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