Television digest with AM-FM reports (Jan-Dec 1951)

However, much more than that is at stake: the ability of the electronics industry to meet its responsibility when and if a third world war comes. To those not familiar with our Industry this situation would seem incredible. Certainly it is anomalous. To those in the industry. however, it is no cause for alarm. People who have been living through the meteoric rise of electronics know that the process of rapid industrial growth is not without its pitfalls, and is often accompanied by dislocations in industry patterns and practices. We are now going through one of those periods of dislocation or relocation, but I am confident that our Industry, noted as it is for resourcefulness, will emerge stronger than ever before. We realize that civilian business went into a slump and military business failed to take up the slack. Here is what happened: First, the fear of wartime shortages developed into a wave of buying that drove television receiver sales to record heights during the latter half of 1950. People bought in 1950 many of the television sets that would normally have been purchased in 1951. Second, consumer credit controls, higher taxes, higher living costs, and other economic factors resulting from our partial mobilization program along with normal seasonal Infiuences, slewed down consumer buying with the result that TV set production in 1951 dropped to a quarter of its 1950 peak. Third, despite large appropriations for military procurement of electronics products, most radio-television manufacturers have been unable to obtain enough defense contracts to offset their losses in civilian business. Why Military Production Does Not Take Up Slack All Of you will have your own ideas as to why military production has not taken up the slack in civlhan production. I will mention some of the factors bearing on the point; (1) Electronic developments have been so great since World War II that the whole character of manufacturing requirements has changed. Citing the highly complex electronic fire control and radar equipment developed since World War II, Mr. Edwin T. Gibson said recently that the radar equipment used in World War II was more easily adapted to mass production methods common to the radio-television Industry. The nmnber of radar units needed by our armed services today is numerically only a small fraction of the number of TV sets which our Industry is equipped to build, but it requires much more time, more engineering, and more labor. Officials estimate that not more than 20% of military electronics contract commitments wiU be spent for items which can be manufactured in normal mass-production fashion. Included, for example, are radar equipments costing $400,000 which use less than 350 separate components. Obviously, such equipment cannot be assembled on a production line basis. Assembly might be done by a total of 60 people, of whom half must be engineers. Here is another example cited the other day by one expert; in $1000 worth of civilian electronics equipment, the maniifacturer solders in 700 resistors. In $1000 worth of military equipment, he solders in 37. The manufacturer of mass production radios and TV sets is likely to find that the biggest order he can get for a military item is 50,000 or 60,000 units. He could handle the job in 10 or 15 days of production, but it takes him 18 months to prepare for the production run. If we use the 20% yardstick, the $7.6 billion I spoke of is reduced to about $1.5 billion for a two-year period, which is little more than could be expected in normal peacetime periods before Korea. It is in the assembly plants that most of the idle capacity and unemployment occurs. (2) The complexity of the apparatiis often places it beyond the engineering or production capacity of many companies to cope with. It is totally different from the products they are used to making. One of your California aircraft manufacturers recently gave expression to this point by saying that while most aircraft his industry is called upon to build is a modification of or closely related to earlier models, the electronics equipment presents novel engineering and production problems which are, as he termed it, "fantastically difficult." Another of your aircraft builders also illustrated the point by saying that the military services must come to the realization that electronics equipment requires more lead time for production than does aircraft. Clearly, it is not every company which has the engineering skill and production experience that v^l permit it to assume responsibility for delivery of some of this complex apparatus. (3) A substantial portion of military electronic contracts go to companies not normally considered a part of the electronics industry. I refer to aircraft companies, automobile companies, and various others, like Eastman Kodak and Minneapolls-Honeywell. The development by these many companies of interest and skill in electronics is very significant. It is another example of the increasing and widespread Importance of the electronics art. It suggests that electronics may be a necessary part of any business of manufacturing mechanical apparatus, and that perhaps in the end it will be difficult to define the electronics Industry. Perhaps we shall all be in one branch or another of the electro-mechanical Industry. (4) The military purchases do not offer as much business for the electronics industry as would at first appear. The statistics lor "electronics” often include other equipment such as trucks upon which the gear is mounted. Also, even in items generally considered to be electronics, it has been estimated that about one-half of the dollar volume comes from outside the electronics Industry. This refers to such things as foundry work for movmts and frames, and various kinds of precision machinery and mechanical gear forming a necessary part of electronics equipment. Recent studies indicate that 35% of the dollar volume of component parts of military electronics equipment, which parts makers are called upon to furnish, represent articles not normally considered as electronics. When spare and replacement parts are also considered, it seems that the 50% estimate for non-electronlc components is not far afield. Conclusions to be Drawn From this situation it seems clear that two conclusions can be drawn : (1) We must continue searching for practical methods of spreading the military load and enlisting the facilities and manpower of manufacturers whose plants are either idle or operating far below capacity. RTMA is trying to do something about this situation. We have established a Small Business Committee and are setting up a liaison between large prime contractors and small manufacturers to facilitate more subcontracting. We compile and issue information leading to subcontracting opportxmities. We are trying to anticipate future shortages so that new opportimities may be uncovered. The larger prime contractors within our Industry are already subcontracting on an average of 50% or more of their defense business, accordmg to a survey made by our Association. A large proportion of these subcontractors are in the “small business” category as defined by the Government. That is, they employ less than 500 employes. Of course, in spreading the work load there is no substitute for shoe leather. I have never seen it better expressed than in the following unofficial quotation on Charles E. Wilson’s remarks in response to a question before one of the committees of Congress: "You have to work for it. Too many people wait for this to come to them on a silver platter. I have not seen that platter myself. You go get it and you work intelligently at it. and you may have to give a considerable amount of help to the departments that are going to place it. That is the way you get it. It is not hard. It is there to get. “Small business operators should know what they can produce and then should work on the prime contractors. Some of the little fellows got rich during the last war and they are going to get rich all over again. “They are the ones who make money out of the big corporations. The big corporations are not going to make any money out of it, I hope — not more than a nominal profit.” (2) The second conclusion is that, short of an all-out war, manufacturers equipped only to do assembly operations will probably not be able to get sufficient military business to keep their plants busy. Therefore we must do everything possible to keep our civilian business strong and healthy, thus keeping our industry intact for a greater emergency and doing our part in the fourth task I mentioned earlier. TV Sales Outlook Is Encouraging Fortunately, the outlook is encouraging for a steadily rising production of TV receivers during the approaching fall and winter, with greater increases to follow as the “freeze” is lifted and new TV areas open. Recent upsv/lngs in sales of television receivers at the retail level have followed the relaxation of consumer credit controls which Congress effected at the behest of our Industry. All indications are that this Improvement will continue and that inventories will gradually get back to normal. In fact, in the light of tightening materials controls, TV receivers may again be in short supply before Christmas. From a long range point of view, we have every reason to be optimistic. Many new TV areas will be opened up within the next few years, and better service will be offered in numerous areas now having only one or two TV stations. Higher power for TV transmitters, now being allowed by the Federal Communications Commission, already is expanding present markets. New export markets are opening up as other countries, especially in Latin America, are turning to television as they did formerly to American movies. American manufacturers, with a head start on most foreign radio-television producers, should be able to supply these new world markets as weU as the expanding home markets. Thus it appears that while the pattern of military production of electronics equipment is changing, there will be enough civilian business to keep the industry busy once television is permitted to extend its boundaries.