Zenith Electronics Corp. hopes to break new ground in the fight against unfairly low-priced imports by asking the government to monitor imports of televisions from 10 countries, Zenith's chairman says.
The comments by Jerry Pearlman in a wide-ranging telephone interview were the first public disclosure of a key component in the plan of Glenview, Ill.-based Zenith for returning to consistent profitability.A New York-based investment partnership earlier this month dropped its efforts to throw Pearlman off the board of directors and get the company to sell its money-losing television business.
Zenith's request to the government will be aimed at cutting off illegal "dumping" of inexpensive TVs from Malaysia, Hong Kong, China, Mexico, Singapore, Thailand, and the Philippines, not just the traditional sources of Japan, Taiwan and South Korea, Pearlman said.
Zenith, the last major U.S.-based television manufacturer, has not had an annual profit since 1984, in large part because of fierce competition from low-priced imported televisions.
Zenith will seek protection under never-used 1984 legislation that allows the Commerce Department to monitor imports of televisions from new countries where dumping is suspected. It can only do so if there is an anti-dumping order in place against more than one country already.
Dumping is the sale of products in foreign markets at unfairly low prices to get rid of excess production or force competitors out of business.
The legislation permits the Commerce Department to initiate its own anti-dumping action against the new countries if the agency finds evidence of dumping.
"I hope to file it (the petition) soon. Nobody's going to talk me out of it," said Pearlman, 49, Zenith's chairman and president.
In Washington, Commerce Department spokeswoman Claire Buchan said the department had received only one request for protection under the 1984 legislation, and action on it had been deferred until next year. That concerned imports of brass sheets and strips.
She said she could not comment on Zenith's petition before it had been received and studied.
Brookhurst Partners, the New York-based challenger to Pearlman, had sought shareholder support for its proposal to force Zenith to sell its money-losing consumer electronics business or, if that proved impossible, to find a buyer for the whole company.
It dropped the shareholder solicitation on Dec. 2, shortly before votes were to be counted, saying it was satisfied Zenith was "headed in the right direction."
Although the pressure from Brookhurst is off, Pearlman said, "we're not going to relax" in efforts to improve Zenith's profitability. The company has a profitable line of personal computers, but its overall results have been dragged down by losses in televisions.
Pearlman said he expected the company to meet the goal, stated in October, of a pretax profit for 1988. But he indicated it would be a close call and said taxes could push the bottom line into the red.
Pearlman said he is optimistic about Zenith's chances in the field of high-definition television, the next generation of TVs that will have sharper, brighter pictures. Zenith has proposed a standard for HDTV transmission that, if selected by the government, would produce royalties for Zenith.
Also, Zenith has developed a sharp, rugged kind of picture tube called flat tension mask that Pearlman said would be ideally suited for commercial or military use. However, he said the cash-strapped company needs government money to make the screens bigger and build a plant to make them.
In a sign that money for Zenith may be forthcoming, the Pentagon on Monday said it would solicit proposals in the next two or three weeks "in the areas of high-definition, low-cost display technology . . . ."
On other issues, Pearlman said:
-The company is benefiting from strong demand and tight supplies of televisions and picture tubes. Zenith is turning down some orders for picture tubes from other TV makers even while running its picture tube plant around the clock, seven days a week.
-TV prices remain depressed, but Zenith recently announced increases of 1 percent to 2 percent to its wholesalers effective Jan. 1. If Zenith and other companies can make the new prices stick, there will be further increases in 1989.
-An increase in the value of the South Korean currency is making imported Korean TVs more expensive, which helps Zenith compete.
Pearlman said the new problem in dumping is that traditional competitors that have been blocked from dumping TVs shipped from their home countries are opening plants in other countries and dumping TVs made there.
In 1984, he said, about 80 percent of imported TVs came from Japan, South Korea or Taiwan. In 1988, that was down to 47 percent, he said.
"What you've got here is the classic water balloon. The government has stepped down in one part and it's popped up in another part because the foot hasn't been as big as the balloon," he said.
There are anti-dumping provisions for TV sets in place against Japan, South Korea and Taiwan and anti-dumping provisions for picture tubes against those three countries as well as Singapore and Canada.