Zenith color television sets next year will still have a "Made in U.S.A." label on them, but that will be little consolation for John Nevin, the chairman of Zenith Radio Corporation.
Nevin said yesterday Zenith is losing money and no longer can afford to make all its color TV parts in the United States Shifting Zenith component production to Taiwan and Mexico will cost 5,600 Americans their jobs and will mean there no longer are any all-American television sets.
For years Zenith and Nevin led American television makers in the fight against Japanese imports.
It was Zenith that accused the Japanese of "dumping" television sets here for less than they sold them for at home forcing the importers to agree in July, to limit their shipments there.
It was Zenith that charged the Japanese with manipulating the color television prices here, filling a massive antitrust suit that is still pending in Philadelphia.
And it was Zenith that continued to make a virtually all-American television set long after other makers has turned to foreign made parts and components.
Now Nevin has thrown in the transistor. About a quarter of the company's American workers will be laid off and their jobs shifted to Zenith plants aboad which will make circuit boards and chassis sub-assemblies for color television sets. Zenith stereos will be built to order by foreign makers.
The only remaining American Zenith product will be the company's Model 700 Transocanic shortwave radio. Built in Chicago, the S300-plus Transoceanic is the only radio still made in the U.S.A.
Nevin in a press conference yesterday said Zenith, "has tried longer has tried harder and has tried more sucessfully than any other U.S. company to protect the jobs of its American workers employes."
"We have to admit that our efforts have been far less successful than we had hoped."
About a third of the parts for Zenith color sets will be imported, industry sources estimate. Up to now Zenith has used less that 10 per cent foreign parts, far less than any other television maker.
Because less than 40 per cent of the set will imported, and the final assembly will be done here. Zenith will still be able to call the sets American-made. But even Sony color television sets are assembled in this country, industry sources noted.
Zenith's decision, Nevin said, will allow the company to lower its price, recapture more of the television market and rebuild its battered profits.
The Zenith chairman acknowledged the company will report a loss for the third quarter. He blamed the red ink on promotional allowances - price cuts to dealers - that were needed to meet competition from imports and on the write-off for closing plants.
Zenith for years has been America's largest television manufacturer but recently its share of the market has shrunk.
Television Digest, an industry news-letter, estimated Zenith sold about 22 per cent of the color television sets in the country in the 1977 model year, down from 23 per cent of the '76 models and 24 per cent of the '75's.
RCA the industry sales leader until Zenith regained the spot in 1973, now has 20 per cent of the market according to the TV Digest figures.
Zenith officials prefer to quote another survey which shows a smaller slip in market share, from 23.9 per cent to 21.7 per cent.
RCA yesterday said its color TV sales to dealers this year are running 5 per cent ahead of 1973, its best year ever. Jack Sauter, vice-president for marketing of RCA Consumer Products, predicted 1977 will be the second best year ever for color television industry. He forecast sales of 8.8 million color sets this year, compared to 9.3 million in the record year, 1973 and 7.7 million last year.
But 40 per cent of those color sets will be imported, mostly from Japan, and all the others except Zenith's will have a substantial share of imported components.
Zenith's decision to join the component importers is the final evidence that domestic television makers can't compete with the Japanese, said Charles Ryan, a specialist in the industry for Merrill Lynch, Pierce, Fenner and Smith.
"Over the years Zenith tried to remain as much as an American manufacturer as possible and they couldn't do it," said Ryan. He said, however, that the industry is not threatened with extinction because most picture tubes are made in this country, as are most television cabinets, which are too costly to ship.
Describing Zenith's shift as "a management decision to increase profits in an environment in which they could not increase prices," he suggested the decision would probably be viewed favorably on Wall Street.
Last year Zenith earned $38.6 million profit on sales of $937.2 million. In the first half of this year, earnings were down to $13.5 million. After the third quarter loss, it is uncertain when Zenith earnings will rebound.
Now that the decision has been made, Zenith ought to be able to concentrate on protecting its number one position in the market, other television manufacturing, industry sources said.
The preoccupation of Zenith executives, particularly Nevin, with resisting imports detracted from the company's management and marketing efforts, some industry people believe. "Maybe they spent too much time fighting the Japanese and not enough selling television sets," suggested one rival.
Zenith's loss of market share during a year in which total industry sales were soaring was due in part to aggressive competition from RCA which took away some of Zenith's marketing leadership.
While RCA had made its "Color Track" feature an important sales device, Zenith's essentially similiar "Color Sentry" feature "never meant anything to anybody" noted one television marketing specialist.
RCA "bought" some of its additional sales through price cutting, forcing Zenith to offer costly promotional allowances to keep its sales up.
Zenith, could not profitably match the prices of RCA and others who imported many components. Merrill, Lynch's analyst Ryan noted.
Zenith began cutting its costs by firing 600 white collar workers, mostly as its surburban Chicago headquarters. The last to them were notified yesterday.
Another 5,000 workers will be laid off over the next 12 months, plants in Chicago and Paris III., Springfield, Mo., Soux City, Iowa, and Watsontown, Pa.
About 1,500 of the workers, at Sioux City and Watsontown, produce Zenith stereo equipment. Zenith said it will contract with foreign producers to make stereo equipment to its specifications. Stereo sales are less than 10 percent of Zenith's business and the company wa considered a minor factor in that line.
Components for color television set-will made in Zenith-owned plants in Taiwan and Matamoros, Mexico. Both plants will be exapnded. The Taiwan plant already makes Zenith's black and white television sets.