Thursday, August 7, 2014

Post 12

Welcome to Post 12 of the Zenith Book Blog!
Some of our dedicated readers have expressed a doubt--

"Why would anyone write a book about the late Zenith Electronics Corporation?" they ask.  "In fact, why would anyone even read such a book?  Zenith is now history--a story quite long in the past, as  Zenith went bankrupt 26 years ago. And those under age 30 will have little or no memory of Zenith."

But for the greater many of those who are older (alas!), the original  Zenith Radio Corporation is still firm in memory, for who can forget the slogan The Quality Goes In Before the Name Goes on, or forget “Mr.Zenith” —Commander Eugene F. McDonald? Zenith was, after all, the “All-American Company”—a glowing success for over 60 years, widely known and much loved by Americans.

Then two other questions may follow:  Why did Zenith fail, and what caused its failure?
The why and how of its failure will be told in a forthcoming book titled   A Requiem for Zenith: Why It Failed, and the Lessons to be Learned From That Failure. The book will be written by Ralph E. Clarke, with Phillip J. Curtis. But the story of  Zenith will be first told in the many Posts in this blog--pages of which you are now reading--called "the Zenith Book Blog."  It is hoped that former Zenith employees will help write the book by their written contributions and the correction of errors.    
Few people really know why Zenith failed.  Former employees are not aware of the reason, nor is the general public.   It is an story that begs be revealed for it tells how the Regan administration  literally gave away to the Japanese . . .  not only the radio and television business of Zenith Electronics Corporation, but  also that of the entire American  consumer electronics industry.  
(Note:  Many believe that Ronald Reagan was one of the greatest American presidents, and  that he had good reasons for what he did, as will be explained.)

Does it  seems probable--or even possible, that a reputable  American administration of elected officials could do that?  But before judging whether the assumption is true or not, please look forward to the story in  forthcoming Posts of this blog.  The facts will be shown!
So there you have a summary of the first reason for Zenith's failure.. The second reason  is an older and simpler story—plain bad business decisions by a Zenith management that ensured Zenith’s eventual bankruptcy  

The story of the dual betrayal and mismanagement will arouse outrage in that it should never have happened—outrage especially in those who spent their careers with Zenith,  and who loved Zenith. If the events  described had not occurred, Zenith would be alive and well today, still employing its thirty thousand American workers. And a thriving  American consumer electronics industry--comprising many other companies besides Zenith--would still be employing its hundreds of thousands. (That is a good chunk of the American middle class, and people wonder why it disappeared.)

The book that tells the story titled A Requiem for Zenith,  will comprise a compilation of two sources. The first source is a  book by Phillip J. Curtis, Vice-President of Legal for Zenith.  The Curtis book is titled “The Fall of the U.S. Consumer Electronics Industry: An American Trade Tragedy.” It tells the story of how the radio and television business of the entire American consumer electronics industry was given to the Japanese.
Phillip J. Curtis

The second source for the writing of the Requiem book  resides in  the files and memories of Ralph E. Clarke, a 40+ year employee of Zenith, and a professional writer with several books and other works to his credit. His contribution will comprise three functions:  Summarizing the Curtis story; reporting on the  management missteps that led to the  final failure of Zenith; and, the writing and recording of the Zenith Chronicles, which comprise  the important events in the history of Zenith.
Further with regard to the Curtis book:  it is a legal indictment of a wrong committed by an American political administration, with chapter and verse in substantiation and proof as only a brilliant lawyer could tell it  The subject and its telling, however, is not one to command attention where it counts—with the American public.  A Requiem for Zenith will attempt to remedy that problem before the Curtis story is lost to history, and it will bring to the Curtis  book the understanding and the recognition it deserves. 
                                                                         * * * * * * *
The foregoing section talks about mistakes by a management as the second cause of Zenith's failure.  Let’s look at a prime example—Lansdale!

LANSDALE!  It is a pretty building in Lansdale, Pennsylvania, purchased by Zenith from Ford Motor Company from whence also came John Nevin,  who had become the President and Chief Executive Officer of Zenith.  The Lansdale  factory had been used to manufacture one of the Ford Motor Company products, perhaps the Edsel. 

                                                                     John J. Nevin 

A Zenith marketing guru brought over from Ford had concluded that there would be a shortage of television picture tubes, and that Zenith should manufacture a lot more of them.  So Zenith  bought the Lansdale building,  and  built  therein a  picture tube factory.

A facility for manufacturing picture tubes is a sheer marvel that encompasses all the arts of manufacturing.  The photos that follow give some idea of the scope and extent of the Lansdale factory--

The photo shows a line of pumps used for circulating the fluids required for the manufacture of television tubes. And there are many fluids: water, of course (deionized, too), acids, alkalis, hydrogen trioxide, etc.  And there are separate tanks for all of them, connected and interconnected by myriad pipes, conduits, conductors, valves, and unions--a wilderness of plumbing activated by myriad electrical controls and circuits.

Add to all the tools and equipment, hundreds of technicians and engineers, all highly skilled  and specialists in what they do to maintain and operate and the  factory.


--and of course, there are long assembly lines with the many attendants required as the tube travels a path from raw glass tube to its final testing stage, ready for sending to an assembly plant where it is fitted into a cabinet and becomes a salable product.

Looks pretty  expensive, doesn't it?  It was.  The cost was $65 million.  That was the cost in 1975. That $65 million in 2014--today's money--amounts to  $314,245, 334.  That's right--nearly a  third of a  billion in today's dollars!  (Let us not get started on the continual cheapening of the dollar by successive administrations of the Federal government!)

Well anyway, the factory was finished, so let's produce some television tubes.  For that, we need some electron guns (actually 12 million of them).  The electron gun is the part  that projects the  three electron beams that activate the red, green and blue-light- emitting phosphors deposited on the inner surface of the glass screen that fronts the tube, and creates the television picture. 

Let's look closer at those  electronic guns. At the time, there were two types of three-beam electron emitters: three guns arranged in a triangle, and, three guns in-line.  The three guns arranged in a triangle were becoming  obsolete because of the difficulty in focusing them, leaving the in-line gun considered as the best type. .  And which type of gun was chosen for early production?  You guessed it:  the obsolete gun.  Let's pass on that (with a sigh),  and report that the first production run was 250 tubes.  And that was it:  250 television tubes were manufactured.  No more.  And tubes with an obsolete gun in it.
Then--(can you believe this?) the realization sank in that more television picture tubes were not actually needed, so manufacturing was suspended, and the plant was put on hold--for three years! What to do with it? Well, perhaps it could be sold.  So an elaborate brochure was created (with my help, I might modestly  add) --

The General Specifications were cited:
     Production capacity: 1,200,000 color television tubes a year
     Number of production lines: Two lines, each capable of manufacturing 600,000 tubes a year. 
     Conveyors: 17,000 linear feet
     Area: 605,000 square feet.  Et cetera . . .

And the "pitch" presented in the brochure read like this--
     "Zenith Radio Corporation herewith offers for sale its Lansdale Pennsylvania, USA manufacturing facility for television picture tubes. This offer is for the facility in its entirety, or, the equipment therein.
     "The facility is housed in a very modern building some of which is only four years old.
     "Equipment compromising the facility is of the most advanced design. Most of it is specialized, intended solely for  manufacturing of television picture tubes." (...which means you can't adapt the plant facilities to any other type of manufacturing. Oy veh!)
         More et cetera . . .  

Gene Kinney, Sr. Vice President,  got the job of taking the brochure  around the world seeking buyers for the Lansdale  factory. Nobody took the bait, except for a mild interest by the Chinese.  But the Chinese looked at it more closely and said--

--which means "no" in Chinese.
So nobody wanted Lansdale. It sat there for three years on hold, not "moth-balled," just held.  And then some bean counter (the term engineers use for the finance guys who squeeze the purse strings), acted. "Well," the bean counter thought, "let's save money with this White Elephant"--                                 
                                                   "Let's turn off the heat."

 And lo,  it was done. The heat was turned off.   All those many fluids froze. The factory was literally reduced to junk.

Now Lansdale did have a buyer--a junk man. He paid $1 million for it.  So Lansdale wasn't a total loss--$65 million minus $1 million equals a loss of  only $64 million. Not exactly a good return on investment.

No "goat'" was known to have been pitched out of the company for this disaster.  But the brilliant designer of the plant had left Zenith, perhaps fearing  that he would be selected as the  goat.

But we're not through yet!  Remember that comment about Lansdale having a dirty secret? The EPA (Environmental Inspection Agency) had noticed the pollution resulting from its early use by Ford as a manufacturing plant. There was so much pollution that there was "plume" of it penetrating deep into the earth.  And to clean up a mess like that, the EPA  selects not the previous owner who made the mess, but  the current owner, which of course, was Zenith. And it had to be one with "deep pockets," which Zenith had at the time (although its pockets were  to become shallower very quickly.) One can only guess how much it must have cost to clean it up Lansdale, but it must have been plenty.  (Does anyone know?)

We can only wonder what the Commander would have done about a fiasco like this.  

                                                                   * * * * * * * * *
So that's it for Post 12.  You have had  the introduction to the why and how of  Zenith's  failure, and the loss of the entire American consumer electronics industry. The facts will follow in later editions of this blog. But to keep you on the edge of your seats, let's first reveal  some other management failures, and perhaps a bit of history.  Next time, we'll look into the loss of Zenith Chromacolor, and how much it may have cost Zenith.

And!--if you see an error, yell!  To correct a mistake in identity, scream! To rectify an injustice, bleat! The "Comment" box below is waiting.   After you enter your comments, the word “Publish” will appear. Also, the word “Preview,” which gives you a chance to change your mind, or to correct any evil grammar and spelling. And the author of this blog will try respond.  

Eleven blogs preceded this one.  If you want to view an earlier blog, scroll to the front of this blog.  There you will find them listed by date on the right where it reads "Blog Archive."   Click on a date, and  the blog  will appear. 

Thank you!  And--





  1. Did Zenith really declare bankruptcy in 1988? They did not sell of everything to LG until 1998 if I am not mistaken. I started at Zenith in 1973 and I recognized the Landsdale fiasco immediately. Nevin must have been doing some friend at Ford a favor.

    I hope you include the work done in CATV where we did make money for a while. Also the Heathkit acquisition in 1979 so Zenith could get in the personal computer business. This was successful for a period of time.

  2. Ralph, one more thing to look into, Zenith had a perfectly good facility in Springfield, Missouri that the bean counters closed only to build a new one a couple of years later in Texas. That could not have been a good use of funds.

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