When General Electric Corp. bought RCA in June, 1986, all the RCA archives were packed up and stored away. Most of the corporate staff left. Some got new jobs. Others retired after 30 or 40 years.
And now it starts again. GE, at least, was one of the original backers of the ”radio trust” that became RCA. If that deal last year pulled up the roots of tradition, what will RCA`s purchase by French-owned Thomson S.A. last week mean?
”Every time we go through one of these mergers, we lose a little bit of our heritage,” grumbled an RCA employee in the wake of the Thomson announcement.
For some, the idea that Nipper, the company`s venerable trademark, will have to learn French to attend his master`s voice, is appalling. But others say that RCA lost its way in the postwar competitive wars and became no more than an awkward stepchild at GE. In this view, the Thomson purchase may give RCA an identity and purpose again.
Radio Corp. of America, founded in 1919, is as rich in tradition as the consumer electronics industry is replete with products. In the industry`s infancy, RCA held the patents for just about any electronics product a consumer might want. Even today, the company reportedly collects $150 million a year from licensing its early technology.
From one view, the sale to Thomson is just another defection by a domestic manufacturer in a field dominated by foreign labels. Glenview-based Zenith Electronics Corp. now stands as the only major U.S.-owned independent television manufacturer.
”You can`t talk about the history of color TV without talking about RCA,” said one industry insider mournfully, recalling that RCA`s founder and longtime president David Sarnoff first demonstrated a color television at the New York World`s Fair in 1939.
It is sad, this insider reflected, to see the company that developed the technology sold to a foreign owner so close to the product`s golden anniversary. Its tradition in the black-and-white field is almost as strong.
RCA introduced the first consumer black and white television in 1946. It had a 10-inch round screen in a huge console. In those days, television still was described as ”radio you can see.”
Most Americans seemed satisfied to watch Uncle Miltie cavort in black and white. But in 1954, RCA began commercial production of color sets in Bloomington, Ind. The first set–with a 15-inch round screen and a $1,000-price tag–rolled off the line 100 days after the Federal Communications Commission approved the standards.
Against this history, the announcement that RCA is no longer American evoked gloom and nostalgia.
Yet William Boss, recently retired after 40 years with RCA, called the sale ”virtually inevitable.” Only the timing was a surprise, said Boss, a perennial keynote speaker for the Consumer Electronics Show who retired this year as RCA`s vice president of distribution.
Employees are trying to be upbeat about another change in ownership, Boss added. Conversations with managers indicate less wariness about this sale than about the merger with GE.
Employees who identify closely with the old RCA are less wounded by the sale to a foreign entity than by their role as the white elephant in the earlier transaction, he said.
There is, added a current employee, a sense that ”somebody wants us for ourselves. We aren`t the stepchild in this deal.”
GE is keeping NBC and RCA`s defense and satellite operations. Indeed, it was clear that these divisions were the reason it bought RCA. Consumer electronics, a tumultuous field rocked in recent years by price slashing and foreign competition, did not live up to its profitability standards. Tradition and heritage do not often translate to the bottom line.
There had been a belief in the industry that GE would give the TV business a few years to show its stuff, so only the speed of the sale to Thomson was a surprise.
”The sale is probably in the best interests of RCA and its employees,”
said Boss. ”I really believe that as strong as GE is, if the top people there aren`t interested in aggressively pursuing this business, then this sale is for the best. It will be helpful to the company and the industry.”
He added that some upper echelon employees he has talked to (”I received a volley of calls when the news broke”) feel they have a future again. Thomson, owned by the French government, is scheduled to go private in the next year or so, and these employees say they are looking forward to investing in their new company.
”They`re enthusiastic,” Boss said. ”Now they have an owner interested in the business. In fairness, GE made investments in plants and facilities. But the company never really had the bona fide interest in consumer electronics that you need. When the chance came, they apparently said `let`s get the hell out of here.` ”
After 40 years, he said, ”it`s like losing a friend or relative. But the brand name will survive. I hope Nipper will survive. Times change. This industry changes. RCA is recorded in history, it will have to be remembered that way.”
Employees on the production line are not so philosophical. Amid fanfare, GE recently expanded its Bloomington plant instead of taking its production offshore. An RCA spokesman says the company is so streamlined that operations are cost effective, but the employees fear cuts.
Analysts agree. They suspect that Thomson will not be as patient with marginally profitable plants as even GE was, and there will be some
”restructuring.” Thomson has a history of large layoffs after acquisitions, such as West Germany`s Telefunken.
Bill Phipps, head of local 1048 of the International Brotherhood of Electrical Workers, which represents employees in Bloomington, said morale is low.
”We`re definitely worried,” Phipps said. ”The majority of workers here are apprehensive about their jobs and about this whole mess. Frankly, we`re tired of being treated like an old has-been baseball player who keeps getting traded.”
That GE recently committed itself to upgrading the plant only sharpens their disappointment, he added.
”You have to understand why they`re upset,” said an industry source.
”They`ve dodged the bullet once, now they had to dodge it again. Everytime we see one of these mergers, we see that boilerplate release that everybody will be kept on. In this case, there are 31,000 GE/RCA employees worldwide, 10,000 in the U.S. But everybody knows, it`s really a case of wait and see.” According to Michael Radnor, management professor at the Kellogg Graduate School of Manage- ment at Northwestern University, there were missed chances in RCA`s long history in which the company could have cemented a place at the top of the consumer electronics heap instead of as a subsidiary of a foreign company.
The first, he said, was in 1952, when RCA began licensing its technology to Japan.
”They underestimated how quickly the Japanese could take that technology, improve it and come back and compete,” he said. ”True, they gained royalties. But in the long run, they did a bad deal. They should have negotiated a piece of the action. They should have gotten more than just royalties.”
The other moment came when diversification hit corporate America and RCA jumped into the carpet, financial services, publishing and car rental businesses.
Boss said: ”We were really a specialized communications company, and the entertainment and broadcast divisions fit in with that. Then in the 1950s and 1960s somebody conjured up this idea that you had to diversify to survive.
”The consumer electronics business was always a high priority, but these other things detracted from it,” he said. ”They were a disruption, and financial resources that could have been put into maintaining the leadership we were known for were spent on a variety of other interests.”
”RCA, and most other American companies, responded to competition by cutting costs instead of improving technology,” Radnor said. The dollars spent on diversification should have been invested in research and development into new technologies, in going one step beyond the present.
”There is no reason that RCA couldn`t have been the leader in developing video cassette recorder technology or even a big factor in personal computers,” he said. Though No. 1 in VCR market share in this country, RCA buys its machines from the Japanese.
He cited other costly mistakes, such as RCA`s brief attempt to take on International Business Machines Corp. in the mainframe computer arena in the 1960s, and its disastrous failure with the video disc player in the 1970s. Some industry analysts estimate that RCA lost a half billion dollars before the company admitted defeat on the video disc.
”We can forgive the attempt in computers,” Radnor said. ”It was logical, and everybody makes mistakes. But the RCA video disc was a product that just didn`t fit in with the times.
”RCA was like a big old bear making its last lunge,” he said. ”It was like `we`re going to show the Japanese that we still have the technological know-how to be a leader.` But then they dug back into an old technology and went with the cheaper format instead of the laser.” Even laser versions have been less than blockbusters.
”RCA was a company that `had it,` ” Radnor said. ”But they didn`t realize what they had, and they didn`t build on it.”
