to kill everybody, and I don't believe it. I believe there is a great future for well-run bicycle stores because they provide value to the customer. One of the things we turned on or re-emphasized on the website was the ability for Trek consumers to be able to buy online and have products delivered to their home.
We've seen a massive surge in that business in the last 15 days. I think after the pandemic the consumer is going to want bike shops to be able to offer more variety in how they take care of them. This a different kind of crisis and one of the things we try to do is put down our priorities here, and the number one priority was safety. And if they don't want to, they didn't need to. If they were full-time people and they didn't want to work they were still paid, they kept their benefits.
We implemented an entirely new way of doing business, the restaurant way, where you are greeted by a host and we take care of people one at a time. And then we took all that information and we pushed it out to our retailers. We have a hotline set up here in our financial services department for retailers to call in if they need help applying for government assistance.
We've been reaching out to dealers on how to apply for that. We have a whole team digging into those programs to figure out what was applicable to bike dealers and what isn't.
There's a lot that is and we made sure to share that with all our customers. And we're helping people through that situation right now. There's a massive effort at Trek to help our retailers through this process. Speaking of government assistance, I imagine Trek doesn't qualify for the small business loans, are you applying for any kind of government assistance? I don't think we apply for very much.
Somehow if you are an airline or you are a small business there's a lot, but I don't think there's a lot for medium-sized businesses. I know you've communicated a lot to Trek dealers, but do you have a message for the industry outside your dealers and partners? I go back to the point that we have a product that helps with the climate and can help with global health and those two issues are massive issues.
I think more people are going to be interested in the environment and in health and I believe our best days are ahead of us. I really do. I just can't tell you when that is going to be and it might be really rocky for a time. And it also might be really good. It's so hard to say. If you take a look around the globe the U. These are people who are lobbying the government every year for money for bike trails, who are lobbying the government on issues like tariffs. This is the organization that has been lobbying state by state on e-bike legislation so retailers can sell e-bikes.
More than ever it's important of the industry to wake up to the fact there we have the most competent industry organization in the world and we should support it.
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