Cerwin Vega will remain in the home, car and pro audio markets even though its new owner, The Stanton Group, previously marketed pro products exclusively, said David Rice, Cerwin Vega's new president.
"We want to grow in home and car audio," he told TWICE. "We will keep Cerwin Vega intact." Stanton Group "is definitely interested in more acquisitions," including possible acquisition of home and car audio brands," he added.
Cerwin Vega will operate as a wholly owned subsidiary of Stanton, whose other subsidiaries are studio-monitor maker KRK Speakers, commercial lighting supplier Coemar, pro accessories supplier Stanton Magnetics, and DJ electronics supplier Stanton Electronics. Rice is also KRK president.
Stanton's owners are president/CEO Gerard Cohen, a pro industry marketing veteran, and U.K.-based investment bank Mezzanine. Six years ago, Stanton Group, then owned by Cohen, acquired its first company, Stanton Magnetics. It was founded in 1946 to sell phono cartridges and styli. Later, the company brought its transducer technologies to the communications and medical electronics industries and ventured into such consumer accessories as record and styli cleaner.
Mezzanine teamed with Cohen for the other acquisitions, beginning two years ago with Coemar.
Until it was acquired in October, Cerwin Vega had been family-owned since its 1954 founding by Gene Czerwinski, whose daughter Connie Czerwinski was president when the new owners took over.
The initial priorities for Cerwin's new owners are ramping up production, staffing up, and improving efficiency, Rice said. Then the company will focus on shipping its first new products under new ownership by August 2003, including its first multimedia products. Probably beginning in early 2004, Cerwin Vega will field higher end home, car and pro lines to complement what is largely a "mid-tier" lineup, he said. In pro, Cerwin offers public address, DJ, and sound-reinforcement speakers, whereas KRK offers studio monitors.
Referring to short-term goals, Rice noted that Cerwin Vega came "close to a 100-percent production stoppage" because select parts suppliers put the company on credit hold. The company hopes to be "in full production" now to fill "tremendous back-orders," he said.
The company, which was put up for sale in June, will also begin to expand its employment roles. Employment fell to less than 100 in recent months from about 300 as a result of the severe cash crunch that led previous management to sell the company.
"We'll rehire, except for the redundant jobs," he said. By the end of November, Rice said he hopes to expand the staff to 120-140 people, including some laid-off engineers. Cerwin will also hire additional engineers and use some of KRK's engineering staff. Existing marketing and sales staff have stayed on board, he noted.
To improve efficiency, the company is consolidating unused space at Cerwin Vega's Simi Valley, Calif., offices. Five buildings with 250,000 square feet, including warehouse space, will be consolidated into two buildings with 175,000 square feet. "Cerwin Vega could have done this before," he said, in part by installing more shelves in its warehouses.
Huntington Beach, Calif.-based KRK will also move into Cerwin's Simi Valley offices, he said.
Cerwin will continue to manufacture products in-house, with the exception of lower priced home theater speaker packages, which are designed in house but manufactured by an outside contractor.
The immediate causes of Cerwin Vega's cash crunch included the economy and market conditions, previous management had said. They also cited the loss of Best Buy in March as a car speaker account and a longer than expected chainwide rollout by Best Buy of a new home speaker series. The rollout took 100 days instead of the 30 days originally planned by the chain. Best Buy had accounted for more than 20 percent of Cerwin Vega's home and car audio sales.
Rice also cited speaker-market changes and a need for a refreshed line. While industrywide sales of speaker pairs are down, particularly in the large speakers that were Cerwin's hallmark, Cerwin only in the past 18 months began offering small-speaker home theater packages, he said. In addition, although the brand also offers some powered subs and separate center-channel speakers, they "weren't the right offering[s]," he said.
Current Cerwin Vega customers include Sears, Rex Stores, and distributors. Best Buy and its Future Shop chain have inventory but aren't buying new products, he said.