Zenith Radio and TV

(Update: Zenith was another company that started in a garage. Its origin was the 1918 Chicago Radio Laboratory.)

Glen Miller posted
1948 The very latest from Zenith Corporation
 in Chicago, a new round screen tv demonstration.

A comment on this posting confirmed that Zenith was the TV manufacture that used a slogan I remember: "The Quality Goes In Before The Name Goes On." They also used to advertise "hand crafted quality." Unfortunately, they were basically saying that they were unwilling to upgrade their factories to use more modern manufacturing techniques. But they did out last RCA and GE, they did not loose majority control to Korea's Lucky Goldstar (LG) until 1995. In 1999, Zenith filed for bankruptcy and LG bought the remaining shares in exchange for its debts. (Motorola sold its TV business to Matsushita in the early 1970s. GE sold its consumer division, including the RCA brand, to Thomson in 1987.) (LAtimes, FundingUniverse)

Zenith still exists as a wholly owned subsidiary of LG, probably to retain the validity of their US patents. Their current headquarters is in Lincolnshire, IL, with 976 employees.

Zenith got its start in 1918 when two ham radio operators started making equipment for other amateurs on a kitchen table in Chicago. (So an advance in technology is that startups now use the garage instead of the kitchen.) Zenith's heritage includes many firsts such as the invention of the stereo FM radio broadcast system authorized by the FCC in 1961.

Michael Matalis posted
1937 ad.

Harry Moore posted in "Early Television and Television Hobby experimenters"
1953  Zenith Television Plant, Chicago

Claudine Wojtowicz posted
Zenith Color TV 1966

Zenith also helped pioneer TV. Note that the 1966 CRT (Cathode Ray Tube) was still rather roundish. Back in the 1960s, most families would have just one TV, and the family would have to agree on which of the three networks they would watch, ABC, CBS, or NBC. Although the above heritage link says they developed "the industry’s first 21-inch, three-electron-gun rectangular color picture tube (1954)" Just because you have a rectangular tube in the lab in 1954 doesn't mean you can economically manufacture one in 1966. The picture illustrates the importance of "glare free" in their 1980s patented "“flat tension mask” technology for high-resolution color video displays with perfectly flat screens, glare-free viewing and superior performance, which earned the company a technical Emmy in 2001."

Their heritage page explains that they bought Heath Company to get their computer expertise. My first computer was a Heath Kit computer that I built. It had floppy disk drives, and it was the most I have ever paid for a computer.

Philip Dimartino posted
One time the ZENITH was the best TV
Robert Bryant: Using the Bureau of Labor Statistics CPI Inflation Calculator, that $699 Zenith you purchased in 1977 would cost you $3,606.55 in 2023.
Brad L. Vanderhye: I’m from Chicago but now live in Springfield missouri. Zenith had a massive complex here also. It is now the main shipping hub for bass pro shops.
Toby Gershon Padgett: I have a 24 inch Zenith analog TV from the mid 1990s and it is still going strong! My cable company had to look way back in their warehouse to find a cable box that would work with an analog TV this old, and they did! I am definitely a Chicago Girl, still loyal to long ago Chicago brands like Zenith and Motorola.
Matthew Cody: By the time those ones pictured were made, production was moved to Mexico and the quality was in the pits. Once Gold Star bought them it was the final nail in the coffin. Our last Zenith (1995) was a prime example, had to be repaired three times under warranty and the TV repair man said to trash it when the CRT failed for the third time. I guess "System 3" ment fix it 3 times then trash it? Meanwhile the old 77' Chromacolor Zenith in the basement still worked fine.
Tracey Gzamouranis: Matthew Cody I’m not 100% sure but I think mostly assembly moved to Mexico. The CRTs were always made at the zenith plant in Melrose park. I took a tour of that plant in ‘94. When Lucky Goldstar (LG) bought them they outsourced everything and shut that plant down.
Philip J Piszek: Something doesn't look right with that ad there wasn't HDTV and $600 wood panel Council TVs at the same time.
James Gavitt: The HDTVs suggest this was mid-2000s? Pretty crazy that there were still woodgrain console TVs for sale then.
Steve Lotus: I worked at Zenith in it's prime when they sued Japan for dumping Japan subsidized TV's into the US with pricing that US TV manufacturers with American workers could not compete with. The irony is that they won that lawsuit but it was too late...Zenith was the last big name American TV manufacturer! Thanks to lack of US Govt oversight!
Michael Mulvey: In the early days of remotes they were tone activated. When the heater would come on our bird would chirp and it would shut off the TV So funny!!

From MadeInChciagoMuseum:

Zenith’s Chicago Factories (The Numbers as of 1962):

Plant #1: 6001 West Dickens Avenue – 2,500 workers made radio and television sets and Hi-Fi stereophonic phonographs.

Plant #2: 5801 West Dickens Ave. – 300 employees made electronics and servicing.

Plant #3: 1500 North Kostner Ave. – 2,100 employees made government electronics, radio and television components.

Plant #4: 3501 West Potomac Ave. – 60 employees performed warehousing.

Plant #5: 6501 West Grand Ave. – 500-600 workers made government hi-fi equipment.

Plant #6: [A comment by Doug explains: "Plant #6 was 1900 N. Austin Ave in Chicago, not 4242 N. Knox. Plant #6 was HQ and major manufacturing plant for color TV."]

Plant #7: 1247 West Belmont Ave. (operated by subsidiary Central Electronics, Inc.) – 100 employees made amateur radio equipment and performed auditory training.

They also had a picture tube plant in Melrose Park and and another plant in Sioux City, IA, which closed in 1978.

Wikipedia has the following information from the 1962 Illinois Manufacturers Directory, p 1311:

Zenith Radio Corporation as having a total of 11,000 employees of which at least 6,460 were employed in seven Chicago plants. The corporate office was in plant number 1 located at 6001 West Dickens Ave. where 2,500 workers made radio and television sets and Hi-Fi stereophonic phonographs. Plant number 2 was located at 1500 North Kostner Ave. where 2,100 employees made government electronics, radio and television components, transistors and hearing aids. Plant number 3 was located at 5801 West Dickens Ave. where 300 employees made electronics and servicing. Plant number 4 was located at 3501 West Potomac Ave. where 60 employees performed warehousing. Plant number 5 located at 6501 West Grand Ave. employed 500-600 workers who made government Hi-Fi equipment. A subsidiary of Zenith, the Rauland Corporation located at 4245 North Knox Ave. employed 850 workers who made television picture tubes. The other Zenith subsidiary in Chicago was Central Electronics, Incorporated located at 1247 West Belmont Ave. where 100 employees made Ham radio equipment and performed auditory training. The other Central Electronics plant was located at State Route 133 and Grandview in Paris, Illinois where 500 employees made radio receivers raising the total Zenith work force in Illinois to at least 6,960.

Mike Kaminski shared
[A comment indicated this plant was on North Ave. But I don't see that in the above list of  Illinois plants.]
Patrick Joyce posted another photo of this building.

From MadeInChicagoMuseum I learned "The first major Zenith factory, located at 3620 S. Iron Street in McKinley Park, was in operation from 1924 to 1937. It has long since been demolished."

Zenith was one of the reasons that, by the early 1960s, electronics and communications equipment was the city's leading manufacturing sector. "At that time, the Chicago area made nearly half of the consumer electronics goods produced in the United States" (ChicagoHistory)

A comment in a posting on the lost of the "fastener (screw) industry" in Rockford, IL. (A screw company screws its employees.)

A history lesson on the death of the U.S. TV industry - End of the American TV Industry
As recently as 1965, every color television set purchased in the United States was made by an American-owned company in a domestic plant. In that year, Americans purchased 2.6 million sets manufactured by companies such as Sylvania, Motorola, Admiral, Philco, Sunbeam, RCA, Quasar, Magnavox and Wizard.

Twenty-six years later, in 1991, sales of television sets to United States consumers soared to twenty-one million. But only one company was still making the sets in the United States-Zenith Corporation, at a lone domestic plant in Springfield, Missouri. By 1992, there were none. In October 1991 Zenith announced that it was ending production in Springfield in 1992 and shifting the jobs to a Zenith plant in Reynosa, Mexico.

For the American television industry, the end came with a swiftness that would have seemed inconceivable a generation ago, when more than two dozen American-owned plants were turning out all the television sets purchased in this country. That was before Japanese television manufacturers began dumping huge quantities of low-priced receivers on the American market.

When American manufacturers objected to what they called unfair trade practices, the Japanese claimed they were able to undersell American makers because their products resulted from greater cost efficiencies. But American television makers said there was no evidence to support that assertion. As proof, they pointed to the fact that the Japanese were selling television sets to Americans at much lower prices than they were selling them in Japan.

Zenith asserted in a 1977 report: "the fact that the Japanese manufacturers, whose lowest-priced nineteen-inch offerings in Japan are priced at about $500, are selling similar receivers to American private brand retailers at prices that permit resale in the United States at under $300, provides substantial support for the premise that those receivers are being dumped in the United States."

The United States Tariff Commission had agreed, saying in a 1971 ruling that the "television industry in the United States is being injured by reason of the importation of television receivers from Japan, which are being sold at less than fair value." Fines and duties totaling several hundred million dollars were later assessed against the Japanese television makers. But years of legal wrangling and diplomatic maneuvering followed with the Japanese companies ultimately paying only nominal amounts.

Zenith also filed a lawsuit against the major Japanese manufacturers, charging them with violating United States antitrust and antidumping laws. The case found its way to the United States Supreme Court, which ruled in favor of the Japanese. By the time litigation and the regulatory proceedings were over, the American television industry was history.

Every American-owned company had either shut down its television production or been sold to the Japanese. Except Zenith. The company known for innovation and quality-"The quality goes in before the name goes on"-continued to maintain one production plant. Zenith's sprawling Springfield plant-it covered an area the size of twenty-nine football fields- was the town's largest private employer and a steady source of earnings for 1,750 local residents.

Until 1992. Having lost $500 million in revenue over the previous five years, the company announced that it had to cut costs. When labor contracts expired in 1992, a total of 1,350 employees would be let go and the work shifted to Mexico. In a statement that has become all too familiar to middle-class Americans, Jerry K. Pearlman, Zenith's chairman and president, explained that the Springfield shutdown, while painful, was necessary for Zenith to remain competitive: "This further consolidation of our operations is a necessary component of Zenith's programs to reduce costs and improve profitability."

The chief reason, Zenith officials emphasized, was Mexico's low wage rate. Wages ranged from $5 to $11 an hour at Springfield; in Mexico they were $1.60 an hour. Actually, the average wage rate at Springfield was $7 an hour. That translated into an annual income of under $15,000, meaning that, by national standards, that the force in Springfield was, on average, at the low end of the pay scale for the American middle class.

Robert W. Mingus, president of Local 1453 of the International Brotherhood of Electrical Workers, which represents the Zenith workers, does not blame the company for the shutdown. He blames the last four presidents , the Commerce Department and members of Congress, both for not doing more to counter Japanese moves, and for making it possible for United States industry to locate to Mexico. "We're encouraging our industrial base right out of this country," he said. 

"America: What Went Wrong?"
Donald L. Barlett and James B. Steele
Andrews and McMeel, 1992
pp. 35-37 

Mark Garrity Japanese, Korean and Chinese mfrs build the parts for TVs now and ship them to Mexico for assembly and packaging. We have about a 5% tariff on TVs these days coming from Asia which is about all the profit there is in them. Under NAFTA there is no tariff from Mexico on them so they ship them there for assembly and packaging. 

In a Facebook posting, Steve OConner comments:

"In the radio and electronics field, Illinois has remained the chief producer. According to 1947 census figures the state had 179 of the 850 radio and television manufacturers in the United States, most of them in Chicago. There are, however, important plants in Elgin, Mt. Carmel, and Bloomington, and manufacturers of parts in various downstate cities. In its review of Chicago industry for 1949, Commerce reported phenomenal gains in 1949 in radio and television, which brought her record to 40 per cent of the national output. Of 2,800,000 television sets, the Chicago area had made 1,242,000 ; of the 10,000,000 radio receivers, she accounted for 4,000,000.
Illinois radio and electronic manufacturers ( Zenith, Belmont, Hallicrafters, Motorola, Admiral, Stewart-Warner, and others ) have handled a large volume of postwar defense contracts, often as much as 30 per cent of their entire production. These projects - radar, guided missiles, and other robot devices - constitute perhaps the most important field of military research aside from the atomic bomb." 


Mary Watters Illinois In The Second World War, Volume II: The Production Front Illinois State Historical Library, 1952 p. 132

I haven't watch this, but it sounds relevant.

Pete Kastanes shared
Zenith Royal 500 Pocket Transistor Radio from the mid-1950's.
[I remember a transistor radio was the first thing I bought with my own money (mowing lawns, babysitting). But the mid-60s, and it may have been Japanese made.  (Yes, babysitting. It was normally a sweet gig of getting paid to do homework. Since I had three younger brothers and a sister who was 15 years younger than me, the word was out in the neighborhood that I could handle boys of any age and change diapers.)]

Alan Coslet shared
Kinda Pricey
Dan Vroom That is $5,147 in today’s [2018] dollars. Makes that 90” LED look like a bargain.

Ray Zirkle posted
A Chicagoland Company... Zenith was on the cutting edge of new technology. I had no idea the remote made it's appearance so early on.
[I finally found the 1958 date at the top.]

I guess I should add Hi-Fi to the title.

Bob Hendricks posted
[This makes me glad that I skipped the 8-track format. I have just vinyl, reel-to-reel, cassettes and CDs in the house.]

Luiz Corona posted
Used to be a household name brand. Now a subsidiary, long live technology.
Donny Farik Where was that located
Ann Varchetta Donny Farik Dickens and Austin Avenue. The picture is the back of Zenith plant 1 from the railroad tracks looking north. Plant 6 is directly south of building. I worked for Zenith for 22 years in both buildings. There was a fire in that building. A shame as the north east corner on the second floor had beautiful walls of wood paneling. The Zenith exec offices and conference rooms were there. Old growth wood.
Donny Farik Ann Varchetta ohhh wow did they at least take care of the employees when they closed?
Ann Varchetta The building had salaried employees in offices and hourly employee in both factories. As Zenith closed and sold plants salaried received buy outs then that dwindled. Hourly received vacation pay and their 401k. LG bought the company in the early 90’s. Your 401K went from company participation to getting company stock. A month after I quit LG converted that stock to penny stock. Zenith was a good place to work and due to poor management went to hell. LG cut what was left. LG didn’t care about the employees. In by 8 cut by 8:05AM. Huge departments gone. Zenith developed remote control, fm stereo signal and stereo tv plus HD. I was present in a 1992 HD demo in Glenview. I own no LG products.
Douglas Smith Ignatz Kowalski Zenith is a subsidiary of LG. They were completely bought by LG in 1999.
Larry DiGangi that viaduct on Austin still floods after heavy rain.
Cynthia Heimsoth We had a Zenith/Admiral plant in McHenry once upon a time. Building was torn down for a drugstore.
Mike Caplan Shed no tears for zenith they sold the TV manufacturing business because they own all the patents 4 HDTV.
Ann Varchetta Mike Caplan no. I was there and worked in the Dickens, Austin, Franklin Park, Northlake and Glenview offices. HDTV was a consortium of TV manufacturers which included Phillips and Thomas electronics. Zenith went under by under priced overseas electronics and mismanagement. LG now owns all patents and Zenith’s HDTV engineering patents. I said it before I own no LG products.

Deborah Risteen Mercer posted
Former Zenith Radio plant, 6001 W. Dickens, 1937.

https://www.madeinchicagomuseum.com/single-post/zenith-radio-corp

Pamela Timme Thank you for sharing. My dad worked at this plant for many years, until the jobs went overseas. Sorry the building has now become such a wreck. “Zenith - the quality goes in before the name goes on.”

Judy Skotzko Pamela Timme my dad retired from zenith. He used to say, "the quality goes out before the name falls off." 

Ann Varchetta So sad. I worked there and Glenview buildings. NE corner exec offices with fireplaces and old growth wood. LG (Gold Star) bought Zenith for the patents, HD patents and cut employees.

Ann Varchetta The product went down and employees were shoved out the door. Many of my friends lost their jobs when LG took over. Zenith stock given instead of payment to 401K with Zenith stock finally devalued to penny stock. Friends were at their desks at 8AM and told at 8:05 to go to HR. Whole departments gone. Some jobs went to Huntsville Alabama where LG could pay less salaries. Managers from LG/ Gold Star Korea were placed in key management positions after firing Zenith people. I do not own or buy LG products.

Gregory Sebben Upper management all got their golden parachutes, though, I imagine. Upper company management are this country's own words enemy so frequently. Rumsfeld killing G.D. Searle in the Monsanto selloff. Eddie Lampert strip mining Sears for anything of value to sell off for cash to line his own pockets while a historic company is destroyed and thousands lose their jobs.

Steve OConnor commented on Deborah's post

Steve OConnor Zenith Corporation
The company was co-founded by Ralph Matthews and Karl Hassel in Chicago, Illinois as Chicago Radio Labs in 1918 as a small producer of amateur radio equipment. The name "Zenith" came from ZN'th, a contraction of its founders' ham radio call sign, 9ZN. They were joined in 1921 by LCDR Eugene F. McDonald, and Zenith Radio Company was formally incorporated in 1923. Zenith introduced the first portable radio in 1924, the first mass-produced AC radio in 1926, and push-button tuning in 1927. It added automobile radios in the 1930s with its Model 460, promoting the fact that it needed no separate generator or battery, selling at US$59.95. The first Zenith television set appeared in 1939, with its first commercial sets in 1948. The company is credited with having invented such things as the wireless remote control and FM multiplex stereo. In fact, Zenith established one of the very first FM stations in the country in 1940 (Chicago's WWZR, later called WEFM, named for Zenith executive Eugene F. McDonald), which was among the earliest FM multiplex stereo stations (first broadcasting in stereo in June of 1961). . . http://en.wikipedia.org/wiki/Zenith_Electronics 

The 1962 Illinois Manufacturers Directory ( 50th Anniversary edition ) lists Zenith Radio Corporation as having a total of 11,000 employees of which at least 6,460 were employed in seven Chicago plants. The corporate office was in plant number 1 located at 6001 West Dickens Ave. where 2,500 workers made radio and television sets and Hi-Fi stereophonic phonographs.

Plant number 2 was located at 1500 North Kostner Ave. where 2,100 employees made government electronics, radio and television components, transistors and hearing aids. 

Plant number 3 was located at 5801 West Dickens Ave. where 300 employees made electronics and servicing.

Plant number 4 was located at 3501 West Potomac Ave. where 60 employees performed warehousing.

Plant number 5 located at 6501 West Grand Ave. employed 500-600 workers who made government Hi-Fi equipment.

A subsidiary of Zenith, the Rauland Corporation located at 4245 North Knox Ave. employed 850 workers who made television picture tubes.

The other Zenith subsidiary in Chicago was Central Electronics, Incorporated located at 1247 West Belmont Ave. where 100 employees made Ham radio equipment and performed auditory training.

The other Central Electronics plant was located at State Route 133 and Grandview in Paris, Illinois where 500 employees made radio receivers raising the total Zenith work force in Illinois to at least 6,960.

Steve OConnor End of the American TV Industry

As recently as 1965, every color television set purchased in the United States was made by an American-owned company in a domestic plant. In that year, Americans purchased 2.6 million sets manufactured by companies such as Sylvania, Motorola, Admiral, Philco, Sunbeam, RCA, Quasar, Magnavox and Wizard.

Twenty-six years later, in 1991, sales of television sets to United States consumers soared to twenty-one million. But only one company was still making the sets in the United States-Zenith Corporation, at a lone domestic plant in Springfield, Missouri. By 1992, there were none. In October 1991 Zenith announced that it was ending production in Springfield in 1992 and shifting the jobs to a Zenith plant in Reynosa, Mexico.

For the American television industry, the end came with a swiftness that would have seemed inconceivable a generation ago, when more than two dozen American-owned plants were turning out all the television sets purchased in this country. That was before Japanese television manufacturers began dumping huge quantities of low-priced receivers on the American market.

When American manufacturers objected to what they called unfair trade practices, the Japanese claimed they were able to undersell American makers because their products resulted from greater cost efficiencies. But American television makers said there was no evidence to support that assertion. As proof, they pointed to the fact that the Japanese were selling television sets to Americans at much lower prices than they were selling them in Japan.

Zenith asserted in a 1977 report: "the fact that the Japanese manufacturers, whose lowest-priced nineteen-inch offerings in Japan are priced at about $500, are selling similar receivers to American private brand retailers at prices that permit resale in the United States at under $300, provides substantial support for the premise that those receivers are being dumped in the United States."

The United States Tariff Commission had agreed, saying in a 1971 ruling that the "television industry in the United States is being injured by reason of the importation of television receivers from Japan, which are being sold at less than fair value." Fines and duties totaling several hundred million dollars were later assessed against the Japanese television makers. But years of legal wrangling and diplomatic maneuvering followed with the Japanese companies ultimately paying only nominal amounts.

Zenith also filed a lawsuit against the major Japanese manufacturers, charging them with violating United States antitrust and antidumping laws. The case found its way to the United States Supreme Court, which ruled in favor of the Japanese. By the time litigation and the regulatory proceedings were over, the American television industry was history.

Every American-owned company had either shut down its television production or been sold to the Japanese. Except Zenith. The company known for innovation and quality-"The quality goes in before the name goes on"-continued to maintain one production plant. Zenith's sprawling Springfield plant-it covered an area the size of twenty-nine football fields- was the town's largest private employer and a steady source of earnings for 1,750 local residents.

Until 1992. Having lost $500 million in revenue over the previous five years, the company announced that it had to cut costs. When labor contracts expired in 1992, a total of 1,350 employees would be let go and the work shifted to Mexico. In a statement that has become all too familiar to middle-class Americans, Jerry K. Pearlman, Zenith's chairman and president, explained that the Springfield shutdown, while painful, was necessary for Zenith to remain competitive: "This further consolidation of our operations is a necessary component of Zenith's programs to reduce costs and improve profitability."

The chief reason, Zenith officials emphasized, was Mexico's low wage rate. Wages ranged from $5 to $11 an hour at Springfield; in Mexico they were $1.60 an hour. Actually, the average wage rate at Springfield was $7 an hour. That translated into an annual income of under $15,000, meaning that, by national standards, that the force in Springfield was, on average, at the low end of the pay scale for the American middle class.

Robert W. Mingus, president of Local 1453 of the International Brotherhood of Electrical Workers, which represents the Zenith workers, does not blame the company for the shutdown. He blames the last four presidents , the Commerce Department and members of Congress, both for not doing more to counter Japanese moves, and for making it possible for United States industry to locate to Mexico. "We're encouraging our industrial base right out of this country," he said. 

"America: What Went Wrong?"
Donald L. Barlett and James B. Steele
Andrews and McMeel, 1992
pp. 35-37

Steve OConnor "One of the clearest illustrations of how the Japanese system was set up to take advantage of American openness and its own closed nature is the television wars. The price that the American television pioneers paid for doing even a limited amount of business in Japan was sharing their technology. They had no idea what that price would ultimately cost them.

Immediately following World War II, American television manufacturers such as Motorola, RCA,and Zenith enjoyed a tremendous, perhaps insurmountable, technological and cost advantage over the rest of the world. It seemed certain that America would dominate the world's television industry forever.

The Japanese market, however, was closed to the U.S. producers. Japan's government wanted to give the fledgling Japanese electronics industry time to get off the ground. Despite the lower price of U.S. televisions, they were unavailable to Japanese consumers. Along with keeping out the U.S. rivals, this practice meant that the Japanese firms had a captive market for their inferior, more expensive products.

It was a perfect example of the Japanese reverence for the producer and the relegation of the consumer to a distant second - a telling contrast to the United States.

Television and the larger arena of electronics were viewed in Tokyo as a strategic industry. The government placed a far higher value on developing a domestic television industry than on serving consumers with the best products.

In order to gain access to Japan, RCA and General Electric were required to license the technology for television to Japanese companies in the early 1950's. The decision was encouraged by the U.S. government as an example of the American commitment to help rebuild its former enemy.

The transfer of the technology provided the U.S. companies with some short-term profits from the licensing agreements. But the leap the transaction gave to the Japanese was priceless.

By the 1960's, the Japanese were inundating the U.S. with their black-and-white televisions. The Japanese sets were cheaper for several reasons. Labor costs were far lower in Japan, and the Japanese corporations had not had to invest the money in research and development that the Americans had spent, because they had been allowed to license the technology.

More significantly, the Japanese were dumping their television sets on U.S. customers. That is, they were selling them at below-cost prices in order to gain a foothold in the U.S. market. The tactic was successful, in part because the Japanese manufacturers could sell their sets at a higher price at home, where they had no fear of foreign competition."

Douglas Frantz, Catherine Collins
"Selling Out: How We Are Letting Japan Buy Our Land, Our Industries, Our Financial Institutions, And Our Future.", 1989
p.90-91

Steve OConnor KICKBACKS IN LIVING COLOR

June 13, 1977

"The flood of Japanese TV sets on the U.S. market has long been a sore point with American TV manufacturers and labor unions. By one estimate, 70,000 jobs have been lost to Japanese imports, which last year accounted for 2.9 million sets, or 38% of the domestic market.

Illegal Rebates. The kickbacks supposedly work this way: if a Japanese manufacturer sells a TV set in the U.S. for a price lower than it charges for the same set in Japan, that constitutes "dumping" under international trade rules and subjects the manufacturer to a penalty tariff. So the Japanese manufacturer quotes the U.S. importer an official price equal to the Japanese price, then makes under-the-table payments —in effect, illegal rebates—that allow the U.S. company to offer the set at prices that undercut U.S.-made TVs by $100 or more. Sometimes the payments are disguised as rebates or "credits" for advertising or shipping."

"Since the Japanese had artificially inflated the prices of television sets sold in Japan, American TV manufacturers reasoned that they could recoup some of their losses by competing in the Japanese market, where domestic sets sold for twice as much as their American counterparts. But the Americans had yielded to the Occidental temptation to underestimate the Japanese.

When Zenith attempted to market TV sets in Japan in 1961, MITI became sorely displeased. Zenith first enlisted two major Japanese trading companies, C. Itoh and Nichimen, but neither was able to get MITI permission to export dollars to buy the U.S. products. In 1963, Zenith tried again, and Nichimen spent a sizable Zenith budget for advertising and publicity in the hope of selling a mere 500 sets. Nichimen reported back that although they had tried hard, the Japanese manufacturers had asked MITI to intervene against Zenith.

According to a report by the office of the U.S. Comptroller General, MITI had pressured Japan's leading department and appliance store chains and had jawboned Nichimen "not to indulge too aggressively in the distribution of Zenith Products." The ministry's implicit power soon became evident. In 1975, when Japan sold 5.5 million of its own overpriced sets in its domestic markets, it imported only 11,644 sets, or two-tenths of one percent. By 1978, the Japanese purchase of imported sets was down to 485 units, less than the number many individual Sears stores sell in one year.

Another major American company, Motorola, also became involved with the Japanese TV dumpers, to their chargrin. In recent years Motorola has spent millions advertising its competitiveness with Japan, accurately pointing out that Japan's trade policies are unfair and ethically dubious. A recent two-page Motorola advertisement proclaims, "When Japan Waives the Rules, Japan Rules the Waves." The text castigates Japan for "extreme protectionism at home and collective efforts permitting targeting abroad." The chief executive officer of Motorola, Robert Galvin, has been active in speaking on this theme to the government and industry groups. "Motorola finally got religion", says Arnold Kalman, "but they sure got it late."

Motorola, now the largest of America's dwindling roster of semiconductor manufacturers, has long been a leading U.S. producer of consumer electronics, including TV sets. Motorola established a branch office in Tokyo in 1959 at the dawning of Japan's reemergence as a powerful industrial nation. This office evolved into Motorola Service Company, Ltd. Later, Motorola formed a second Japanese subsidiary, Motorola Semiconductor of Japan, Ltd., and joined with Alps, a relatively small Japanese concern, in a joint venture known as Alps-Motorola.

In 1973, Motorola was hoping to conclude a deal with Aiwa to sell color television sets in Japan. Aiwa, a smallish company controlled by Sony, proudly announced it would market Motorola's big Quasar color consoles, made by the American company in Japan, to retail at 330,000 yen, or about $1,500. It was an attractive price alongside comparable models which Japan Victor and Matsushita were then selling for between 480,000 and 570,000 yen. But rival Matsushita, an enormously influential firm in Japan, decided that such a large American company as Motorola could not be permitted to gain a toehold in Japan's protected markets. The presence of an American company selling sets to Japanese consumers for less than inflated Japanese prices would not only endanger their high domestic prices but expose them to dumping charges in the U.S. Somehow, Motorola must be stopped. It was accomplished through an offer Motorola could not refuse.

In March 1974, Matsushita purchased Motorola's Japanese television manufacturing interests for $100 million in return for which Motorola agreed to abandon all its television manufacturing, including its plants in both the U.S. and Taiwan. Matsushita and Motorola announced plans to jointly pursue other ventures in "growth industries" at a later date. Motorola had received a sizable sum for a business that was only marginally profitable, and Matsushita had eliminated its only possible American competitor in Japan."

Marvin J. Wolf
"The Japanese Conspiracy: Their Plot To Dominate Industry World-Wide, And How To Deal With It", 1983
p. 23-25


Steve OConnor Larry DiGangi "Meanwhile, on anther front, in the recession of the early '80s- which was really a depression for autos - Japanese automakers under pressure from Washington, had agreed to "voluntarily" limit the number of cars they imported into the United States to 1.68 million per year. This was called the Voluntary Restraint Agreement, or VRA- and it made sense because Japan's own auto market was (and is) locked up tighter than a drum to foreign competition. For example, in the year the VRA was enacted the Big Three American automakers sold a grand total of 4,219 vehicles in Japan, and by 1997 that number had climbed to just 25,000 vehicles.

In 1985, however, Washington decided to let the Japanese lift the VRA (in essence, to eliminate it). On the face of it, this seemed like a sensible decision - after all, the Big Three were all making money once again. However, with foreign nameplates already taking more than a quarter of the U.S. market that year (and now threatening to take a lot more), and with autos accounting for more than half of the nation's all-time record $130 billion trade deficit, it wasn't inconceivable to consider the future for American auto producers, especially those whose products competed so directly against the Japanese, a little bleak.

Moreover, there were a few other Japanese-related factors at work as well: The original imposition of the VRA had given the Japanese an incentive to sell a higher mix of upscale cars in the United States (just as gasoline prices were falling) and to build what turned out to be a bevy of "transplant" assembly plants in the United States (just as the yen had finally strengthened against the dollar) - proving, much to Detroit's chagrin, the old saw, "Be careful what you ask for, because you just might get it!" Adding insult to injury, as the yen rose from its previous absurdly weak (read rigged) levels, the Japanese complemented their growing U.S. transplant production by selling many of their Japan-built products for less in the United States than what they sold for in Japan (which they could get away with because they had a sanctuary market at home, peopled by consumers who had no other choice but to pay high prices to help offset the cost of their marketshare grab in the United States).

This is, of course, by definition, dumping - an illegal practice in the United States and also against the rules of the World Trade Organization (then the General Agreement on Tariffs and Trade). Whenever anyone from Chrysler pointed out this or any other Japanese transgression, however, the Washington (and media) response was, "Stop whining - it's not trade practices; it's that the Japanese just build better cars!" The fact of the matter is, both statements were true: (which, by the way, in turn helped give them the resources to build better cars!). And while I, for one, readily conceded the former point, hardly anyone in Washington or in the media would concede the latter. It seemed almost as if the American mind was incapable of grasping both propositions simultaneously."

Robert A. Lutz
Guts; The Seven Laws of Business that Made Chrysler the World's Hottest Car company,1998
p.14-16