black & decker in the kitchen - personal care appliances

JAN.
1984 this is a digital version of an article from The Times Print Archive, before it starts online in 1996.
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At first glance, Black & Decker plans to buy GE's home appliance business, which seems to be a deal that neither side can refuse.
But some analysts warn that despite the considerable benefits, it is a risky business for Black & Decker manufacturing to move so forcefully from the tool shed to the kitchen counter.
The company's first major marketing question will be how to quickly and skillfully phase out the well-known G. E.
Brand name to convince consumers that Black & Decker is the name of the toaster and coffee machine they can trust.
In addition, the company is facing fierce competition in the $14 billion small household appliance market, which is trying to become a household name.
Perhaps surprisingly, even some competitors are pleased with the deal announced on last December. The G. E.
John Flaherty, CEO of Hamilton Beach, said the sale was "a great Christmas gift ".
His company is a market leader in coffee machines and irons, hoping to attract more coffee lovers. E.
Our old customers
Proctor's Chief Executive Arnold Dreyfuss said the ad "once again opens all doors for everyone in the industry"
Silex says his company wants to increase the market share of the toaster by 33%.
However, if the $0. 3 billion deal is completed within 3 years, Black & Decker will build a solid bridgehead in the competitive small household appliance market with a full toasterR-
Oven, coffee machine, food processor, juicer, electric can opener, iron and hair dryer. AdvertisementG.
E sold these products worth about $0. 47 billion in 1983.
But that's less than 2% of the company's total revenue.
However, if Black & Decker is able to maintain this level of sales, these household items will account for about 45% of its total sales. G. E.
Plan expansion. E.
Will also be improved from the transaction.
The sales revenue will help the company expand its major electrical, audio and video electronics and lighting products, with a research and development budget of over $0. 5 billion last year. ''G. E.
"We are moving out of the lower-margin market," said Robert Kaseman of Prudential . "
Like many other analysts.
"The $0. 3 billion in this deal, and the $2 billion it will receive from Broken Hill, for international coal and natural resources operations in UtahE.
There will be plenty of cash.
"In blackdecker, Lawrence J.
Farley, president and chief executive, said he would not expect G. E. operations.
"We are buying an ongoing business," he said . "
"The best way is to change nothing.
Under the terms of the proposed transaction, his company is entitled to use the respected G. E.
Brand name for three years.
It also agreed to absorb a G. E.
About 8,500 household goods workers.
A major marketing advantage of overseas sales network Black & Decker for home appliance operations is a global sales network, with 54% of last year's sales coming from the network. ''G. E.
"We don't have a business in Europe, we have a wide range of franchises in Europe," he said . "Farley said.
The technical foundation of Black & Decker is another potential advantage, including a multi-functional micro-motor for power tools.
"We have some motor technologies that we think can play an important role in a variety of products. E.
"It's marketing," he said . "Farley said.
"Cost savings can be achieved through combination.
Analysts say it makes sense to advertise the company's products.
"From a manufacturing point of view, household products, such as food processors and electric drills, use small electric motors in plastic packaging," said Franklin L . "
Morton, analyst at Alex
Brown and his son in Baltimore
"Black & Decker's very modern cordless technology may be used for hair dryers or for some kitchen appliances," he added . ".
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How about Black & Decker based in Tucson, Maryland
, Dealing with established G. E.
The brand will be one of the most important decisions.
Many retailers believe that this will be phased out by 1987, and they fear that sales will decline accordingly if consumers abandon less familiar trademarks.
Another challenge will be to adapt to G. E.
Distribution network, it depends entirely on
The home sales force, often bypassing department stores, turns to discount chains and catalog showrooms.
By contrast, until recently, Black & Decker sold more consumer products in hardware stores than in household goods stores and used independent dealers.
The deal also opens the way for the company to enter five new markets: food processing;
Beverage Processing or juicer; small ovens;
Personal care equipment such as iron and steam engine, hair dryer and so on.
As for the cost, Black & Decker took a long time
Short-term debt funds purchased $100 million 12% note.
Shortly after the deal was announced, Black & Decker's-
In addition, the "credit watch" of S & P also received credit.
"Although the company used to gamble, not all bets were paid off.
The $0. 126 billion loss from the McCullough gasoline chain cost it $76.
1982 Red 6 million.
"This is an isolated case. we lost our shirts . "
Farley recalled.
There may be other troubles, but the bigger ones bother the company and persist.
The core business of electric tools accounts for more than 50% of the global market, facing increasingly fierce competition and slow growth worldwide. Do-it-
The growth rate of products such as floor wax machines and Sanders is no longer 20%.
Worldwide, sales of consumer goods from garden hoses to electric drills account for about 75% of Black & Decker's $1.
17 billion of the business fell by 6% in 1982.
In 1983, the company made $44 and made a lot of money. 2 million.
The August 8 stock offering of $500 and the sale of McCullough accelerated the recovery.
But the biggest benefit comes from a handful of home products.
Advertising equipment such as dust remover cordless vacuum cleaners, spotlight rechargeable flashlights, skitters footrest and wipes broul increased the Company's household goods sales by 41% last year to $0. 155 billion
Only $0. 444 billion in power tools exceeded that figure.
Stocks responded the same way.
From a low of 18 in the past 12 months to a high of 28 last Thursday.
The stock closed at $27 on the New York Stock Exchange yesterday.
50, down 1/2 cents. '' G. E.
Made a smart move;
They have entered a bigger and better area, "said Judy Barron, a stockbroker and financial planner at Baltimore's Legg Mason.
"Personally, I don't recommend Black & Decker stocks right now.
I had a while about 18 months ago.
"A version of this article appears on page D00001, country edition, January 18, 1984, with the title: BLACK & DECKER in the kitchen.