Dayton manufacturer faces uncertain future
Huffy considers selling company as losses mount.
DAYTON (AP) -- Nancy Thickel has fond memories of the Huffy bikes she has bought over the years.
The first one she used to get around as a student at Ohio State University in the 1970s. Another was an anniversary present for her husband and two more were birthday gifts for her children.
One reason to buy Huffy bikes was to patronize a local company that had grown up in the city known for two famous bike makers -- Wilbur and Orville Wright.
"It was all about brand awareness," said Thickel, 53, of suburban Oakwood. "It was the Dayton brand."
But Huffy Corp.'s recent financial bumps in the road have Thickel concerned about the future of the Huffy name. Over the past few months, Huffy has seen its stock plummet, sold some units and talked about strategic options, including the possible sale of the company.
"A lot of people rode Huffys when they were young," said Fred Clements, executive director of the National Bicycle Dealers Association. "Huffy is a recognized brand. I think there is value there."
Robert Lafferty, Huffy's chief financial officer, referred questions about Huffy's performance to the company's press releases.
President and CEO Paul D'Aloia said in the latest annual report that Huffy's 2003 performance was "not acceptable." The company lost $7.5 million in 2003 after losing $1.4 million in 2002.
The suburban Miamisburg-based company's stock dropped in value from $6.80 a share in December -- when Huffy announced fourth-quarter earnings would be below expectations because of sluggish sports equipment sales -- to about $1. The company also has been threatened with possible delisting from the New York Stock Exchange because its value is too low and has delayed filing its first-quarter earnings report.
Huffy recently sold its basketball-backboard unit and part of its Gen-X business, which makes equipment for golf, snowboarding, inline skating, skiing and hockey.
Despite its losses in 2003, Huffy had sales of $438 million, an 18 percent increase from the $370 million it earned in 2002. And the number of bicycles it sold worldwide was the second highest in company history -- at a time when bicycle sales in the United States were down. Last year, about 18.5 million bikes were sold in the United States compared with 19.5 million in 2002.
Bill Smith, Huffy's general manager and executive vice president, said Huffy's bicycle division is performing solidly and has increased its share of the U.S. bike market in the past two years. It currently holds about 30 percent of the market.
Huffy's roots began growing in 1892 when George Huffman, owner of the Davis Sewing Machine Co., oversaw production of the company's first bicycle. Horace Huffman sold the company in 1925 and formed the Huffman Manufacturing Co.
In the 1960s, Huffy began to diversify and entered the emerging discount-store market. The company introduced the Huffy Dragster, a smaller bike with a banana seat and high-rise handlebars.
By the late 1990s, foreign competition began to take its toll. In 1998, Huffy closed its bicycle plant in Celina, putting 1,100 employees out of work and moving production to Farmington, Mo.
The following year competitive pressures from Chinese-made bicycles forced Huffy to close its last two U.S. bicycle plants -- in Farmington and Southhaven, Miss. The move eliminated 600 jobs.
Clements said Huffy may have been hurt by holding on to its U.S. production when its competitors were transferring production to Asia, to take advantage of lower labor costs.
Smith said Huffy kept its U.S. plants open longer than other bike makers because it wanted to try to preserve the jobs of its U.S. workers.
Huffy employs about 1,000 workers and has offices or warehouses in Miamisburg and nearby Springboro as well as Toronto and Carson, Calif. The company employs about 100 workers at its headquarters in Miamisburg, a city of about 20,000.
Huffy imports its wheeled products from southeast Asia.