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Richardson Electronics, Ltd. Business Information, Profile, and History

company tubes sales edward

40W267 Keslinger Road
P.O. Box 393
LaFox, Illinois 60147-0393
U.S.A.

Company Perspectives:

Richardson has developed one of the most technically adept sales support teams in the distribution industry. The Company now routinely services customers from the design-in through replacement stages. This well-rounded approach has enabled Richardson Electronics to reach an unparalleled position in the electron tube and power semiconductor distribution industry.

History of Richardson Electronics, Ltd.

Richardson Electronics, Ltd., is one of the fastest growing, highly specialized international distributors of power semiconductors, electron tubes, electronic security systems, and various other electronic components. Presently, Richardson Electronics has four core businesses, the Electron Device Group, the Solid State and Components Group, the Display Products Group, and the Security Systems Group. Having created for itself a niche to distribute products which control electrical power, and amplify and switch signals within the industrial and telecommunications industries, the company has established an international customer base with over 55 sales offices, including 18 overseas locations in such countries as Brazil, England, France, Italy, Spain, and Germany, and most recently in Taiwan, Holland, Thailand, and Australia. Sales continue to climb rapidly and, despite some anti-trust litigation brought against the company during the early 1990s by the American government, Richardson Electronics continues an aggressive expansion program within the electron tubes and semiconductor industry.

Early History

At the end of World War II, Arthur Richardson, a man with extensive experience in the burgeoning electronics industry, decided to establish his own electronics firm. Recognizing the trends of the future, specifically the growth of the vacuum tube industry, Richardson wanted to take advantage of what he thought would be a gigantic burst in consumer demand. The ambitious entrepreneur's approach was somewhat unique. Many people, not only those within the electronics industry but family and friends, advised him that market growth was being created by semiconductors, which would ultimately render the tubes obsolete. But Richardson clearly saw that the semi-conductor technology in the late 1940s and early 1950s was developing at a much faster rate than most companies within the industry would be able to keep up with. As a result, that meant a large market for the older tube technology, and Richardson intended for his company to fill the gap.

During the late 1950s and early 1960s, the company concentrated on distributing vacuum tubes and component parts for the semi-conductor industry. Sales continued to increase, but gradually, especially compared to the skyrocketing growth seen in other areas of the burgeoning electronics markets. Arthur Richardson was a cautious and careful manager, sticking to the distribution of materials that he knew best. In some ways, Richardson Electronics was left behind during this period of time and didn't take advantage of the wide variety of opportunities in the worldwide electronics boom and insatiable consumer demand. But Arthur Richardson would have it no other way--vacuum tubes and small component parts were the wave of the future, according to the company founder, and one just had to believe in the potential of that niche market.

Arthur Richardson had always encouraged his son to become involved in the management of the company, but the young man resisted his father's desires and pursued his own dreams. Edward J. Richardson attended the Iowa State University School of Veterinary Medicine and began to prepare himself for a life in the country. Having been raised in LaFox, Illinois, there were plenty of chances to observe the livestock in the area, and from the earliest years of his childhood Edward was enamored with the physiology of barnyard animals. While in the middle of his studies at Iowa State, however, Edward suffered a debilitating bout with mononucleosis and was forced to miss two consecutive semesters. Bored with nothing to do at home, the young man finally agreed to work at his father's company. When Edward joined the business in 1961, Richardson Electronics employed only three workers, and annual sales amounted to $53,000. Telling his father that he would only help out at the firm on a temporary basis, and fully intending to return to veterinary school, little did Edward know at the time that his destiny had already been decided.

The more time he spent at the company the more Edward was intrigued both by the company's products and his father's vision of what an electronics firm should be. As the older Richardson began to delegate more and more responsibility to his son, it became clear that there was no returning to veterinary school. Edward Richardson assumed the position of Vice President and Director in 1965 and later, when his father retired, became President in 1974. By this time, Edward was completely convinced by his father's vision, and by the predictions of the elder Richardson that were coming true within the electronics industry. The father guided his son through the middle and late 1970s, and when he died Edward was well prepared to lead the company. One of the first decisions that he made after the death of his father involved the addition of power semiconductors and RF components to the company's product line.

Growth and Expansion during the 1980s

Until the beginning of the 1980s, Richardson Electronics had concentrated on the replacement market, namely, selling replacement electronic power tubes to radio and television stations and electronic maintenance firms. Television and radio stations, which used power grid tubes to broadcast both visual and audio signals, were the historic core of the company's business since the tubes usually lasted only one or two years at most and then required replacement. By the early 1980s, however, Edward Richardson recognized the advent and potential of newer technologies, such as the RF and microwave, and began to direct his firm toward supplying original equipment manufacturers, who were rapidly becoming the larger percentage of new customers. When many of the electron tube manufacturers exited the industry at this time due to increased competition, Richardson began to acquire product lines or companies that would ensure his own company's ability to provide a continuous supply of electron tubes to customers. Over a period of just a few years, Richardson Electronics acquired 17 various electron tube manufacturers located throughout the United States.

The implementation of such an aggressive acquisition strategy worked better than expected: sales shot up to $15 million and the number of employees increased to over 35. With revenues gained from a higher sales volume, Richardson Electronics opened its first overseas office in London, England. Almost overnight, business exploded in both England and continental Europe, especially with the introduction of solid-state components and closed-circuit television. Confident of his success in foreign markets, Edward Richardson decided to establish a joint venture in China for the manufacture and distribution of electron tubes. Richardson Electronics invested large amounts of capital, and committed its engineers to spending a significant amount of time training and guiding their Chinese counterparts in the intricacies of electron tube manufacturing. Unfortunately, when the Americans returned to the United States, the quality of the products being manufactured dropped dramatically, and the company had a difficult time from that point forward in getting the quality of the products made in China to conform to Western standards. As a result, the joint venture was only able to sell approximately $1 million worth of products during the early years of its operation.

By 1988, the company had completed its acquisition program and had grown from a relatively small operation into a business with sales of over $150 million, almost exclusively in the electron tube market. That year, the U.S. Justice Department filed suit against Richardson Electronics, accusing the company of numerous anti-trust violations. Alleging that Richardson was creating a monopoly for itself in the field of manufacturing power grid tubes, and in the process eliminating all possible competitors, the Department of Justice vigorously litigated the company. After three years of intense and sometimes bitter court proceedings, the Department of Justice stipulated that the company had to obtain permission before acquiring any company involved in the rebuilding, manufacturing, or distribution of power grid tubes.

The decision of the court had an enormous effect on the way Richardson Electronics conducted its business. Management had always thought of the company as a distributor rather than a manufacturer. Yet during the 1980s, Richardson Electronics had acquired numerous firms primarily engaged in the manufacture of electrical component parts. The results of the anti-trust suit brought against the company led to a selloff of almost all of the manufacturing-related acquisitions made during the 1980s. Richardson Electronics was forced, in large measure, to return to its role as a distributor. Research and development was given a very small portion of the budget, and the company returned to copying products that were originally manufactured by other firms but had been discontinued.

The 1990s and Beyond

By the early 1990s, Richardson Electronics had decided to capture a larger portion of the overseas market, and opened offices in Canada, Mexico, England, France, Italy, Spain, Germany, Japan, and Singapore. Sales generated from overseas operations were becoming a significant percentage of the total figures, with the offices in England, Germany, and Singapore leading the surge. Yet, as usual in the course of business development, there were difficulties along the way. The Mexico City office had initially performed quite well, but because of the political upheaval and the depressed economic conditions during the early 1990s, the company's business in Mexico declined suddenly and rapidly. Management decided to retain a presence in the capital city, but scaled back operations until more promising conditions suggest an expansion of operations. In 1995, management decided to recommit itself to its fledgling operation in China, which since its inception had never generated more that $1 million in sales. The company opened a new office in Shanghai, and sent engineers over to China on extended contracts to ensure that the level of quality control remained high. Industries which manufactured heating equipment and electronic broadcast components needed the kinds of tubes that Richardson Electronics was distributing. Anticipation of better sales volumes for the China office were high in 1995, and the plant appeared to be fulfilling its promise by the middle of 1996.

During the early and mid 1990s, partially as a result of the anti-trust suit, the company implemented a thoroughgoing restructuring program. Richardson Electronics was divided into four distinct groups, the Electron Device Group, the Solid State and Components Group, the Display Products Group, and the Security Systems Division. The Electron Device Group was the business upon which the company was founded, and continued to specialize in providing tubes, especially power grid tubes, for a broad spectrum of industries. Approximately 80 percent of all the company's business in these products involve the replacement of tubes in existing equipment. By the end of fiscal 1995, the company reported over $100 million in sales generated from the Electron Device Group, comprising approximately 50 percent of the firm's total business.

Although not as large nor as important as the Electron Device Group, the remaining three business units were growing rapidly in the mid 1990s. The Solid State and Components Group, which specializes in the distribution of power semiconductors, has grown at a rate of 25 percent annually from 1993 to 1995. Richardson Electronic was fortunate to enter the market when it was expanding at a phenomenal rate, and created a niche for itself as a specialized distributor of semiconductors to the RF and microwave manufacturers. The Display Products Group, specializing in replacement cathode ray tubes for data display applications, primarily in computer terminals, reported an increase in sales of 41 percent from 1994 to 1995. The smallest of the company's four business units, the Security Systems Division specializes in closed-circuit television for corporations, schools, and apartment buildings. The securities business is growing at a rate of about 20 to 30 percent annually, and Richardson Electronics has made a major commitment to increase its sales during the mid and late 1990s. According to management, one of the most promising markets for the company is the diagnostic imaging sector of the medical market. Richardson Electronics began providing X-ray tubes and X-ray image intensifiers and related component parts directly to hospitals in 1994. In 1995, the company reported a total of $5 million in sales in this sector, and by the end of fiscal 1996 reported an increase in sales to $10 million. With such a promising beginning, the company acquired TubeMaster, a firm specializing in the reloading of X-ray tubes and X-ray image intensifiers, and projected sales of $25 million by the end of fiscal 1997.

By the middle of 1996, Richardson Electronics had 55 offices around the world, and approximately 50 percent of its sales generated from overseas operations. New offices have been opened in Brazil, Taiwan, and Korea, and management has plans for continued expansion to take advantage of new markets in India, Holland, Thailand, and Australia. Edward J. Richardson, faithful to the vision of his father, had built Richardson Electronics into the most successful electron tube distributor in the world.

Principal Subsidiaries: TubeMaster Inc.

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