GLUT IN DIRECT-VIEW TUBES SPAWNING MORE PLANT FURLOUGHS

Heavy backup at retail in direct-view is said by sources to have reached 10 weeks. It’s believed tied to emergence of LCD TVs at sub-$1,000 prices as well as sluggish holiday selling season results that left most national and regional accounts with excess inventory. LCD TVs remain priced well above CRT-based models, but drop below $1,000 for LCD has put price pressure on larger sizes of direct-view sets.

Retailers have responded by slashing prices. For example, Circuit City recently promoted bare-bones analog 20” Apex TV at $79, while step-up flat-screen 20” version was $229, down from $299. Apex and Jensen 32” sets have appeared in ads at $499, and executives we polled said Apex model could drop another $100 by spring. Direct-view sets are “definitely not moving as quickly as they once were and prices are plummeting,” said Robert Damrow, senior electronics buyer at distributor BDI Laguna. “The pricing is scary and it’s getting lower and lower. Almost everybody is sitting on inventory right now.”

Among those hardest hit by inventory glut have been glass and tube manufacturing plants that have shut down for stretches in hope that pipeline would clear. Furloughs have ranged from 2 weeks at Panasonic’s tube factory in Troy, O., and Corning-Asahi glass-making facility in State College, Pa., to month or more at Sony’s production complex in New Stanton, Pa. Panasonic will furlough 900 of its 1,400 workers for 2 weeks starting in mid- March, while Corning began temporary layoff of 400 of 750 employees in Feb. About 100 employees at Corning already had been laid off before new wave hit and another 2-week furlough is planned for July, Plant Mgr. Deborah Balentine said. Industry’s other major glass supplier, Techneglas, underwent restructuring year ago. As result, it no longer produces glass for sets 25” and under, and has made adjustments based on orders, but hasn’t furloughed, CEO Timothy Hickey said. “Business is not good out there and I think we're being attacked by imports of TV sets from China.” Hickey said “you also have a little of bit of the Asian companies trying to drive down inventories prior to the close of their fiscal years this month.”

While many factories typically slow production in Jan.-Feb. as retail absorbs any postholiday season inventory, shutdowns this year are more widespread and telling of larger problem. For example, Sony typically imposes temporary plant closures in Jan.- Feb., but this year marked first time its entire American Video Glass complex was idled. It produces glass in joint venture with Corning as well as direct-view and projection tubes. New Stanton plant also assembles Sony’s Wega brand LCD-based rear-projection TVs. Overall, about 1,000 of facility’s 2,800 employees were furloughed for at least month starting in Feb. Sony also began letting go 800 temporary workers in Dec., month earlier than normal, spokesman said. During layoff, Sony is continuing to maintain benefits and make employee contributions into medical, dental and vision plans, spokesman said. Like most affected companies, Sony expects its plant to return to full production at start of new fiscal year in April, spokesman said. Not returning, however, will be about 60 employees of Display Systems Service Co., which repairs computer monitors and is being phased out effective March 31. Sony recently shifted majority of its PC monitor business to LCDs from CRTs.

Toshiba also laid off workers at its Horseheads, N.Y., factory in bid to reduce inventories as prelude to planned formation of CRT joint venture with Panasonic that takes effect April 1.