General Electric Co. is considering closing its color-television manufacturing plant in Suffolk, Va., company officials said yesterday.
While company officials stressed that they have made no decision on the future of the 19-year-old plant and its 1,800 employes, they said they were reviewing a number of options that could result in the closing of GE's only domestic plant that assembles color televisions.
"The state of our color-television business is in very poor health," Jacques Robinson, manager of GE's Consumer Electronics Business operations in Suffolk, said in a one-page memo to employes.
Noting that the company is competing "in a brutally tough market environment," Robinson said "actions need to be taken as soon as possible. . . . Everyone must understand that we need to fix the color-television business as soon as we possibly can."
Over the past few years, Robinson has been determined to make the Suffolk plant the exception to the pervasive erosion of the U.S.-based television-manufacturing industry by Japanese imports. One manufacturer after another has turned to the Japanese to build their televisions.
However, GE spokesman Richard Knoph said that despite massive cost-cutting efforts and quality-improvement programs, GE continues to be particularly hard hit by foreign competition. The strong dollar "has been a significant problem," Knoph said. So, too, has been the entry of South Korea and Taiwan into the color-television manufacturing market. The U.S. International Trade Commission recently found both countries guilty of "dumping" their sets in the U.S. market, that is, of pricing them below their manufacturing costs.
What makes matters even worse is that although the market for color televisions reached a record high last year, it is expected to remain flat this year. As a result, inventories are high, prompting heavy promotions and large price cuts that GE can ill afford, Knoph said.
As a result, GE now has to decide if it should remain in the color-television business and, if so, how to do it. Last November, the company announced that it no longer would produce its own small color televisions -- those with 10- and 13-inch screens -- but that starting in July, it would contract with foreign manufacturers to produce televisions for sale under GE's name.
"It's premature to speculate what we are going to do and even when we are going to do it," Knoph said. Nonetheless, he added that the company is reviewing several options, including making further cost reductions, contracting with foreign manufacturers to produce all sets sold under GE's name or getting out of the color-television business completely.
In recent years, GE has operated under a new corporate policy under which it stops manufacturing products when it does not have a major share of the market or when it is clear that GE cannot compete. Just two months ago, GE announced it would stop producing its own microwave ovens at its Columbia, Md., plants. It also has sold its small-household-appliance business to Black & Decker for $300 million.
If GE does decide to have a foreign manufacturer produce color televisions for the company, the decision will be a blow to the Suffolk area. GE is the area's second-largest private employer, behind Newport News Ship Building & Dry Dock Co.
"It would hurt," said John Rowe, Suffolk's city manager. "The effect of the shutdown would be to increase our tax rate by 2 percent to replace the dollars we would lose" by their departure.
The Suffolk plant's work force already has been trimmed considerably. In 1973, there were 5,000 employes; a year ago, there were 1,935; today, there are 1,800.