To hear a lot of people these days, American business is in deep trouble. The auto and steel industries are in a slump. The United States is falling behind on new technology.Competitive spirit is on the wane.
Not at Wang Laboratories Inc.
While some U.S. firms may be fighting desperately to stay alive, the big problem here at Wang is how to slow the company's explosive -- and admittedly unmanageable -- growth pace:
Since 1977, the Lowell-based computer maker has been growing at an average 67 percent annual rate -- a staggering pace that company executives concede is "unsustainable" and must be arrested in the next two or three years. c
Wang's expansion has been so rapid, it has spawned serious new problems in managing personnel and resources. There already are complaints about service snags. And the firm is continually looking for land on which to locate new plants.
The company's own advances in new technology are pushing it into a far larger market, with the prospect that Wang now will have to face new, more threatening competition from such giants as IBM.
To top that off, the changes come at a time when An Wang, the 60-year-old Chinese-born computer genius who founded the firm in 1951, is beginning to ease himself gradually out of the driver's seat.
The question now is, will corporate managers be able to slow the company's growth successfully from the current dizzy pace? And how well will the corporation fare after An Wang finally steps down?
"It's mathematically impossible for them to grow at that rate, and I don't think the marketplace is going to give them a chance," says Ulrich Weil, vice president and analyst at Morgan Stanley & Co., the New York investment house.
Here at Wang's ultramodern corporate headquarters -- a 14-story glass-and-concrete tower in Lowell's new industrial park -- the company's phenomenal growth pace is evident at every turn:
The work force -- now at 13,500, up from only 1,000 just 10 years ago -- is conspicuously youthful. "I'm sort of a veteran," boasts one corporate guide now in her late 20s who joined the firm four years ago.
And the physical plant is brimming over. Officials concede the headquarters building, still in the final stages of completion, already is too crowded, and the firm just broke ground for a third big manufacturing plant here.
Wang's frenetic growth, and that of other high-technology firms here, has spawned an economic renaissance for the entire New England region, which had slumped badly following the decline of its textile and footwear industries. h
In essence, these high-technology companies have replaced footwear and textiles as the region's most important economic staple -- often occupying the very plants abandoned by failed mills and shoe plants.
The shift has been steady, not only here in Lowell but in Worcester and Littleton, N.H., and dozens of other New England cities from Maine to Connecticut.
The result has been thousands of new jobs and -- for the first time in recent memory -- a reversal of the region's traditional suffering during time of recession. In the 1980 slump, New England virtually was unaffected.
Moreover, virtually all of these firms still are growing rapidly, leading industry analysts to project at least a modest continuation in job growth for several more years.
Wang's basic business is essentially in four fields:
Word-processing equipment: Wang is the nation's largest manufacturer of cathode-ray-tube word-processing systems -- combination typewriter-and-TV-set devices used for composing and writing letters and manuscripts.
Small-business computers: The Lowell company is second only to IBM in production of relatively inexpensive business computers, priced at $25,000 or less, primarily for first-time users and small- and medium-sized firms.
Desk-top calculators and computers intended mainly for research, engineering and scientific computations. Wang also manufactures computer software, the programs and procedures needed to make computers do their jobs.
Complex integrated information systems that combine data-processing, word-processing, printing and electronic mail and message services in a single package. In this field, too, Wang is the nation's leader.
Today, Wang Laboratories, Inc., competes feverishly with a dozen major computer makers, including Burroughs, Digital Equipment, Data General, Hewlett-Packard, IBM, Xerox, NCR, Exxon and Lanier Business Products.
In the past four years alone, the company's revenues have spurted from $97 million to $543 million, with a cumulative $800 million in new orders. And Wang sells and services its products at 300 locations in 80 countries.
Wang last year forecast it will hit $1 billion in revenues in fiscal 1982 and grow to a $5-billion-a-year operation by 1990. So far this year, it's running ahead of expectations.
The company's beginning, in Boston in 1951, did not exactly set the business world on fire. Dr. Wang, then a 29-year-old physics graduate student at Harvard, was all but unknown, except to a handful of professors.
A few years before, Wang had invented a special magnetic memory core that paved the way for the manufacture of modern-day computers. Selling the patent to IBM, he reaped a $500,000 windfall -- which he used to form his own firm.
At first, Wang Laboratories -- as the young inventor boldly dubbed his one-man firm -- was intended only as a vehicle for its founder's random inventing efforts. The shy, brainy Wang hoped to turn out one-of-a-kind specialty instruments.
A year later, the company took its first great leap forward when Wang hired a 20-hour-a-week assistant, doubling the firm's entire personnel complement, he likes to recall jokingly.
Wang also made another key corporate decision that year that was to set his company apart from others in the industry:
After a bad bout over a computer typesetter he'd invented, he vowed that from then on he would sell only directly to the end-users of his products and not go through a larger system-assembly firm, as most smaller manufacturers do.
Within a few years, "the Doctor," as he's still known, had chalked up inventions that included a cloud-measuring device, a computer typesetter, a block tape-reader and the nation's first electronic scoreboard.
By 1964, company revenues had edged up to $1.6 million.
Wang's first serious growth began in 1969, when key customer Litton Industries began buying up its own components plants. The question was, should Wang try to compete or seek new markets instead? An Wang chose the latter.
Wang's inventions continued to flow. In 1965, he developed and marketed a sophisticated desk-top calculator that could do logarithms at a single keystroke. He also began work on a computer word-processor. Revenues soared.
In 1972, again using in-house technology, the company began offering small computers and word-processors for office use, the first step toward a mythical "office of the future" in which clerical jobs all would be automated.
Since then, sales have skyrocketed. Between 1973 and 1976, the company's revenues doubled, to $96.9 million from $47.3 million, and between 1977 and 1980 they exploded, jumping to $543 million.
Analysts attribute the rapid growth to development of new products that rapidly expanded Wang's top-of-the-range data- and word-processing lines, more aggrssive sales to large companies and reorganization of top management.
The firm also has made a reputation for state-of-the-art technology and reliable products.
Today, at 60, "the Doctor" is quietly trying to step back from his involvement in the firm's day-to-day operations, even to the point of refusing interviews lest they "place too much emphasis" on him rather than the company.
A reserved but dapper man with a quick sense of humor and a penchant for white shirts and bow ties, Wang continues to surround himself with young people and takes an active interest in all facets of the firm's operation.
For all the rapid growth, Wang Laboratories' corporate structure has remained about as central and unbureaucratic as can be.
Instead of having separate managements for different geographical business units, the corporation is run centrally by function -- manufacturing, field engineering, sales, development, finance and administration.
The corporate structure is laced with checks and balances -- to guarantee executives at Lowell a more complete picture. For example, a comptroller in Belgium may report directly to Lowell as well as to his own local superior.
And the atmosphere at headquarters is informal, with little display of rank-consciousness. In the 1973-75 recession, when Wang had to order pay cuts, executives suffered a 10 percent reduction. Everyone else was docked 5 percent.
However, as Morgan-Stanley's Weil points out, Wang's explosive growth "has not been without its hitches."
For one thing, Weil points out, the company's rapid expansion has sometimes outstripped its ability to train maintenance personnel, resulting in what he calls "pockets of customer dissatisfaction" over service.
For another, he notes, the growth has required so much borrowing, both to provide new working capital and to finance expansion and new construction, that the books are beginning to show it.
Figures show Wang's long-term debt now totals $312.2 million, compared with $111.2 million in 1979 and $25.9 million in 1976. "They have a very leveraged balance sheet," Weil asserts.
Wang officials acknowledge both those points but assert that the company is moving to correct them and will be able to take care of both problems without any serious difficulty.
John F. Cunningham, 37, the firm's executive vice president, admits there are some "hot spots" in service now but insists maintenance is "about the same" as ever and "our reputation might be worse than the actual performance."
Still, Cunningham says the company is beefing up its maintenance and repair operation, adding 1,000 new service personel this year, a 44 percent boost. It's also speeded up its shipments of spare parts to eliminate service delays.
On the issue of financing, Cunningham concedes Wang's overall debt burden is now "heavier than many of the competitors" but points out that it is all "fixed-rate debt, at rates under 10 percent," balanced by securities holdings.
"We're in pretty good shape that way," he asserts.
To Cunningham and other key Wang officials, the biggest problem the company faces now is not so much its rapid growth pace but the threat of being thrown into new, heightened competition with giant IBM in the word-processing field.
In previous years, Wang had almost an open field in the desk-top computer and word-processor markets. IBM, which had captured the magnetic card market in the early days, was late in getting into small office-automation equipment.
Last May, however, IBM announced plans to market a new "Kisplaywriter," an $8,000, stand-alone unit intended primarily as a competitor to Wang's cathode-ray-tube word-processing units.
Wang countered in December by unveiling a low-cost "Wangwriter" -- a stand-alone system designed to sell for under $7,500. But company officials concede IBM has the resources "to swamp us, if it wants."
By Cunningham's reckoning, there's little real doubt that IBM -- and possibly the Bell System's computer division -- soon will enter the automated office market in earnest and will "become a real factor" in five to 10 years.
"They've already become much more aggressive as a computer supplier," he calculates. "Their products are much stronger. And if the market expands sharply, there's no way for a company our size to pick up an 80 percent share."
"I think we're going to have to be very good IBM-watchers," Cunningham says.
What that means to top Wang officials is that their own firm will have to become much more sophisticated at marketing, primarily to the major accounts, and to improve its standard of service, as well.
There's also some uneasiness about potential competition from Japan, whose expertise has been mounting and is now at 90 percent of U.S. technological ability. By the late 1980s, Cunningham says, the Japanese could be a factor.
And what about the edging back and eventual retirement of Dr. Wang? Can a firm that's been a virtual one-man company all these years survive and continue to prosper once its founder retires?
Both company officials and outside analysts seem relatively unconcerned.
First, although An Wang still is virtually revered as both the founder and guiding light of the firm, colleagues point out he's recently stuck mostly to new-product development, not manufacturing, sales or marketing.
Instead, the day-to-day operations have been managed by a team of a dozen or so senior executives, most of whom joined Wang 12 or 13 years ago and have been with it ever since.
"The infrastructure already is in place," John Cunningham says. "Myself and the operating vice presidents who work along with me . . . basically have driven the business without an awful lot of input from Dr. Wang."
For the long range, however, company officials are decidedly optimistic. Cunningham, for example, believes that despite the threat of IBM and the Bell System's word-processing component Wang always will have a place in the market.
Meanwhile, Wang executives are fond of recalling that An Wang was dismissed as "audacious" when he predicted a few years ago that his company would top $1 billion by 1983.
It's now 1981, and the "audacious" Wang proved too conservative. And now, about that forecast for 1995. . . .