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Power-Tool Firm Pins Growth Hopes on Product Line Acquired From GE : Black & Decker Tackles Small-Appliance Field

February 24, 1986|MICHAEL ABRAMOWITZ | The Washington Post

Anyway you cut it, Black & Decker is still synonymous with the workbench. Asked to name a brand of power tool, almost two out of three consumers cite Black & Decker--or roughly twice the number that cite the manufacturing company's nearest competitor.

These results from a recent brand-awareness survey conducted for National Home Center News, a trade journal, are yet another indication of the powerful grip Black & Decker exercises in the marketplace for workshop equipment. Nolan D. Archibald, president of Black & Decker Manufacturing Co., boasts: "We're still No. 1. We're still the leader."

But evidence is mounting that brand awareness is no longer enough to keep the manufacturer in the black. A wave of imported power tools has battered the company's share of the market. Turnover has shaken the senior management. Overhead has soared as Black & Decker's factories have run at barely half capacity in recent years. And a bold effort to diversify into home appliances has proved more expensive and difficult than the company first imagined, industry observers contend.

Suffered Loss for Year

These factors added up in 1985 to the worst year in recent memory for the Towson, Md., manufacturer. Black & Decker recorded a $158-million loss for the 12 months ended Sept. 29, compared with profits of $95 million the year before.

The losses included a $205-million write-off for a huge restructuring program of layoffs, plant closings and refurbishments designed to slim down Black & Decker. Even excluding the restructuring charges announced late last fall, earnings dropped 51% to $47 million.

The restructuring is only part of Black & Decker's strategy to recapture its past profitability and high growth. The company has also embarked on a wide-ranging effort to promote and market more aggressively its lengthy list of products, from its traditional assortment of drills, sanders and jigsaws to a new range of household wares.

As part of this drive, Black & Decker is spending millions of dollars on market research, advertising, product innovation and improvements in its distribution. It spent $100 million in an ongoing, three-year promotional blitz to hawk its expanded line of home appliances.

"Marketing will become an increasingly important part of our company," said Archibald, a highly regarded veteran of Beatrice Cos. who took B&D's chief operating post last summer. "We intend to become a very aggressive, market-driven company."

Marketing Weakness

Archibald, 42, has his hands full. Compared with innovation and product development, marketing hasn't always been one of B&D's strong suits, industry observers said. Retailers, they said, have been known to complain that Black & Decker hasn't been aggressive enough in promoting their products.

The company was also slow to respond to the foreign competition, especially from Japan that a few years ago blanketed consumer outlets, such as hardware store and home centers, ith high-grade professional power tools normally sold through industrial outlets, according to Joseph F. San Angelo, national sales manager for the U.S. subsidiary of Makita Electric Works Ltd. This strategy, he said, has helped Makita to reach about $200 million in annual sales in the United States, much at the expense of Black & Decker.

But the marketing challenge extends to a different part of the company as well. As a result of its 1984 purchase of General Electric's small-appliances division, Black & Decker is in the midst of one of the biggest corporate brand-name transformations in history.

The company has until the middle of next year to complete putting the Black & Decker name on a host of toasters, irons and other goods that for years have been sold under the GE logo. And it is pouring millions of dollars into acclimating consumers to the switch.

Move Was a Disaster

The jury is still out on the wisdom of the move. The last major diversification Black & Decker undertook--into McCulloch chain saws--was a disaster. And some analysts, pointing to subsequent write-offs the company has had to take at former GE plants, believe that the $300-million price tag was too high.

The real test will come after 1987, when, under the terms of the deal, Black & Decker will have to take the GE logo--the top in the field--off its goods.

"GE is one of the oldest brands in the electric appliance business," said Susan B. Bassin, senior vice president at King-Casey Inc., a Connecticut marketing-consulting firm. "It's just a tremendously powerful and pervasive name. To take that and try to translate it to another brand is a challenge. I've never seen anything like it."

To complicate matters, Bassin said, the housewares industry is much more crowded than the power-tools business Black & Decker has come to dominate. "The niche that Black & Decker was able to create for itself 30 years ago is already occupied by several companies," she said.

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