$1,000,000. But the exponential growth was constrained by the small size of the facility. It was time for a move.
Trek didn’t have to look beyond its backyard for the ideal location for its next facility. In 1980, for $10,000, Burke purchased ten acres of land down the road from the red barn that Trek had called home for four years. The city of Waterloo rezoned the land from agricultural to industrial, the city founders financed the installation of sewers, and groundbreaking for the 26,000-ft. factory was underway. Yet the area’s rural roots quickly put things back into perspective. “We were forced to temporarily delay production of the factory until the farmer that owned the land could harvest his corn for the season,” said Burke.
The new facility’s space allowed Trek to expand its frame-building capacity. Automation led to more frames, and an assembly line and paint factory were added to make Trek a full bicycle manufacturer. “It wasn’t until we built the new factory that we became a business,” said Burke. Shortly after, the company hired its first true sales reps and a customer service foundation was born. Sales doubled in 1981, and again in 1982. By 1983, the company had outgrown the current factory and attached an addition.
As Trek’s business boomed, a movement was spreading on the West Coast. Renegades like Gary Fisher were bombing down their local mountain trails on stalwart bikes with balloon tires, amalgamations adorned with road bike and motorcycle parts. Looking to expand outside of the road touring market, the company took interest in these new “mountain bikes”. But how would a company accustomed to touring the open, paved roads of Southern Wisconsin jump into the mountain bike craze?
Issac shipped a prototype mountain bike frame that mimicked a Trek road-touring frame in July of ’83 to Harry Spehar, the West Coast territorial sales manager. Spehar, who had been riding old dirt trails in Northern California for years, took the prototype to the legendary Whiskeytown Downhill in Redden, California to race against the “Clunker” posse. The Midwestern anomaly held its own and Trek had officially begun its venture into mountain bikes.
By 1985, the company had reached sales of $20,000,000. Yet growth in the fast lane caught up to the company and Trek was faced with a net loss for the second straight year. 1984 product hadn’t sold to expectations and sub-par quality control was angering retailers.
To add fuel to the fire, a revolutionary bonding technology had all but halted the assembly line. “We built the first one, but we didn’t know how to build the second one,” said Spehar in reference to Trek’s model 2000 aluminum bonded road bike. A company built on the foundation of brazed steel had undertaken the project of bonding aluminum tubes together with an aerospace-grade epoxy resin. Trek was at a crossroads.
“We had absolutely no focus, and we needed to get the water out of the boat,” said Burke. “I thought it was time for a change.” That change would be a more active role for Burke in the company’s day-to-day operations. He was faced with three options: close the operation and liquidate the business, sell the company, or turn it around. “We decided to roll up our sleeves and get it done.”
Hogg left the company and Burke searched for a mantra around which he could rebuild. He articulated a back-to-basics approach and came up with a mission statement – “To build a quality product at a competitive value, delivered on time; create a positive work environment for customers and employees; deliver a profit.”
The fix that needed immediate attention was the product. “All the executives joined assemblers on the line to fix the bonding problem,” recalled Spehar. “It said a lot about the company.”