Saturday, October 25th, 2014

A $50 million question

A triathlon bike made by Trek, a Wisconsin company founded by the late father of Mary Burke, a Democratic candidate for governor.
A triathlon bike made by Trek, a Wisconsin company founded by the late father of Mary Burke, a Democratic candidate for governor.

As she ramps up her campaign for governor, Democrat Mary Burke has spotlighted a particular statistic about her time at Trek Bicycle Corp., the Wisconsin-based manufacturer once affiliated with cycling legends Greg LeMond and Lance Armstrong.

When asked on Wisconsin Public Television, for example, how she would help grow the state’s economy, Burke began her answer by saying:

"Well, I look back to the experience that I had at Trek. I grew the division that I ran from $3 million to over $50 million in sales. This was selling Wisconsin products all over the world."

The reference is to annual sales of Trek bicycles in Europe from roughly 1990 to 1993, during a period when Burke, now a Madison School Board member, headed the company’s European division.

It is a striking statistic.

But Burke and Trek -- a company founded by her father and run by her brother -- have repeatedly refused PolitiFact Wisconsin’s requests to document her claim.

Noting her statement refers to sales figures from more than 20 years ago, Burke said she has no reports, memos, newsletters or any other such record that could confirm the figure.

She added: "I also am not a person who throws around numbers. And I know what I’m talking about. I welcome the inquiry into it."

But because Trek is a private company, there is no way to independently confirm or refute Burke’s $3 million-to-$50 million boast. That complicates her efforts to tout her business credentials in contrasting herself with Republican Gov. Scott Walker, an essentially career politician.

"She can’t put out such a specific claim and then say it’s a secret," said University of Wisconsin-Milwaukee political science professor Mordecai Lee, a former Democratic state lawmaker.

"It’s a reasonable expectation that if a politician makes a claim, that she has to document it. No one can have it both ways. Governor Walker is not permitted to have it both ways and Mary Burke can’t have it both ways."

If specific information surfaces before the November 2014 general election, we’ll test Burke’s statement on the Truth-O-Meter. In the meantime, we consulted a number of experts for some perspective on the claim.

In a nutshell, they told us:

  • Only Trek would know whether sales in Europe increased like Burke said they did.

  • Burke actively led the company’s European division.

  • European sales for Trek, as well as other American bike manufacturers, were driven in large part by the popularity of American-made mountain bikes at the time.

"I think Mary was very instrumental in the growing of (Trek’s European) business," said Scott Montgomery, who headed European operations in the early 1990s for Cannondale, a Trek competitor. "But I would realistically say we were in the right place at the right time."  

Clarifying the claim

Trek, based in Waterloo, a burg between Madison and Milwaukee, was founded by the late Richard Burke in 1976. The current president is Mary’s brother John.

In a resume she submitted to the state before being named commerce secretary under Democratic Gov. Jim Doyle in 2005, Mary Burke said she was director of Trek’s European operations from 1990 through 1993, and that she grew sales from $2 million to $60 million over those four years.

Her claim is different now.

Burke told PolitiFact Wisconsin she held the post from 1991 to 1993. She said that prior to announcing her candidacy for governor, she confirmed with Trek that the company’s annual sales in Europe were $3 million in the year before she started in Europe and more than $50 million in her final year there.

When we initially asked Burke’s campaign to provide evidence to back her statement, we were referred to a Trek spokeswoman. The spokeswoman said Burke’s claim is accurate, but that "Trek's policy is not to release any confidential information, including current or past financial records."

The numbers

The experts we contacted all said that because Trek sales figures are kept private, they had no way to know how much the company’s annual sales in Europe rose under Burke.

They agreed that, relatively speaking, a starting point of $3 million in annual sales would have been tiny. On the other hand, growing from $3 million to more than $50 million in roughly three years is significant, the experts agreed.

Montgomery, the former Cannondale executive, said he couldn’t recall how much Cannondale’s European sales grew in the early 1990s. But the company was profitable "very quickly" there and sales were much higher than expected, he said.

Fred Zahradnik, an editor at Bicycling magazine during the time Burke led Trek’s European operations, and other experts said the early 1990s were also a time of growth for several other American bike companies that were active in Europe.

But Burke told us that other American bicycle manufacturers "were not as successful" in Europe as Trek, which had offices in Germany and the United Kingdom before she took over.

Bicycle industry consultant Jay Townley, who is based in Lyndon Station, Wis., said the sales increase Burke claims would have been "very doable in that time frame." He credited the popularity of American-made mountain bikes and Burke’s effort in "putting people on the ground" -- opening Trek offices in Europe rather than relying solely on European distributors to push Trek products.

Asked what specific steps she took to increase sales, Burke cited choosing where to open offices in France, Austria, Switzerland, Spain and the Netherlands; hiring managers and sales staff; choosing which bike models to sell and which dealers to sell them; and overseeing advertising and marketing campaigns. She said Trek’s tailored approach to the various European markets, and setting up operations there quickly, were crucial.

"I credit that entirely with how we were able to have incredibly strong, quick sales growth, not only because we had great products to sell -- certainly there was a lot of European interest in buying American mountain bikes -- but also because we took a very aggressive, thoughtful, long-term approach to how we were going to build our business," she said.

She added: "There’s one thing about having a strong market. The other thing, when that happens, it’s the competitors that have the right game plan and execute it that actually come out on top."

Townley, the consultant, and Michael Gamstetter, who was a senior editor at Bicycle Retailer Industry and News magazine at the time, agreed that Trek’s approach enabled the company to learn the nuances of the markets in the various countries.

But other experts said timing, given the popularity of American-made mountain bikes in Europe, was a critical factor.

And there was disagreement on whether Trek could have increased annual European sales from $3 million to over $50 million so quickly.

Steve Lindenau, who was director of Trek’s office in Germany and reported directly to Burke, said he thought that $3 million to over $50 million in annual sales "would not be an exaggeration; I think that’s pretty accurate."

He gave part of the credit to Burke’s leadership in studying the market, saying she also "initiated quite a bit" of interviewing distributors and visiting the various countries. "She was definitely more hands on than hands off," he said.

But Lindenau also noted the interest among Europeans in American-made mountain bikes, adding: "We got in really at the perfect time."

Jack Oortwijn, editor in chief of Bike Europe, said he doesn’t know what Trek’s annual sales were in Europe under Burke, but believes they did not reach $50 million.

Marc Sani, a writer and the former publisher of Bicycle Retailer and Industry News, also cited the American-made mountain bikes phenomenon but questioned whether Trek’s European sales could have grown as quickly as Burke claims.  

"To go from $3 million to $50 million in three years, that just seems a lot," he said. "I’m not saying it didn’t happen, because the Europeans were enthralled by the American mountain bikes. But that’s a huge increase."

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