Roadmaster Industries, Inc. (Specimen)

Roadmaster Industries, Inc. (Specimen)
Item# 4286roadmaster

The origins of the Roadmaster product family can be traced to a small metal factory located in Harvey, Illinois, where its proprietor, Brett Anderson, began making four-inch wheel disks for toy manufacturers in 1925. The following year, he moved his business, now known as the Anderson and Vail Stamping Company to Hammond, Indiana. As the decade progressed, the fledgling company, which changed its name to Junior Toy in 1929, began manufacturing the metal tricycles and little red wagons that would become a familiar part of the American childhood experience. Noted for their dependability, these toys were often passed down from one generation to the next.

Just as the company was starting to establish itself as a reputable toy manufacturer, it found itself in the midst of the Great Depression. While the stock market crash of 1929 and the precipitous decline of the American economy may have spelled the end for many businesses--especially those engaged in the production of such nonessential items as toys--Anderson's company managed to survive. In fact, during the 1930s, the company actually managed to double sales each year as it was able to turn out a line of toys that fell within the budget of average Depression-era wage earner. Its most popular item during the period, a sidewalk bicycle with a stamped metal frame, carried an affordable one-dollar price tag. In 1935, the Junior Toy company began marketing this line of metal framed bicycles and tricycles under the Roadmaster label. The increasing popularity of the products suggested that the name was quickly gaining a reputation for high quality and value.

After more than a decade of strong growth, Junior Toy and its Roadmaster line, now under the control of the privately held Cleveland Welding Company, were acquired by AMF Wheel Goods. In 1950, the company started to produce a line of exercise equipment under the brand name Vitamaster.

After two decades of consistent growth, however, the AMF Wheel Goods Division stalled under the long-distance management of a parent company bogged down in layer after layer of bureaucracy. By the late 1970s, the bicycle division had fallen on hard times. The quality of the Roadmaster line--once its hallmark--had fallen to an all-time low. Bicycles made at the Olney plant, according to Judith Vandewater's article in the St. Louis Post-Dispatch, were manufactured so poorly that some bike shops in the area refused to repair them, claiming that the bikes would not stay fixed no matter how much labor and effort was put into them. In August 1982, AMF decided to sell the Wheel Goods Division. Six months later, George Nebel and Robert O. Zinnen completed a leveraged buyout of the company, relying heavily on the assets of the company to finance the deal.

After renaming their new company the Roadmaster Corporation, the two men implemented an aggressive plan for recovery. "We did all the things that were necessary to turn a big ship around," Zinnen told Vandewater. Not only did they cut out waste and reduce inventory to a manageable level, but they launched a more aggressive sales campaign and added new product lines to offset the losses resulting from increasingly strong foreign competition. They expanded the children's product division with a new toddler line, while adding three new divisions: Healthmaster home fitness equipment; Arrow bicycles, a higher-end line designed to boost Roadmaster's reputation with bicycle shops; and a contract manufacturing business that would bid on Defense Department contracts.

To improve sales on their core bicycle business, the newly-formed Roadmaster began more aggressively courting such major retailers as Sears, Penney's, Kmart, and Venture stores, attempting to carve a profitable niche in the popularly-priced segment of the market.

The company was plagued by a series of lawsuits and Federal Trade Commission investigations concerning the questionable use of the American flag stickers on Roadmaster bikes. According to some employee charges, the company imported bicycles manufactured in Taiwan, fixed the flaws in the bicycles, and then replaced "Made in Taiwan" stickers with American flag stickers.

In 1987, Henry Fong, head of Denver investment firm Equitex Inc., engineered a $27 million leveraged buyout of the company, which he renamed Roadmaster Industries and took public in January 1988. Headquarters for the new holding company were established in Colorado.

In August 1988 Fong acquired Ajay Enterprises Corporation, a manufacturer of fitness equipment and sports accessories, with a sports division in Delavan, Wisconsin, and plants in Mexicali, Mexico; Sun Valley, California; Tyler, Texas; and Reading, Pennsylvania. This purchase doubled the size of the company and helped to boost 1988 sales to $109 million, nearly triple that of the previous year, largely as a result of the addition of Ajay's line of treadmills, exercise benches, and free weights. The following year, which saw the company further diversify its product line with the acquisition of Hamilton Lamp.

In 1990, Roadmaster Industries acquired Diversified Products, a $215 million sporting-goods manufacturer based in Opelika, Alabama, known for its "DP/Fit for Life" brand name of fitness equipment. The consolidation created a $400 million, 4,500-employee conglomerate that quickly became one of the nation's largest sporting goods companies. Later that year, Roadmaster added size--and prestige--to its bicycle line by acquiring the 113-year-old Columbia Manufacturing Company, a Westfield, Massachusetts, bicycle company.

Having dramatically increased the size and the scope of company operations since his arrival, Fong, along with his co-president and chief executive officer, Edward Shake, had the clout to expand contracts with several of the nation's largest and fastest growing retail chains. While in 1990 one retailer accounted for a large percentage of total sales, by 1992 three retailers--Wal-Mart, Toys "R" Us, and Sears--contributed approximately 50 percent of sales. That same year, Roadmaster launched an aggressive marketing strategy emphasizing what the company believed a unique combination of quality and value. Pointing to products such as mountain bikes that featured racing-quality components at a mass merchandiser price, the company attempted to win retailers and customers over with upscale features at a "best value" price.

In 1992, the company engineered one of its most successful product launches in its history, the Motocycle, a bicycle made to look like a motorcycle for ten- to 14-year-olds. A concentrated marketing effort that included print advertisements in Good Housekeeping, Parenting, and Family Circle, as well as television spots on the youth-oriented cable channel "Nickelodeon," enabled the company to sell out its inventory in just five months.

In September 1993, the company purchased the century-old Flexible Flyer company, maker of the legendary steerable wooden snow sled. The acquisition not only complemented Roadmaster's line of classic toys but helped to moderate the seasonal fluctuations that had previously hurt the company. Flexible Flyer's line of swing sets, for instance, traditionally performed well in the first six months of the year, in contrast to many traditional Roadmaster products, which enjoyed greater sales volume during the Christmas season.

In 1994, the same year that the company began trading on the New York Stock Exchange and moved its corporate headquarters to Atlanta, Georgia, Roadmaster made one of its largest acquisitions to date, as it purchased the Actava Group's four sports subsidiaries: Diversified Products; Nelson/Weather-Rite, a leading supplier of outdoor and camping equipment to mass merchandisers; Hutch Sports U.S.A, a national marketer and distributor of products for team sports with the official license for The National Football League, The National Basketball Association, The National Hockey League, Major League Baseball, and several colleges; and Willow Hosiery Company, a national distributor of socks for the NFL and several collegiate teams.

Close Up of Vignette

Certificate: Common Stock, specimen, late 1900s

Printer: American Bank Note Company

Dimensions: 8 (h) x 12 (w)

State: IL-Illinois

Subject Matter: Consumer Products | Childrens Games | Sporting Goods | Specimen Pieces

Vignette Topic(s): Allegorical Featured | Allegorical Truth (male variation) | Globe Featured

Condition: No fold lines, punch hole cancels in the signature areas and body, very crisp.

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