A bright orange Black & Decker hand drill stands out on the shelves of a Mideast bazaar's tiny stalls. The same flash of color jumps out of the dinginess of a Portugese fishing village's general store. Yet Black & Decker is as much at home in these unlikely places as in a surburban American do-it-yourself shop.
Black & Decker drills have even traveled to outer space, when one of the tools was used by Apollo 15's astronauts in 1971 to drill beneath the lunar surface.
Black & Decker, which has its headquarters in this Baltimore Beltway town close to where it was founded 72 years ago, is internationally ubiquitous. The company is a multinational concern which, despite the quality and popularity of its products, now is suffering from foreign currency fluctuations and the international recession.
The company lost $77 million in its 1982 fiscal year, which ended in September, on top of 1980's 27 percent drop in profits. The sharp decrease in housing starts, caused by high interest rates and the recession, cut deeply into Black & Decker's sales of professional power tools.
The do-it-yourself market also fell. This came as a surprise to most company executives who learned belatedly that the consumer market was a victim of the soft housing market since most fix-up activity goes on either just before a house is put on the market or just after it is purchased.
Nonetheless, company executives are bullish about the future. They have continued to invest in new product development and plant modernization, and are looking toward diversification into household goods, accessories and car care products to help pull the company back into the black.
Besides planning ahead, the company has tightened its operations. Ten percent of Black & Decker's workers were laid off in the past year and 1,000 salaried employes took pay cuts, including Chairman Francis P. Lucier, who gave up $10,000.
The company also announced last month that it was trying to unload its biggest loser, McCulloch chain saws, which cost Black & Decker $24 million in fiscal 1982. Without that loss and the $94 million put aside to cover potential losses connected with the sale of McCulloch, Black & Decker said it would have made $41 million.
"With the growth inherent in our strong position in electric power tools and substantial opportunities for selling related products . . . it makes sense for us to concentrate . . . on the electric power tool business," said Lucier.
Many market analysts agree. David Lebowitz, vice president of Wall Street's American Security Corp, said the company has been "pretty well battered" by the recession and by the drying up of the chain saw market soon after it purchased McCulloch.
"These are good people. They put out a good product," Lebowitz said. "Black & Decker's name is good. They are going to live through this recession. They have one of the best consumer divisions going and an excellent professional program. It's only a matter of time before it starts paying off. It's a tribute to management that they can still make money in this hostile environment."
Investors apparently agreed. Shares went up 52 percent during the stock market boom of the past two months, and closed Friday at 17 5/8 (down 3/8). But Black & Decker stock still sells far below its 1973 peak of 42.
For Americans who are used to seeing Black & Decker products on local hardware shelves, the company's international character may come as a surprise. A full 60 percent of its business comes from overseas operations, mainly in Europe, Africa and Asia, and it runs manufacturing plants in Britain, France, Germany, Italy, Ireland and Canada.
But this has been a mixed blessing in recent years, with the strength of the dollar diluting profits from overseas enterprises. The mark, for instance, dropped 30 percent in two years, the franc and lira 50 percent, which looks bad for the home office when foreign currency income is translated into dollars.
In fact, said Black & Decker's new president, Ronald H. Fidler, overseas operations had a modest growth in fiscal 1982, and the network of foreign plants goes a long way toward compensating for the strength of the dollar.
"It would have been very difficult to have exported from the United States to our associated plants because of the strength of the dollar," said Fidler, whose appointment in September underscores the international nature of the company. He previously had been head of European operations and president of Black & Decker's Italian subsidiary.
Fidler has just returned from a trip to Japan where he explored the competition from power tools made there and the possibility of returning Black & Decker to the Japanese market. The company tried to move into Japan in the late 1960s, but Fidler acknowledged it went about it in the wrong way -- without the right organizational base or product line. As a result, its market share is now less than 1 percent.
But Japan is the world's third largest power tool market, and Fidler called it "pretty unsatisfactory" that Black & Decker's share is so infinitesimal.
The Towson company goes head to head with Japanese firms, especially Mikita and Hatachi, for the professional tool market here and in other countries. While the Japanese market today consists largely of professional users, Fidler said he learned from his trip that there is a growing consumer market of up to one million units that Black & Decker might be able to tap into.
"I don't see Japan as a country that we cannot export to, providing we have the right costs and the right products," said Fidler. He said Black & Decker's philosophy is, "we're going to be better than the Japanese."
Japan has made a large investment in power tool production. But, with a stagnant economy, business there is down between 10 and 25 percent, Fidler said. The Japanese industry is now turning aggressively to exports, taking on Europe before North America and going for market shares with low prices and heavy discounting, he said.
The company president said Japanese firms have grabbed between 5 percent and 10 percent of the world market, some of which comes from Black & Decker but most from European companies.
Japanese firms are now moving on the United States and Canada with the same techniques, mainly in the field of tools for professionals. The North American competitive race, moreover, is far more difficult today than it was three years ago. Nonetheless, he said prices of Japanese products here remain higher than in Europe.
"We adopted a head-on strategy with the Japanese," Fidler said. "We're not going to give up one market share without a fight."
But he doesn't anticipate going the protectionist route of manufacturers in other American industries, charging their Japanese competitors with dumping.
"I think they are very efficient, low cost producers of quality products and the only way to beat them is to sell a better, less expensive product," Fidler said. But he added that he is alert to any Japanese intrusion into the consumer market in this country.
The company has had major problems in other overseas markets. Iran was once a major operation for Black & Decker, with annual growths before the Khomeini revolution ranging from 20 to 50 percent. That business now has shrunk to almost nothing.
More recently, Black & Decker was caught badly by the peso squeeze in Mexico, where it had opened a new plant that the company made the mistake of financing by borrowing dollars rather than pesos, Fidler said.
The Mexican operation had shown "dramatic growth" in both professional and consumer power tools. Fidler said he believes its long term potential remains good after a period of stagnation. Nonetheless, he said Black & Decker would sell the plant if it got a good offer.
"Mexico is a salutary lesson to us because we overexpanded there," he said.
While the less developed countries of the world pose the greatest risk for companies such as Black & Decker, Fidler said he believes they also provide the greatest opportunities for new markets. For instance, 75 percent of the world power tool market is concentrated in just seven countries -- the United States, West Germany, Japan, France, Britain, Italy and Canada -- and another 15 percent is spread among ten more countries.
Black & Decker is in all of them, at least--like Japan -- with a toehold. But the future lies in opening up new, uncharted areas for sales.
In the domestic market, Black & Decker is trying to expand its product line. In its traditional field of home tools, it has moved into microchips, adding electronic, computer-controlled drills to its standard, best selling models first developed in 1916 and sold 30 years later for do-it-yourself use.
New "home handyman" products include a hot air paint remover; an electric planer-joiner; a line of rechargable products for general home use, such as the "dustbuster" cordless vacuum and a powerful spotlight, and do-it-yourself car tools, including an orbiting polisher for waxing cars.