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Roadmaster Leaves Distribution Legacy

Published February 1, 2010

CORRECTION:

***In our February 1 print version of this story we stated incorrectly that Highway Two is owned by Dave Hostetter. Hostetter actually serves as president of Highway Two. Highway Two is a joint venture, wholly-owned by Selle Royal S.p.A and Continental Tires North America. Highway Two functions as the North American distributor serving the U.S. and Canadian markets in conjunction with QBP and Norco for the brands of Selle Royal (Brooks, Crank Brothers, Fizik and Selle Royal) and Continental Bicycle Tires.
We apologize for the error and any inconvenience it may have cause.***

BY JASON NORMAN

OLNEY, IL—This small Illinois town 250 miles south of Chicago holds the distinction of being home to the white squirrel and several notable bicycle distributors. But at one time, one of the biggest mass-market bike manufacturers in the world—AMF/Roadmaster—was headquartered here.

Roadmaster moved its operations to Olney, Illinois, in 1962, largely because of the town’s central location and its low cost of doing business.

“After farming and oil, bikes were the deal in Olney,” said Crystal Trout, sales and marketing manager for SKS USA, one of four distributors who now call Olney home.

Roadmaster employed upwards of 2,000 locals during its heyday 20 years ago.

“That’s very good for a county of 17,000 people,” said Tom Fehrenbacher, Olney’s former mayor (see sidebar inside).

About 30 years ago two German parts manufacturers—Union Frondenberg and Weinmann—followed Roadmaster’s lead, moving to Olney to supply parts for the company. Union made pedals and spokes among other components and Weinmann produced rims not only for Roadmaster, but for Huffy, Schwinn and Murray—all located in the Midwest.

The man who convinced these two parts manufacturers to move to Olney still works in town today. KHS Bicycle Parts founder Karl Schaette started his career for Union—based in Germany—in the early 1950s in the export department.

By the mid 1960s Schaette started traveling to the United States and Canada to visit customers and sell Union product.

Shortly thereafter, Schaette and his wife, Erika, created KHS. His company landed in New York City representing several European companies including Union, Weinmann, SKS, Esge, Reich and Eldi. Schaette later moved his office to Houston.

“I recommended in 1976 that Union and Weinmann open up manufacturing plants in Olney,” Schaette said. “Olney was centrally located, and in between Schwinn and Huffy. For distribution Olney is great.”

KHS moved to Olney in 1979 after the two companies had already started production. In 1980, the company built its own office in Olney’s industrial park.

A Town and Industry Transitions. A lot has changed in Olney since KHS first set up shop three decades ago. For one, AMF/Roadmaster, Union and Weinmann all stopped manufacturing there roughly a decade ago.

Pacific Cycle still handles distribution out of the former AMF/Roadmaster facility. It bought Brunswick, which owned the Roadmaster brand at the time, in 2000.

As it turns out, its move was a precursor of things to come as companies like Huffy, Murray and Schwinn learned that it was much cheaper to manufacture bikes abroad.

“These companies [like Union and Weinmann] that were supplying those mass-market bike companies dried up just as quick,” said Jeff Enlow, general manager of Magura Direct.

Magura, like SKS, began distributing its products in the U.S. market through KHS. But eventually Magura branched out on its own.

The manufacturing exodus took with it many production-level jobs, according to SKS’ Trout. Though the number of industry jobs in Olney has dropped substantially since the town’s peak manufacturing days, Enlow said the average pay for today’s positions is much higher.

Schaette said he prepared for the town’s transition from a manufacturing mecca long before it happened.

“We broadened our [portfolio],” Schaette said. “We went into the motorcycle industry.”

Though the manufacturers left, the industry didn’t die in the town of about 9,000—it just changed, with its German roots still persisting.

This was probably thanks in large part to KHS and the German-based companies it helped grow to spread their wings and fly on their own, such as Magura, SKS and Sigma Sport. Sigma Sport was based in Olney before moving to Chicago five years ago.

Around the same time that Sigma hit the road, a new distributor was formed in 2006—Highway Two. At one time its president, Dave Hostetter, worked for Sigma.

“We drew a line at the Rockies and drew a line at Eastern Pennsylvania,” said Hostetter of his options on where to break ground. “There were some decent deals out there, but nobody could touch Olney for operating costs.”

Another major advantage Olney offers distributors is a UPS shipping facility. “We’re the biggest UPS shipper in five counties,” Hostetter said, adding that being in Olney enables Highway Two to compete with timely shipment and delivery of product.

Being in close proximity to each other has also allowed these four distributors to communicate with one another easily, and help forge lifelong friendships. Magura’s Enlow and SKS general manager Mark Burgener have been friends for many years. The two often ride a six-mile mountain bike loop on Trout’s parents’ property.

A Future in Olney. While Olney might not have the cycling panache of Portland, Oregon, or Boulder, Colorado, its industry lore is cemented because of AMF/Roadmaster’s long and successful four-decade run in town. At one point during the 1970s, the company was pumping out several million Roadmaster bikes a year.

“If you say you’re in the bike industry, the old guy sitting next to you in town might say that he worked for Roadmaster,” Hostetter said.

But the Roadmaster name resonates far beyond the border of Richland County.

When Hostetter told one of his saddle brands that his business would reside in Olney, “they knew it because they came to Olney to try and sell seats to Roadmaster,” he said.

While KHS’ Schaette and fellow distributors love to talk about the town’s industry heyday, they hope its best days lie ahead.

“The cost of living and doing business is very attractive,” said Schaette, who up until two years ago rode his bike to and from the office.

“We always try to reach out to suppliers” and get them to come to Olney, Schaette said.

Trout added, “I would certainly hope they’d consider it for distribution. The cost of doing business here is low.”

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