Fight for Appliances

The holder of the oldest name in automatic washers tossed in the towel last week. Bendix Home Appliances, which brought out the world's first automatic washer in 1937, will be sold, pending approval of final terms, by Avco Manufacturing Corp. to Philco Corp. Avco also said it will close its money-losing Crosley appliance business (refrigerators, ranges, radio-TV), leaving 78 distributors around the nation with nothing to distribute. Chairman Victor Emanuel ticked off a host of reasons for Avco's retreat from appliances: "Increasingly severe competition, large over-capacities, rampant price-cutting, rising costs of labor and material."

Like Autos. Like Avco. many another appliance maker has found itself unable to cover the high costs of nationwide distribution, of straining to produce a full line of models and retooling for new models. As a result, the industry is going through the same kind of consolidation that the automobile industry experienced. Said Westinghouse Vice President Chris J. Witting: "Appliances can be expected to follow the path of automobiles, with half a dozen companies covering the field."

Sales already are rapidly concentrating among the industry's Big Five: General Electric, Westinghouse, Philco. RCA and General Motors' Frigidaire Division.

In recent years almost 200 makers of appliances have merged or liquidated. Last year International Harvester shucked off its refrigerator and freezer branches. La March Deep Freeze, a household word discontinued business. Thor Corp. dropped its washing-machine business. TV manufacturers liquidated by the handful or so out to bigger companies.

"This year has been the most rugged of history," says Bernard A. Chapman, general manager of American Motors Corp. Appliance Division (Kelvinator). Although sales are big, production capacity is much bigger. Said the vice president of another appliance maker: "The U.S. has enough appliance producers to make two or three times the amount the market can absorb." Complained a small appliance maker from Chicago: "The little guy has two choices: drop out or sell to the big fellow."

Philcos' Executive Vice President John Otter argues that dealers want to carry only one or two brand names and well-advertised, full lines. When a customer buys a Philco refrigerator, he will have Philco in mind when shopping for a telvision set. Under Chairman William Balderston, Philco has been moving into full-line diversification, since 1949 has bought up the Electromaster Inc. range line, the Dexter Co. home-laundry line, will get still another new family of washers and Bendix.

Sins of Bigness. This trend to bigness is criticized by some of the bigwigs. One of the strongest voices is that of Judson Sayre, who as Bendix president in 1941-55, probably did more than any other man to promote the automatic washer; he now heads Borg-Warner's fast-growing North Division (1955 sales: about $129 million, triple the 1953 volume). Says Sayre: "The industry has been committing every sin in the book. Some of the giants have a policy of 'buying off' key markets. They have been moving appliances through big dealers who operate on a small margin. Small dealers have been the victims of big dealers and small markups."

The giants heartily disclaim that they are smothering the small fry among manufacturers and dealers. Protests General Electric Co. Executive Vice President Roy Johnson: "We don't believe that only the full-line appliance manufacturers will survive this race. Some small company may come up with a new feature, like a waterless machine that would vibrate the dirt out of clothes, and sweep the field."

Actually, the small companies that have done best are those that have stuck to just one or two products and continued to come up with new features.

Among them are Iowa's Amana Refrigerator, Inc., which concentrates its advertising budget on home freezers, claims to be the biggest producer of them; Michigan's Ironrite Co., which grosses $6,000,000 a year by renting ironing machines, letting housewives apply payments toward later purchase of ironers; Philadelphia's Proctor Electric Co., which turned out an iron with steam holes over its entire sole rather than just the tip, now has sales galloping 300% ahead of last year.

Says Proctor's Advertising Director William Rambo: "If you have quality and the right price, you're bound to survive."

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