Pacific Founder Hornung Exits After 29 Years
- *** Pacific Founder Hornung Exits After 29 Years ***
MADISON, WI-- 12/04/2006
After close to three decades as Pacific Cycle's
main man, Chris Hornung felt the timing was
right to exit at year's end.
This was a decision Ive made over the past year, s
aid Hornung, founder and chief executive officer at Pacific.
In 2004, Hornung signed a three- to five-year
performance-based contract with Dorel, parent
company of Pacific. I didnt know at that point
in time what decision I was going to make.
Theyve already delegated much of my responsibility.
Hornung said he leaves the company in capable
hands with Pacific president Jeff Frehner at the
helm. Frehner takes over duties from Hornung Jan. 1.
His vision grew an idea to a $400-million-plus global
company and positioned Pacific Cycle as the industry
powerhouse it is today, Frehner said. Were going to
miss him and I wish him well.
For Hornung, the time seemed right to pursue other
interests and opportunities, none of which are in the
bicycle industry. It would be difficult to find something
that wouldnt have an impact on Pacific Cycle, he said.
I wouldnt do anything to compete with Pacific.
This departure is very friendly.
Looking back, Hornung said hes most proud of
creating a company from scratch. I basically started
with no money, Hornung said. Weve become one
of the leaders in the industry.
Hornung made a name for himself in the industry for
supplying bicycles to the mass-merchant channel with
frames sourced overseas.
He had an extremely successful model, said Jay
Townley of the Gluskin Townley Group. He brought
major brands to the mass merchants.
Hornung said the companys move to source bicycles
in Asia was slightly ahead of the competition. But it
was at a time when domestic manufacturers were
struggling to maintain operations in the U.S.
Hornung was ahead of the curve again in 1998 when
he reached an agreement with Wind Point Partners,
whereby the private equity investment firm acquired a
controlling interest in Pacific.
The Wind Point deal gave Pacific the resources to
purchase Brunswick Corp., including its Mongoose
and Roadmaster brands, for $60 million.
The acquisition gave Pacific inroads to the second largest
U.S. retailer of bicycles, Wal-Mart. At the time Brunswick
was the largest bicycle supplier to Wal-Mart. Pacific already
supplied Toys R Us, the largest bicycle retailer at the time.
But Hornung wasnt done wheeling and dealing.
In 2001 Pacific outbid Huffy in bankruptcy court,
obtaining control of the Schwinn and GT brands
for $86 million. The deal completed the companys
portfolio but it didnt come without consequences.
Trek, Giant and Specialized all stepped in to counterpunch,
Hornung said, as many Schwinn/GT dealers viewed Pacific
as an unknown entityand some even looked at the company
as the bad guy.
The impact of that [deal] is still being felt to this day,
Hornung said, adding that he harbors no regrets.
We were there to buy the business. Dealers were
frustrated with the sequence of events. Schwinns
woes were brought on by Schwinns management team.
Pacific ate nearly $1 million in warranties resulting from
the deal, according to Hornung. The company could have
easily passed the buck onto dealerseven those who
ceased doing business with Pacific after the deal.
We didnt think that was the right thing to do, he said.
We really cleaned up a lot of messes.
Shortly after purchasing Schwinn, Pacific introduced the
brand into the mass channel and GT into sporting goods.
Last year, Pacific returned GT strictly to the specialty channel.
In 2004 Hornung led Pacific through its acquisition by
Dorel Industries, a Canadian manufacturer of juvenile
and home furnishings. Hornung called the move a
mixed bag. Because of the additional reporting
Pacific has to do for Dorel, the company isnt as
nimble as it once was.
The upside is the unlimited financial resources and strong
network in China, where Dorel has roughly 130 employees.
Hornung admitted that Pacifics sales are down, and that
market share is difficult to grow. But he believes the specialty
channel in particular offers the company potential growth.
His leadership and accomplishments at Pacific have not
gone unnoticed by industry peers. He is often the topic
of conversation with many of our mutual industry partners,
said Bob Margevicius, executive vice president of product
group at Specialized. Chriss success is attributed to being
honest, trustworthy, humble and respectful.
Hornung wont have a problem keeping busyputting
in time at a non-profit organization that provides health
care to third-world countries and a startup company
that conducts human performance testing.
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