To-day's Outlook in the RADIO TRADE

Radio Record, Volume V, Issue 19, 20 November 1931, Page 1

To-day's Outlook in the

RADIO TRADE

Mr_ D

E. R.

Boucher

gives an

Authoritative Survey of Trade Conditions in the States

TH. most striking and significant impression of my investigation of the conditions. of the radio trade in the United States was the tremendous change in feeling of the radio industry as compared with that of my last visit in 1928, stated Mr. E. R Boucher, managing director of Radio, Ltd., the course of an interview | with the Record." "

In 1928, mantfacturers." and dealers were proud and-happy ‘to be associated with the idevelopment' of radio. This spiritwas acquiréd mainly through the excellent profits god bright future prospects for -the dustry. This year, however, from the smallest manufacturer to the largest there is an atmosphere of tension and worry, and continuous reference to the "good old times" of the past Most of those interviewed would. be pleased indeed to be able to liquidate their assets to-day-if it were possible to do so-and retire from the industry. eee As in every industry immediately it becomes profitable a multitude of new manufacturers appear who at the commencement are moderately successful, but when conditions become difficult they are unable to survive, and in their efforts to remain in the trade resort to pricecutting. Seesbe sed

This is exactly the position in the Unitea . States to-day. Not only has the small manufacturer resorted to reducing prices, but competition between the larger manufacturers is very evident, and we see first-class receivers listed at dollar prices which can only return to the manufacturer approximately 25 per cent. of what these factories received for console receivers two years ago. It was the object of the set manufacturer during the peak period of the industry to manufacture all the components used in the construction of a receiver. This position has changed, and the set manufacturers find that apparatus manufacturers are also fighting fo: their existence, and in doing so are quoting prices below the set manufacturers’ cost of production, hence many of the large manufacturers are now purchasing component parts from apparatus manufacturers. The same keen competition exists between the manufac turers of apparatus who are endeavouring to remain in production and resort to securing the business at unprofitable prices.

The introduction of the midget hae sounded the death-knell of many a manufacturer, and has been a great blow to the largest producers. Logically, from a turnover standpoint, to maintain the same volume of output factories should produce three times the number of receivers to maintain their turnover, but actually the output has decreased in most instances by 50 per cent. and more. Tee difficulty of the larger manufacturers is that during the peak of the industry they invested large sums in buildings and equipment, either borrowing from the banks for that purpose or using up all their available capital and necessitating borrowing from the banks for carry ing on. At that time, of course, it was quite an easy matter for prosperous, large manufac~ turers to raise capital, but from the time of the collapse of the stock market on Wall Street, banks have refused to further finance these organisations, and have been demanding reduction of overdrafts.

There is more than one instance of the largest and proudest radio manufacturers being operated under the supervision of a bank nominee, not exactly a receiver, but a specialist qualified in the preservation of the bank’s interests, and whose sole policy is to endeavour to conserve sufficient assets to cover the bank’s liability. There are, of course, many financially sound organisations, but there are very few showing a worthwhile margin of profit, and very few who would not be pleased to retire from the industry were it possible to get reasonable value for thew assets. I was informed from a reliable source-that one manufacturer who nad undertaken expenses (in the way of national advertising, cost of "dies" and equipment for producing a particular model receiver, etc.) based on a certain (Continued on page 2.)'

output for the year, had, from the beginning of September to the end of the year, to produce half a million receivers in order to fulfil the programme and show a margin of profit. If only half that quantity is produced, it would probably mean that the year’s operations would result in only a few thousand dollars profit. If the full programme is achieved, the company stands to make a million or more dollars. The general feeling was that the production must fall short of the quota. Retail Trade Affected, THE retail trade in America is also suffering considerably, because the accepted method of sale is time-pay-ment, and with a population in: the cities largely comprised of those renting flats, extreme care is necessary as considerable losses have been made since the commencement of the depression. This, coupled with the fact that the manufacturer, in order to make lower list prices, has reduced the wholesaler’s and dealer’s discounts, has left the retailer and dealer wishing he were in some other class of business. Chain Store Developments. A RATHER peculiar situation has arisen with the large chain stores and department stores. Previously, these organisations would link up with one of the large manufacturers and distribute throughout their branches the particular line of the manufacturer they linked up with, but with the rise and fall in popularity of radio sets, naturally these organisations found that the goodwill they created one year would be of little or no use to them the next year when that large manufactur. er would be superseded by some other manufacturer on the release of the new season’s model. The result has heen that these chain stores and department houses-some of whom operate 60 and 70 branches-have contracted with the smaller manufacturers for the supply of receivers to their own specification and registered brand. If that manufacturer fails, no harm is oceasioned to the brand which is owned by the department store, and today there are quite a number of small manufacturers thriving by producing merely for these organisations. Conservative Policy Pays. HREE or four of the oldest and most‘ reliable manufacturers of radio receivers have réfused to produce low-priced midgets, and have concen-' trated their efforts mainly on consoles and high-priced, better-quality manteltype receivers, They have also refused to meet price reduction, and these organisations, although their sales have decreased, arrange their production so that they manufacture only what can be sold through their fixed distribu-

tions at a margin of profit. These are the only concerns that are really conducting a profitable business. A great effort is being made in the States to educate the public to a higher standard of receiver. Previously, there was a wild scramble to produce at low cost with resultant service troubles, but now the general tendency is to produce a better quality receiver at a slightly higher price. It is quite definitely established that the bottom has been reached as far as prices are concerned, and immediately there is a return to. prosperity in the United States the first move will be an increase in prices. Every possible method known to business and science has been operated for the reduction in cost of radio receivers, and it is absolutely impossible to produce a radio receiver constructed under the present and only: known principles at a lower price than has been offered during the past year. Not Desperate, but Difficult, HE impression may be gained from the foregoing that the radio industry in the United States is in a despe.ate condition. This is not so, but the industry is passing through a very difficult period, and one which after all should result in the elimination of the weaker and less desirable manufac-

turers and the final result will no doubt prove beneficial. The fierce competition. existing has made it ‘necessary for every manufacturer to produce a receiver which is reliable and which possesses a standard of performance much superior to anything manufactured in previous years. Tt is thought that although it wil take some years to eventuate, the radio industry will settle down more or less on the lines of that of the gramophone industry prior to the introduction of radio. By the elimination of the undesirable and weaker manufacturers. and the combining of the larger organisations, greater production will be secured by the finalists in this marathon contest for survival, and the majority of the business will be enjoyed by four or five large organisations instead of being spread over hundreds as it is to-day. Important Conclusions, jy the large American cities on account of the extremely low prices and the small margin of. profit left to the dealer, the demonstration of midget receivers is reduced to a minimum. The dealer will demonstrate the machine to a client, but does not leave the set for several days and make several demonstrations, but expects the buyer to arrive at a reasonable quick decision

without.many unnecessary demonstra" tions. _.The New Zealand public are to-day purchasing receivers at prices which. do not leave an adequate margin to show the dealer a reasonable profit. The dealer in New Zealand receives the same amount of profit as the American dealer, but the American dealer secures from four to ten times the; amount of business from the same amount of time and effort. Finally, a word of warning to those business organisations not at present engaged in the radio trade, and contemplating entering it. Although it is only natural to feel that "distant fields are green," let those who think of entering the radio trade make a thorough and careful investigation before they enter one of the most difficult and trying businesses known to commerce. Those who have concentrated on it for many years, and who should be fully qualified to handle a radio business properly, find the utmost ditficulty ia maintaining a profitable trade. New Developments. ONCHRNING fresh developments in circuits, designs, etc., it is generally felt by the largest that there is very little scope now for radical changes. The practice of holding a radio show annually for the release of new models is one which is exercising the minds of designers and engineers. The trade and the public have come to look upon the radio show as the opportunity taken by manufacturers to place something entirely new before them which supersedes the previous models. 'y t A few years ago they were confiden that a better type of speaker would be developed, and then they produce the dynamic. .They were confident that a different type of valve would be evolved which would have an output of 50 per cent. more than the types then existing. Then came the screened grid valve, then the multi-mu and pentode. It has always been acknowledged ‘that the superheterodyne circuit had wonderful possibilities-then came the improved superheterodyne circuit this year. -Radio engineers concede that : this seems to have exhausted all possibilities that they can imagine for improvement in radio reception. Any change would have to be of such a radical nature that it would entirely supersede the present principles. and there is nothing looming up on the horizon which would indicate that this is likely. It is consequently fut by leading radio engineers in Am a that any alterations for some time] to come will be merely minor alteratiéns such as we find each year on motorears, mostly featured merely for tie purpose of releasing a ne~ model. Television. (CLOSE investigation into the leading television equipment at present on sale did not disclose any apparatus which in its present state of development could be considered as a practicable proposition. Certainly, blurred pictures could be seen, but apart from ~ discerning the outline of an individual, it would not be possible to recognise," features, There is a considerable amount. of television equipment sold to the keen amateur who is following the development of -television and who experiments and is content vr " vreveiving something in the nature of a picture. (Concluded on page 30.) {

The Radio Trade (Continued from page 2.) From an entertainment point of view it would not be tolerated in New Zealand. There were some rumours that television had been perfected by some organisations to a stage where it was ready for release, and which would be generally accepted as a form of entertainment. but apart from these rumours there was no other evidence that television was much nearer being a form of entertainment. Several large manufacturers have a department with research engineers devoting their entire attention to perfecting television, but these all conceded that progress was very slow and they were not hopeful of early success.