Over the 40-odd years I spent covering consumer electronics news and products, I developed close personal relationships with many of the manufacturing companies and with certain individuals at the different sales and distribution levels. But my heart always had the softest spot for Philco-Ford.
Why? I'm not sure exactly. Maybe it was because Philco's was the first national sales meeting I was assigned to cover. Or maybe it was sympathy for the level of frustration felt by many of the top-level Ford executives sent from Detroit to Philadelphia, charged with turning around the fortunes of the deficit-ridden producer of electronics and appliances. But I can say that conversations I had with Philco executives and dealers were a critically important early contributor to my education on the ins and outs of the consumer electronics market.
Actually, my first in-depth lesson in industry economics came at my first Philco, and industry, sales convention held in May 1968 in the Bahamas. My teacher was Jack Luskin, then Baltimore's leading power retailer, one of the NATM buying group's so-called “Forty Thieves” and a 2005 inductee into the CEA's Consumer Electronics Hall of Fame.
Following the early afternoon's major product introduction, dealers were escorted to a private room to place orders. I peeked in to see what was happening. What I found was a roomful of gaming wheels and tables at which dealers were feverishly placing orders. It seems that in exchange for orders dealers were given play money for gambling and could exchange winnings (dealers didn't lose) for various prizes.
Later that afternoon I saw Luskin at the pool and I settled into a chaise alongside him. I told him I knew Philco had a less than 5 percent share of what was then a 5.5 million unit annual color TV market (a total that 30 years later would be considered a very disappointing third- or fourth-quarter result). I was therefore sort of bewildered at the frenzy with which dealers were placing orders.
Luskin looked at me as if I were the neophyte that I was and said, “Don't let it bother you. We know Philco will never ship all that we order.” That was my first inkling that those in this business play by a different set of marketing rules.
A second important lesson in the unique nature of the relationship between industry manufacturers and retailers was also delivered at a Philco sales meeting, this time few years later, at a hotel in Las Vegas. The teacher was executive VP Leo C. Beebe, a one-time Ford trouble shooter. He was charged with closing down the Edsel project and developing a Ford NASCAR racing team. Beebe remains one of my favorite industry personalities. He was very bright and had the warm personality of a dedicated college professor. (In fact, he became one after retiring from Ford.)
I was sitting in the hotel lobby on a late afternoon when Beebe walked over and sat beside me. He let out a sigh, and said this industry makes no sense at all. At Ford, he said, they get together with a dealer after doing a market study of his territory. The dealer is then presented with a list showing his minimum required new-car purchases and delivery schedule for the year, by model with accessories and colors recommended. “We know exactly what he can sell,” and so Ford can schedule parts orders and production accordingly.
But here, Beebe said, we present new model plans to our dealers after a year of engineering and costing, having ordered up tooling and parts for new table models and furniture consoles, “and then they tell us what we should be making. It's impossible to do business this way.” Beebe arrived at Philco from Ford in January 1969 and is generally credited with engineering Philco's financial turnaround to profitability. But the frustrations, which included dealing with superiors who didn't agree with or understand his methods, proved too much. In July 1972, he took early retirement and ended his 27-year Ford career.
Just one year later Ford pulled the plug on Philco. And that story is fodder for another column.