When Joe Montgomery was growing up in rural Ohio, he had an old single-speed bicycle. Going up hills was mighty tough.
The family’s fruit farm sat on top of the second of two steep hills that young Montgomery had to conquer to get home.
“There was no way you were going to pump the bicycle I had up those hills. You’d do the old S-turns going up, trying to get to the top,” said Montgomery.
Today, he is making it easy for people of all ages, all around the world, to pedal up and down not just hills but mountains.
Montgomery, 55, is founder and chairman of Cannondale Corp., one of the world’s leading makers of mountain bicycles.
The frames and many of the parts for those bicycles are built one at a time in Bedford, Pa., a rural community 200 miles west of Philadelphia along the Pennsylvania Turnpike.
The Cannondale story is multifaceted. It’s about a college dropout determined to run his own business, a company dedicated to high-technology and an American firm that became a world leader by building a high-quality product.
Cannondale’s fat-tube aluminum bikes are recognized by cycling enthusiasts around the globe.
Based in Georgetown, Conn., Cannondale went public Nov. 16, 1994, with an initial offering of 2.7 million shares of common stock priced at $13 each.
The shares have traded as low as $9.75, but more recently have been in the $14-$15 range.
In the third quarter, which ended March 31, the company reported an increase in sales of 30 percent, to $39.5 million. Net income, before an extraordinary credit, was $4.9 million, up 136 percent. The company’s gross margins rose to 36.3 percent from 33.2 percent, the best in the bicycle business.
Cannondale employs about 800 worldwide, including 80 at company headquarters, 560 at Bedford and 65 at a smaller plant in Philipsburg, Pa.
The company makes racing and road bikes as well as mountain bikes, though mountain bikes have become the fastest-growing part of its business and of the bicycle industry.
In the U.S., mountain bikes account for about 40 percent of all bikes sold but bring in 70 percent of revenue because of their higher price tags.
Montgomery said the key to Cannondale’s success is making a lightweight bike that is stiffer and stronger than competitors’. That stiffness makes the bikes more efficient.
“Joe Montgomery has worked a long time and gone a bit against the grain in an attempt to build a better bike,” said Jean-Michel Valette, a senior analyst with Hambrecht & Quist of San Francisco.
“The company has put blood, sweat and tears into producing a great product and a great brand. Now it is all beginning to show,” said Valette, who strongly recommends Cannondale stock.
“Technology is really what brought me into the business,” Montgomery said.
Technology has become the hallmark of the Cannondale bikes, first more than a decade ago with the strong, fat-tube aluminum frames, more recently with custom-designed suspension systems such as that on the Super V 900 full-suspension mountain bike.
That technology comes at a price. The Super V 900 costs about $3,500, but Cannondale is able to demand premium prices because its products are distinctive, Valette said.
Cannondale also employs advanced technology in the design and production of the bikes. The designers in Connecticut use computers; changes can be relayed electronically to Bedford so building one-of-a-kind, or prototype, bikes is relatively simple for Cannondale.
The company invented its own process of heating the frames, made out of airplane-fuselage-grade aluminum. The heating, which takes place after welding, turns the frames virtually into one unit.
Montgomery said he wanted to run his own business since he was 12. His father and grandfather had their own businesses. “I thought that was what you did when you grew up,” he said.
Farm life did at least two things for Montgomery. It made him love outdoor activities, such as hiking, biking and camping. It also turned him into an inveterate tinkerer. Around the farm, something was always broken.
His father gave him an assortment of outdoor gear-bikes, tents and other camping equipment. Whatever it was, Montgomery would have it apart in a couple of days, trying to make it better.
“I used to say, `Dad, the guy who makes this stuff doesn’t use it because if he did, he wouldn’t make it this way,’ ” Montgomery remembers.
His professional path, at least at the start, was much like those S-curves up the Ohio hills. He dropped out of several colleges, then earned a living by crewing on sailboats and did a brief stint on Wall Street as a stock analyst.
Finally, in 1971, Montgomery moved from Manhattan to Connecticut to start his own business.
The company’s name came from an old rail station across from the firm’s headquarters in Georgetown, Conn. When the new company moved into its first offices, it didn’t have a name.
Montgomery said an employee was in a phone booth, asking the telephone company to install phones. The phone company sales representative wanted to know the name of the firm. The employee looked up, saw the name “Cannondale” on the rail station, and quickly replied “Cannondale Corp.” The name stuck.
In the beginning, the company made trailers for bicycles, then bike bags and other gear. But the goal always was to build an aluminum bicycle.
Manufacturing of metal parts was initially done in Stamford, Conn. The sewn pieces for clothing products and bike bags were contracted out. But as the company grew, Montgomery knew he needed more space, more employees and lower costs.
He wanted to be in a rural community where people had a strong work ethic and where there was high unemployment-preferably high unemployment of skilled stitchers to make bike bags and clothing.
He scoured several states before finding what he wanted in Bedford, which used to be part of the old Shoe Belt when the shoes on most Americans were made in America. By the time Montgomery arrived in the late 1970s, the shoe-making industry had collapsed and the unemployment rate was 17 percent.
By the early 1980s, the company was getting strong enough to consider making bicycles.
After working on several designs, Montgomery decided a fat tube design would be stronger and lighter than others.
Cannondale shipped its first bike in the summer of 1983. Initially, most of the business was in the U.S., but that has changed dramatically. Cannondale bikes are now sold in 63 countries.
