General Electric Co. finally pulled the plug on its television manufacturing business last week, ending a long struggle to remain competitive in one of the meanest consumer markets of all.
Next August, it will shut down its Portsmouth, Va., assembly plant, eliminating the jobs of some 800 employes. GE dealers will continue to sell television sets with the GE trademark. But next year, they will come from Matsushita -- one of the Japanese consumer electronics powers -- which already produces Panasonic and Quasar brands for the U.S. market, many of them in this country. The only GE component in the sets will be the picture tube, which GE will continue to produce in its Syracuse, N.Y., plant.
Political and academic examiners who pick through the remains of GE's TV manufacturing business, looking for an explanation of its defeat, will have to unravel this question: Why was one of the country's most well-heeled and combative manufacturers, with a familiar name and a strong consumer franchise, unable to make a profit selling television sets?
Some may blame the defeat on an overvalued dollar or the dumping of unfairly low-priced foreign TV sets on the American market -- the most common explanations for the string of losses U.S. manufacturers have suffered in the 1980s.
And those are part of the story here, too, but only part, according to Jacques A. Robinson, GE vice president and general manager of consumer electronics.
"If the dollar had been lower and dumping had been controlled, you could say things could have turned out differently," he added. But he couldn't prove it. "It isn't the simplistic case of Japan walking in and banging U.S. companies over the head," said Robinson. "It's a very competitive industry, with half the sets coming from Far-Eastern suppliers, who take a very long term view of how they'll play."
The lesson, said Robinson, is that "this environment is a sign of things to come in numerous other industries that are going to be very, very aggressive."
The other factors include:
*An easily transferred product technology that skips over the Pacific like a flat stone over a pond, winding up in South Korea, Taiwan and Singapore, whose manufacturers are following in Japan's footsteps to become large, powerful global competitors. The transfer of consumer electronics technology tends to offset quickly the benefits of research and technological innovation, according to what historian Daniel J. Boorstin calls the "law of convergence" -- the tendency for "everything to become more like everything else."
*Relentless price competition, the product of that global market, which obliges manufacturers to be just as relentless in knocking costs out of the production processes. By one reckoning, color TV sets would be selling for $1,600 apiece if they had kept pace with inflation since 1967. Instead, they average $500.
*A changing, tougher retail market. One of GE's strengths is its distribution network of dealers. But the waves in the television market are being generated by the big discount stores like Circuit City and Federated, whose high volume, low-cost operations make them tremendous price competitors.
*GE's image is as a manufacturer of refrigerators, dishwashers and other kitchen appliances, the "white goods" that are one of GE's strengths. "TVs aren't 'white,' " said David A. Lachenbruch, editorial director of TV Digest magazine. "You wonder how many people felt a GE name belonged in a wood cabinet in the living room," he added. "I think their refrigerator-washing machine image hurt them."
Two years ago, GE was heading into this battle with a clear strategy and a leader, Robinson, who exuded confidence. Its hope was that the industry had hit bottom and was headed upward. To build its position, GE's plan was first to cut costs by improving production facilities in Portsmouth, Syracuse and Singapore.
Second, it would concentrate its efforts on higher value -- and higher profit -- sets. It began developing new TV sets capable of performing new kinds of services for consumers, making the set the command console for home appliances of all kinds, capable of controlling heating and air conditioning, operating lights and regulating home security systems.
GE's ace in the hole, like that of its competitor Zenith Radio Corp., was to be an entirely new approach to television projection, using computer technology to sharpen and alter the picture signal picked up by an antenna or coming in over a cable system. New digital processing chips would permit a viewer to split the TV screen, showing parts of two channels at once. Single frames could be captured and saved -- like a TV weather map, for instance, or zoomed in on through a close-up feature. Messages could be received and sent using the set. "The field is so wide, it's literally the imagination that's the limiting feature, rather than the technology," Robinson said back in 1983.
"Once the TV set goes digital, there is no reason why you cannot turn it into an intelligent terminal," Mark Hassenberg, an analyst with Donaldson, Lufkin, Jenrette Securities Corp., said recently.
But digital technology didn't make it in time. GE and Zenith postponed the decision to commit to the new technology because the powerful new features they wanted to justify premium prices were not ready. And the digital picture itself wasn't demonstrably better than current technology, said Lachenbruch.
Without digital, GE's attempts to create a high-quality, prestige -- and high profit -- TV set didn't work. "They tried every conceivable effort. Jacques Robinson made a noble effort, but the cards were stacked against him," said Lachenbruch.
"The problem was, the overall economics of the industry somewhat overwhelmed all of the players, including us," said Robinson. "The fact of the matter is, the industry is so plagued with excess capacity that it's impossible for us -- even with a strategy in place being relatively well executed -- to manufacture a product and make a profit."
Color TV sales soared in 1983, but settled down to a slower path last year. "Fundamentally, when you have an industry where demand is growing 3 to 5 percent a year and productivity is growing 10 to 20 percent, the result is a great overcapacity," Robinson said.
Nobody's really winning, said Robinson. Its losses on TV sales pulled down GE's earnings this fall. Zenith Radio Corp. reported a third-quarter loss. "Even the Japanese are not having a great time here," Robinson said. "The industry is truly plagued and everybody is suffering."