Zenith Radio Corporation Yr Sale YoY PAT YoY Investment

1949 77 - 2.7 -
1950 134 174% 5.6 207%
1965 Leaderconsumer electronics 1951 110 -18% 3.3 -41%
Products Television Recievers 1952 137.6 25% 3.8 - 4
Radios 1953 166.7 21% 5.6 147%
Phonographs 1954 138.6 -17% 5.6 -
Military Gear 1955 152.9 10% 8 143%
Sp Prod - Hearing Aids
ISSUE 1966 - Where and How to expand Mfg Capacity For Consumer Goods

Company Financial Posture

(a) No Long Term Debt
Investment In Inventories Kept Minimum
This Saved The Company From Losses In 1930-1933 and Later Slight Loss in 1946 1 2

Issue With TV as Compared To Radio 1956 1965 9 yrs

1 No Radio Mfr or Broadcaster can afford supplying adequate TCV progr Sale(M$) 142 471 332%
2 Advertisers were not willing to contribute untill the circulation is acqui PAT(M$) 6.2 33.6 542%
3 Customers were not assured for satisfactory and continued timelines

1919
Foudned As Partnership - Chicago Radio Lab
Ventrue 1 - Const Of Long Radio Wave Reciever For Chicago Tribune
1920 High Quality , Innovative Manufacturer Of Radio Services
1921
Formar Navy Leuitnent Mc Donald Provided funds for expansion
Initially Company Acted as A sales Agent For Chicago Radio Laboratory
Zenith the absorbed & entered mfg
1923
Mc Donald Founded ZENITH RADIO Corporation
1930
Losses Were Incurred From 1930-1933
Market - TV generated excitement

1933
Initially Sales Dropped to Low 2 Million $
Losses Were Incurred From 1930-1933
1938
1939
Chicago First TV station Was Set Up
1945
With WW-II the components was shortage for supply
Zenith Defined the Mfg Startegy as INHOUSE to deal with this situation
1948
First ZENITH TV reciever in market
Acquired Raulant Corp for PICTURE TUBE
In 1952 Enlarged Capacity by Investing 4 Million $
1949

1955
1958
1961
 è1961 Forecast Shows Colour TV Era Has come
1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
Sales 131570 148458 180634 239819 235772 254553 289804 323597 362314 470503
Net income 6179 8166 12116 16630 15226 18015 19637 20853 24283 33553
NI-%S 4.7% 5.5% 6.7% 6.9% 6.5% 7.1% 6.8% 6.4% 6.7% 7.1%
Investment on facilities 1134 1218 747 2590 4242 2116 9662 12289 4177 10852
Production 22907 24979 29812 34100
TV 7903 9051 10775 12500
RADIO 9975 10771 13282 15600
Phonograph 5029 5157 5755 6000

Avg Price - Zenith Colour Set $350 to $400

Avg Price - Zenith B&W Set $80 to $100
Television Sale - Retail SEASONAL PATTERN - Peak 4th qtr & lag in 2nd Qtr
Market
Sales Coloured Sets 743000 1366301 2746618 ~5000000 ~10000000 ~10000000
Sales B&W Sets 8027981

Industry Uncertain About 1 How Many Sets It Can Make and SO how many sets can they supply to market
2 How Many Coloures Picture Tube Will Be Available
RCA: Around 7-9
850000 sqft Million
Plant 1 B&W - TV assy
Phonography
600000 sqft
Components Mfg - Radio + TV + Phonographic Set + RADIO Assy
Plant 2
115000 sqft
Components - in 1960
Plant 3 SPD Division
Plant 4 Warehouse
Plant 5 Financial Office + Engg + Special and Military Products
**** PLANT - 6 735000 sqft
325000 sqft Receiving Shipping & Storage
155000 sqft Adminstrative Quarter
** Facility At Rauland Corp Also to be expanded
Forecast in 1965
1.5M B&W
1.0 M Colour Tube

McGregor Findins 151000 sqft Colour TV MFG Investment$3M

380000 sqft
Rauland Corp
B&W-Tube research + Elec tube research
Wincharger Corp Power Generator
100000 sqft
Central electronics
Manufacture Componets Of Radio & TV
Zenith Radio Distribution Corp
Zenith Radio Research Corp
Capacity
Tube Production
Weekly O/p Daily Cap Daily Act
min 70000 11667
max 80000 13333

Prediction of 10M Colour Sets was anticipated on

1 availability of Colour Tubes
2 Night Shifts
3 Reducing Assy Of B&W
Fewer Hi Fin Stereo Consoles
Daily Colout TV Prod To Be Increased from 3500 to 4500 by
1 More Nigh tShift
2 Overtime
3 Higher Efficiency
Fewer Rejects
Availability of Parts
Additional Experiecnec & Well Trained Supervisory & Technical Persns
Capacity Sought 10000000 Sets ( Industry Says 7-9M)
Productivity 3500 Sets Per Day to 4500 Sets Per Day
Colur TV Sales 750000 This Year To Additional 750000 Next Year so Total Of 1500000 Units

Option For Expansion

Option 1 - Purchase Ready Occupancy

Merit Construction time reduces
Labour supply arrangement - ok
Transportationa & other operational Factors Ready

Demerit Adapt to zenith prod requirement ?

Training wil take time

Overall Still 10-12Months to initiate production

Option 2 - Pilot Productoion whil plant under construction

Plant 6 New Plant Addition East of Existing plant#1 PROPOSAL 1

151000 Sqft
+ve Handle Increase Production - Colour TV Sets
Minimise Overtime and Night Shift Presently 3000 Colout TV Sets PD with Max Night Shift To 3700 PD with Min Night Shift '
Obtain Better Material Handling ( assumption - this will use the current same space utilised by STEREO Assy )
LOWER COLOUR TV Assembky COST
1500 Employee More
-ve Presently 3000 Colout TV Sets PD with Max Night Shift To 5250 PD with Min Night Shift '( Double Size )
-ve Plant 1 add 1000 employee more
High manpower & Transportation Difficulties
Total Cost $ 2.7 M

LOWER COLOUR TV Assembky COST

proposal 1
New Plant - PLANT 6 Capacity 3700 With Min Night Shift & Overtime
&
Near The Existing Plant #1 Capacity 1500 With Night Shift And Ovrtime New Plant For Steros
5200

Investment = 2.7M Investment = 4.9M

But With Forecast
1967 ~10000000 Volume Of Colour TV Sets Then PD Requirement = 6500 So This Proposal
1968 ~10000000 Volume Of Colour TV Sets Then PD Requirement = 8500 Shall Fall Short

So further add
New Plant Capacity 2100 With Min Night Shift & Overtime
7300
Balance Shortage Can Be Dealt With Overtime and Night Shifts CRITICAL ASPECT

With 2100 PD - Area required = 600000 Sqft

But 1968 Volume is estimate so We start with 400000 Sqft and expandable to 60000 Sqft as the forecast materialised

Finally

Current Future 1
Plant 1 Used For B&W - TV Sets Prod New Plant Addition East of Existing plant#1 Used For All Colour TV 151000 then 1500 pd
Plant 6 Used For Stereo Consoles Plant 6 Used For All Colour TV All Area then 3700 pd
New Plant 400000 then 2100 pd
ok for 1968 volumes 7300 pd
Future 2
But This Will Have Issue as The Plant 1 is all set for B&W and Full Existing plant#1 Used For All Colour TV 850000 then 2700 pd
Would require heavy investment for converting into all colour - Plant 6 Used For All Colour TV 151000 then 3700 pd
So future 1 New Plant 400000 then 2100 pd
ok for 1968 volumes 8500 pd