SETTLING IN

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SETTLING IN


Aerial View of Northridge Plant
Harman International, Courtesy Mark Gander and John Eargle

 


Settling In

Some of the turbulence that characterized the sale of the company and the transition to new ownership carried over into 1970. A new, unseasoned management team was in place. Sandy Berlin, who had been running the company for some months, departed the scene two weeks after Arnold Wolf was installed, apparently in the belief that "total immersion" was the best way to learn how to swim.

Shortly after Berlin's return to Lake Success, New York (the location of the Jervis corporate offices), he called Wolf and urged him to consider the discontinuance of JBL's electronic products. It was felt that electronics was not JBL's principal business; that the company faced major and increasing competition in that area; and that concentration of resources on electronics could compromise developments in the loudspeaker field. Although not stated, there may also have been the corporate concern for the continued success of the Harman-Kardon products and the desire to avoid internecine competition between the two consumer divisions of Jervis (the corporation also comprised, at that time, an Automotive Division that made diecast parts for the automotive industry -- principally exterior rearview mirror assemblies -- and the Aviation Division, a manufacturer of high-temperature components for jet engines). Wolf resisted the suggestion with the result that the JBL electronic series was maintained for several more years.

He was not equally successful in turning aside another corporate idea. Everyone was on the alert for ways to expand JBL's professional products business and it was evident that the line lacked a wide variety of electronic devices it would need to truly encompass that market. Some time earlier, Harman-Kardon had developed its own series of moderate-priced professional electronics -- mixers, power amplifiers, equalizers and the like. The HK management wished to eliminate the line because it was interfering with their production capacity in the consumer area without generating a compensatory profit contribution. There was, however, a considerable inventory of product to be dealt with. It seemed to corporate that transferring the product line to JBL would be a logical solution, despite misgivings on the West Coast about the actual utility of the move. There were questions about the price points and technical performance; nonetheless, the inventory was shipped out and a modest corporate re-identification and facelift program instituted so that the products could be visually integrated into the JBL catalog. Unfortunately, sales did not meet expectations and eventually the entire line was discontinued.

Corporate Assistance

The above events are cited only to demonstrate that, as in all major readjustments, there were a few missteps along the way. In sharp contrast, it must be emphasized that numberless vital contributions were made by corporate management that led directly to JBL's further growth and profitability.

One of the most important of these efforts was the assistance given by Jervis personnel in the further expansion of the international market. A remarkable personality, Walter Goodman, was the roving sales ambassador who was instrumental in widening the market presence of both JBL and Harman-Kardon throughout the world. Ably assisted by Ernest Wetzig and, later, Bruce Scrogin of the JBL Export Department, Goodman was tireless in opening up new lines of distribution in countries and areas where no one had penetrated before. Goodman was an irresistible salesman who, given time, generally achieved his objectives. Sidney Harman once characterized Goodman as "a stream of lava that may move slowly but eventually overcomes everything in its path."

This proved entirely true. For example, the Japanese market had been pioneered by Bill Thomas and Ray Pepe, and by the time of the Jervis acquisition a distribution arrangement was in place with the Sansui Corporation, a well-known electronics manufacturer. Under Goodman's and Harman's guidance a new and better-defined relationship was created, with a comprehensive, long-term contract drawn up to formalize the terms. Continuous efforts by Goodman and occasional promotional trips by Arnold Wolf all contributed to the remarkable increase in sales to Japan. By 1973 those sales outstripped those of any other market save the U.S.

At the same time, new distribution was achieved in many other countries. Exclusive distributorships with well-established, experienced independent sales organizations were established in the United Kingdom, Canada, Switzerland, Italy, Denmark, Sweden, India, Australia, New Zealand, Taiwan, Mexico, Brazil and other South American countries. Further distributorships either owned by Jervis outright or organized with substantial equity participation were eventually developed in the United Kingdom, France, Germany and Japan (where products from Jervis divisions other than JBL were imported and marketed). These efforts proved so successful that, in time, product literature, owners' manuals and packing material had to be produced in several key languages.

Less glamorous, perhaps, but no less important, were the internal operating controls put in place by the Jervis group immediately after the acquisition. Direct Standard Cost accounting methods allowed for much better decision-making and control. This technique, among other benefits, permitted management to view the precise profit contribution of each product individually and to gauge the effects of product-mix changes. Inventory control was also upgraded as were the computerized management information systems. Operational management continued in the capable hands of Sterling Sander.

Expansion Pressure

 


Back of Casitas Plant
Adjacent to Railway
Harman International, Courtesy Mark Gander and John Eargle

One of the striking shortcomings that greeted Wolf soon after arriving at JBL was the sad state of the furniture factory and final system assembly building. The main plant on Casitas Avenue backed up directly on a major two-track rail line. The difficulty of this location lay in the fact that the furniture factory was immediately on the other side of the tracks, in Glendale (the rail line marked the municipal boundary). This circumstance meant that all deliveries of finished transducers and networks to the furniture plant, and all return deliveries of finished goods to the Casitas warehouse, had to take a circuitous, one-mile journey each way in order to gain access to the nearest automotive crossing. Nor was this the major problem. As JBL grew rapidly in the 60s, manufacturing space became crowded in all departments. The only industrial building available for the furniture plant within a reasonable distance was the one across the tracks. It was barely large enough and lacked many of the most basic requirements. The roof leaked during rainstorms, there was little ventilation in summer, less heat in winter, and poor illumination. It also represented a genuine fire hazard especially in view of the sawdust-producing wood mill and the combustible materials used for wood finishing. It is a tribute to the furniture personnel that so many excellent pieces of cabinetry were produced in those surroundings. Larry Witcher, a master woodworker and head of the wood shop has to be credited with much of this achievement.

Wolf remembers an early meeting with Albert Schwartz, the Vice President of Manufacturing, who had come to JBL from the high-precision, clean room environment of the aerospace industry. A hard-working and very conscientious individual, Schwartz was almost in tears when he described the inefficiencies, high rate of rejects, and poor working conditions of the furniture facility. It was clear that finding a new space was an immediate priority perhaps even an emergency.

It was a stroke of good fortune that a new industrial space became available at the old Glendale airport. This facility, bordering the eastern edge of Griffith Park, had been deactivated at the end of World War II and converted into an industrial estate. Many of the existing aircraft hangars were retained for industrial use. One of these had been occupied by a wire and cable manufacturer who was about to vacate the space. JBL immediately leased the building and was able to move all of the furniture operation, raw material and finished goods warehousing, and some of the transducer manufacturing into the vast space. The plant was about three miles away from the Casitas address. It was dubbed "Airway" after the name of the road on which it was situated. Almost coincident with this move, Accounting, Payroll, and Data Processing were also relocated away from Casitas Avenue to a small office building in Glendale, to be followed shortly by the exodus of Marketing to yet another site (on Riverside Drive).

It soon became evident that even this degree of expansion would not be sufficient. An intensive effort was begun to identify a suitable industrial site where a factory could either be leased or a brand-new facility built to consolidate all of the company's operations in one place. There were several aborted starts on promising properties. On one of these the company had gone so far as to engage an architectural firm to do preliminary site analysis. This study demonstrated that the proposed property (in Pacoima) was actually too small to allow for additional expansion and, accordingly, was rejected.

While the property search continued, it became necessary to find still more manufacturing space. A suitable tilt-up concrete walled building near the western edge of the Burbank Airport was leased, and the transducer, network, and electronics operations were transferred there. Again, because of its address, the interim transducer plant was labeled "Sherman Way." By that time, an almost ideal future site had been located farther west, in Northridge, at the heart of the San Fernando Valley.

The Northridge property was owned by RCA and comprised several purpose-built structures that had been used for research and manufacture of marine electronics, a business that RCA planned to abandon. The situation seemed perfect for JBL -- not only because of the usable existing buildings (one even included a small anechoic chamber), but because of the amount of undeveloped ground on the site (which comprised, in total, some 44 acres). In 1976 a portion of the facility was leased from RCA (with an option to buy) and JBL's management, engineering, accounting and communications offices moved to Northridge, effectively ending the company's history at 3249 Casitas Avenue. Once the purchase of the property was assured, plans were drawn to construct a 420,000 square foot manufacturing facility that would consolidate all the operations conducted at Airway and Sherman Way. This massive addition brought the total square footage available at Northridge to 550,000. The Los Angeles architectural firm of Martin and Martin was engaged to create the design, ground was broken in March, 1976, and the resulting distinctive building was ready for occupancy by November of 19
78.

2001 Arnold Wolf

 

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