Friday, July 22, 2016

Designed in America: Part Four

The Rise of Shimano

When IBM was developing its groundbreaking personal computer, the IBM PC, it turned to a relative newcomer in the business, Microsoft, to provide the PC's operating system. In the negotiations with IBM, Microsoft's young entrepreneur Bill Gates made what probably seemed to be an odd but benign request. He wanted to retain the rights to the software. IBM likely figured that the real potential for profit was in the computers themselves - the hardware, not the software - so they allowed Gates' request. I can just picture the IBM executives shrugging, "Sure, kid. Why not."

As we now know, Gates saw the future, and his MS-DOS, and later Windows operating systems, would come to control roughly 90% of the world's personal computers. Since the '80s, the term "PC" has become just a generic term for any computer that runs a Microsoft operating system, regardless of whatever brand name is on the case, as opposed to, say, a "Mac." (Trivial disclosure. This blog is composed on a Mac).

The bicycle industry has its own version of Microsoft, a company that has grown to such a position of dominance that their components have become more important than the name on the bike. Obviously, the Microsoft (or the Intel, or the 800 lb. gorilla) of the bicycle industry is Shimano.

In the previous installments of the Designed in America series, I've mostly discussed the loss of American bike manufacturing, and in that specific context, the rise of Shimano may seem less important than some of the other factors already described. Shimano only makes components, and America never really had much of a bicycle component industry -- at least not for lightweight, multi-speed bikes. But Shimano's dominance came at the expense of most European component makers, and their rise hastened and facilitated the shift of the center of the world's bicycle industry to Asia.

Up through the 1950s, Japanese component makers, Maeda Industries (aka SunTour) and Shimano, were both almost entirely focused on bicycle parts for their home market. But in the '60s, they were looking to expand into lucrative Western markets. Early offerings from both companies were mostly inexpensive knockoffs of European components. French designs were a typical source. By mid decade, both companies began to innovate, and one of the most influential of the Japanese innovations was SunTour's slant-parallelogram derailleur of 1964, the design of which would become the basis of all modern derailleurs. That patent-protected design gave SunTour an early edge against Shimano, but both companies still needed some help breaking out of the Japanese market.

It just so happens that, once again, the American giant Schwinn would play a significant role in helping Shimano establish itself in the U.S., though it didn't begin there. The American company that first gave Shimano a foot in the door was Westfield Mfg. - better known as Columbia.

According to Frank Berto's The Dancing Chain, the Western Auto Supply chain, which did considerable sales in bicycles in the '50s and '60s (some older readers may recall the Western Flyer brand of bikes. Yeah - that's them), imported Raleigh 3-speeds from England for their lightweight line. In the early 60's, Raleigh cut off their relationship with Western Auto, leaving the auto parts chain scrambling to find a replacement supplier. Westfield/Columbia stepped up. They couldn't make a profit if they equipped their bikes with Sturmey-Archer 3-speed hubs (Raleigh owned S-A, and got the hubs at well-below market value), so the company looked to Japan. Westfield's president, Norman Clarke, was practically given a hero's welcome when he arrived in Japan. One of the many parts contracts he came back with was for Shimano 3-speed hubs, at roughly half the price of Sturmey-Archer.  Shimano's 3-speed hubs, named the 3.3.3, had cold-forged internals, making them light and durable.

Throughout the 60s and 70s, Schwinn's
main supplier of derailleurs had been Huret
with their Allvit model, which was
notable for its steel shroud to protect the
rather flimsy parallelogram.
A few years later, it was Schwinn's turn. In Crown and Coleman's book No Hands, it tells how Schwinn dealers were having to replace too many freewheels on their multi-speed bikes - from 5-speed Sting-Rays, to the 10-speed Varsity. The problem was due to the intrusion of dirt and sand inside the mechanism. When Schwinn asked for a sealed-mechanism freewheel, their main supplier, Maillard, either wouldn't or couldn't provide it. Shimano had been trying unsuccessfully to court Schwinn for a couple of years at that point, and Schwinn finally took an interest. They asked Shimano if they could make a sealed freewheel, and a short time later, the thing was done. It was the beginning of a very beneficial relationship -- particularly for Shimano. During the bike boom, Shimano was equipping all of Schwinn's Japanese imports, as well as supplying replacement parts for the company's domestic models. The Shimano-made derailleurs were a nice replacement for a worn-out Huret Allvit.

Clearly at Schwinn's request, Shimano modified their Lark
derailleur to include a very Allvit-like steel plate. The result
was re-branded as the Schwinn GT-100.
Shimano's head of U.S. sales in the '60s was Yoshi Shimano, son of founder Shozaburo Shimano. Yoshi Shimano developed a close relationship with Schwinn's management, particularly Al Fritz (the man usually credited with bringing America the Sting-Ray), typically serving as Fritz's translator in meetings between Schwinn, Shimano, other Japanese suppliers, and even the Japanese government.

The relationship between the two companies could be seen not only in Shimano's sealed mechanism freewheel, but also their derailleur designs, some of which were obviously requested by or influenced by the American giant. Shimano made versions of their derailleurs with the Schwinn name, and some bore Schwinn-specified modifications. The derailleur database website, Disraeli Gears, has a whole page of Schwinn derailleurs, many of which are re-badged Shimano units.

The Shimano Crane GS, which was one of the best touring derailleurs of its day (only the SunTour V-GT shifted better) was re-branded for Schwinn as the LeTour GT-300. According to Disraeli Gears, the Schwinn version may have outsold the Shimano-branded one. (photo from Disraeli Gears)
Shimano was, no doubt, given a considerable boost from Schwinn, and by the 1980s, had grown to the point that they really didn't need the American company's help anymore, and the cooperation between the two gradually faded.

During the '70s, Shimano's line of components expanded, and they quickly adopted the "gruppo" concept, inspired by Campagnolo of Italy, whose full line of components included nearly every part needed to build a complete bicycle. Still, their competitor SunTour continued to control more market share for derailleur-equipped bikes.

One of the things the company became well-known for was its constant innovation. Those who are less charitable might refer to it as a commitment to planned obsolescence. If anybody had been trying to copy Shimano's lead, they would have found themselves trying to hit a constantly moving target. According to Berto, Shimano had a company policy that 10% of their workforce must be graduate engineers, and 10% of the employees worked in research & development. Through the '70s and '80s, some of the company's notable innovations would include: several versions of Positron indexed shifting, FFS freewheeling cranks, Dyna Drive pedals, BioPace chainrings, 10-mm pitch chain and drivetrain (normal chain pitch is 12.7 mm), AX-series aerodynamic components, and Freehub cassette hubs (not actually new, but a refinement of an older idea). Many of them failed to catch on and quietly faded away after a couple of years.

Then, in the 1980s, two things happened that combined to make Shimano the dominant force in the industry. The first was mountain bikes. Both Shimano and SunTour jumped in early to provide components for the hot new trend. SunTour got a slight jump on Shimano with their mountain-bike-specific MountTech derailleur. However, the MounTech, with its extra linkages and pivots, was too complicated for its own good and didn't hold up under hard use. Many users replaced it with the Shimano Deore, which was a simpler, more robust design. That gave Shimano an edge in the burgeoning off-road market.

The second thing was indexed shifting. Indexed or "click" shifting was really nothing new. SunTour had already tried a system they called Mighty Click. Huret offered something they called the Commander. In fact, some of the earliest gear-shifting bicycles from the turn of the 20th century had some form of indexed shifting. Shimano had made several attempts at indexing with their Positron system, but they were all aimed at entry-level cyclists, and didn't work reliably enough to catch on. Then in 1985 Shimano introduced a redesigned Dura-Ace SIS, which stood for Shimano Index System. The new Dura-Ace utilized the slant-parallelogram derailleur design (SunTour's patent had just expired) and two spring-loaded pivots, along with a special shift lever with very distinct detents built into it. It was a revelation. Introduced at the top of the line, it was poised for trickle-down appeal. Best of all, it worked reliably.

Suddenly, everyone had to have indexed shifting. A common expression was heard at the time: "If it don't click, it don't sell." SunTour responded in 1987 with AccuShift, which worked reasonably well, but not as well as SIS. Campagnolo responded with Synchro, which really didn't work well at all. What Shimano had figured out, and which their competitors took longer to realize, was that SIS was a fully integrated system, relying upon the derailleur, shift lever, chain and sprocket profiles, and even the cables and cable housing to achieve the most reliable performance. By the time their competitors figured that out, Shimano -- the constantly moving target -- was already onto something else. By the end of the decade, most of the European component makers were flailing and failing. Campagnolo managed to hold on, mainly because of loyalty among the racing elite. Even SunTour was greatly diminished. Shimano's once-formidable competitor was sold, combined with Sakae-Ringyo, re-sold, and moved to Taiwan. SR-SunTour is only recently starting to re-enter the U.S. market, but with a much smaller range of components.

By the end of the '80s Shimano had gained a Microsoft-like near-monopoly in bicycle components, controlling approximately 85% of the market.

The idea of integration appealed to Shimano, and their next innovations took that concept to new levels. STI, or Shimano Total Integration, combined shifting and braking controls into an integrated package - which meant that if someone wanted the company's drivetrain components, they needed to get the company's brakes as well. The days of mixing and matching components from different manufacturers (and even different countries) were truly gone. More to the point, Shimano took steps to seriously discourage bicycle manufacturers from even attempting to mix parts from different makers.

In the same way that Microsoft would bundle their own software, like their own Internet Explorer, with their Windows OS on new computers, Shimano would bundle all their components into packages that discouraged bicycle manufacturers from equipping their bikes with any competing products. If a manufacturer wanted to include a different brand of shifters or brakes, for example, they were slapped with a surcharge on the Shimano components. Both mega-companies were sued in similar anti-trust suits for stifling competition. SRAM Corp, makers of Grip-Shift shifters, sued Shimano for their bundling practices. The case was settled out of court, and the price penalties were dropped, but ultimately few companies would choose to break up a Shimano group.

The result of the company's dominance is that most bikes are now marketed and sold based on the level of their Shimano group set. Sales people will tout, or buyers will ask for, the "Ultegra-level bike" or a "105-level bike" and the name on the frame is of minimal importance. And that shift of power, from the bike manufacturer to the parts manufacturer, made it harder for buyers to notice or even care as more and more bike production moved to the same handful of suppliers in China and Taiwan. Ostensibly competing bike brands are overwhelmingly selling bikes that have frames that are made by the same factory, equipped with identical components. Choosing from different bikes in the showroom has become a matter of choosing which color or graphics package a person prefers.

Yes, there is still Campagnolo - but good luck finding a Campy-equipped bike in the average bike shop. And SRAM has managed to take away some of Shimano's market share, but even their story manages to fit into the same "design it here - import it from there" business model, as the American-based component maker, just like the rest of the bicycle industry today, imports most of their components from Asia.

From a retrogrouch perspective, the saga doesn't exactly have a happy ending. But I hope readers enjoyed the 4-part series.

11 comments:

  1. Fascinating and well-explained history I was always interested in but didn't know how to research, thank you!

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  2. I've very much enjoyed reading this series.

    You touch upon one very interesting development in the paragraph beginning with "The result of the company's dominance." In "Anybody's Bike Book", Tom Cuthbertson wrote, "The frame is the heart and soul of the bicycle." Those of us who became dedicated cyclists before the Shimano's dominance saw bikes that way. Often, if we were on limited budgets (as I almost always was), we bought the best frame we could and rode the bike until the parts started wearing out--or we had more money. Then, we'd upgrade the worn-out (or simply less-expensive) derailleurs and such.

    Some manufacturers even offered two or more models that had the same (or, at least the same level of quality) frame. The less-expensive model came with less expensive (but, usually, functional) components. Trek did this during its early years, when it was still building its bicycles in the US.

    Of course, some of us bought bare frames (which Trek and a few other companies--and, naturally, the custom builders-- offered) and built them as our budgets allowed. This really was the ideal situation because you knew you had a good bike because you had a good frame, and you could make it better as you had more money to spend.

    Today, though, almost nobody--except for a few of us old die-hards--think in those terms. As you mention, even experienced cyclists shop by the Shimano component group (e.g., a 105-level bike) rather than the frame.

    The only real differences in new mass-market frames that I can see are in the materials: carbon, titanium, aluminium or steel. Most bikes are aluminum, and carbon or titanium bikes are almost always near the higher end of the price spectrum. It's rare to see high-quality steel bikes apart from those made by small or custom builders: almost all steel bikes sold in shops today are at the lower end of the spectrum. Thus, people think steel bikes are cheap or lower quality. This way of thinking, I believe, is also a result of the developments you've described in your series.

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    1. The advice about the frame being the heart and soul of the bike was something I heard and read again and again when I was younger. Every book about serious cycling had something similar to say. I just don't hear that anymore.

      Yes, we die-hards still follow that advice -- and for those of us who do, we are fortunate there are some wonderful custom frame builders out there. And we can put on any components we like -- even mix & match! Of course, people like us are outliers, and don't typically buy our bikes from regular bike shops.

      I like your final point about different materials and the perception of quality. You may be right about how that fits the theme too.

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    2. I think one reason why it fits is that the cost of mass-producing aluminum frames dropped around the time manufacturing shifted to Taiwan and China. In fact, it wouldn't surprise if the Taiwanese or Chinese were the ones who came up with the manufacturing technique. (If you recall, early aluminum frames from Klein and Cannondale were expensive--almost as much as the best steel bikes.

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  3. Many thanks for these very fine articles. Interesting and fun to read.

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  4. Just read the whole series this morning. Nicely done. Thanks!

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  5. Let me add my appreciation for your excellent historical summary of an era I remember well. Bought my first derailleur bicycle in 1963, a Carlton labelled Huffy in the US. Pretty basic entry level bike but it got me started on a life-long love.
    The one thing that has always informed North American cycling is the "toy" aspect. You cite the history of predominantly child bike sales before and after the brief boom years. But in addition it is worth noting that the adults have almost always bought "toys" as well; not transportation, but fantasy recreation. I say fantasy because we bought Walter Mitty road racers during the early boom years. And then we bought Walter Mitty off road racer mountain bikes from the early 1980s. You can ask, "Who cares?" But no country ever achieves real cycling acceptance, and safety, until it relies on cycles for transportation. My motto for the future is: "Walking, busses and bikes for transportation. Cars and motorcycles for sport." How's that for an inversion?

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    1. Nice points - thanks for adding them!

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  6. Vancouver Island--You make a great point about bicycle acceptance. In several posts on my blog, I have touched on the reasons why most efforts to make US cities more "bicycle friendly" are misguided at best and dangerous at worst. Among them is what you have said: Most Americans still see bikes as "kids' stuff" and that any serious adult should be driving a car. Until that mentality changes, we can build all the bike lanes we want, but it won't help us.

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  7. About Disraeligears' comment: He is probably right. Some cyclists who bought bikes equipped with that derailleur--or the other Schwinn-branded derailleurs that weren't made by Huret--probably didn't know their derailleur was made by Shimano.

    In fact, Shimano really wasn't a significant name in high-quality cycle parts until they came out with indexed shifting and integrated systems. Most malfunctioning or broken Simplex, Huret and non-Record Campagnolo (Valentino, Velox, Gran Turismo) derailleurs were replaced by SunTours. Even though Shimano was making good equipment, it wasn't common in the replacement (or "after") market. Also, until 1985 or so, SunTour derailleurs (along with SR and Sugino cranks and Dia-Compe brakes) were more common than their Shimano counterparts as original equipment.

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