SIC 3651 Household Audio and Video Equipment
SIC 3651
This category includes establishments primarily engaged in manufacturing electronic audio and video equipment for use at home or in automobiles, such as televisions, video recorders and players, radio receivers and amplifiers, phonographs, cassette tape players, and compact disc (CD) players. This industry also includes companies that manufacture microphones, speakers, and public address systems.
334310
Audio and Video Equipment Manufacturing
In 2003 household audio and video equipment industry manufacturer shipment values totaled almost $8.7 billion, marking a significant increase from 2000 totals of $7.7 billion. This was an exceptionally mature market in the United States, with household penetration for products in this category hovering around 95 percent.
However, technological innovations boosted sales, with the acceptance of a variety of digital products, such as high-definiton television (HDTV) and digital video recorders (DVR). Consumers in the market for home electronic equipment in the early 2000s had already been devoting their disposable income to digital products, namely DVD players, which by 2005 rivaled the VCR for market penetration. Thus, manufacturers were focusing heavily on the digital market, including digital television and audio and video recording equipment. Because the rate of obsolescence among many products in this category is fairly slow, particularly in comparison to computer products, the large numbers of Americans who already possess such equipment have fewer reasons to upgrade.
During the early 2000s U.S. manufacturers were focused almost exclusively on producing audio speakers and advanced technology televisions. Virtually all other consumer electronic components sold in the United States were manufactured abroad or manufactured in the United States by foreign-owned companies.
The U.S. household audio and video manufacturing industry was dominated in the early 2000s by American subsidiaries of Japanese companies who used technologies developed by American companies. These subsidiaries assembled color televisions and high fidelity audio equipment from components imported from Japan or from Japanese-owned manufacturing facilities in other countries. The exception was speaker systems, regarding which U.S. owned companies were recognized as market leaders worldwide. By the end of the 1990s, the Zenith Electronics Corporation in Glenview, Illinois, was the only major U.S. owned company still manufacturing color televisions. The company grew in 1999 after having filed for bankruptcy a few years earlier. By the early 2000s, South Korea-based LG Electronics had acquired Zenith. Bose Corporation of the United States held a leadership position among U.S. speaker manufacturers, supplying as much as 25 percent of domestically produced speakers during the late 1990s. In the late 1990s, more than one-third of all U.S. establishments employed fewer than five workers.
U.S. manufacturers dominated the household audio and video industry from the first experimental radio and television broadcasts until the 1980s, when many U.S. owned companies were forced out of manufacturing by foreign competition. The first radios to be mass manufactured were developed by RCA in the 1920s, which also pioneered television manufacturing in the 1930s. For years, American manufacturers like RCA, Westinghouse, General Electric, Motorola, Philco, and Zenith dominated the industry.
Although the nature of television manufacturing in the United States began to change in the late 1960s, the stage was set more than a decade earlier when several major Japanese manufacturers formed the Home Electronic Appliance Market Stabilization Council. Despite opposition from the Japanese Fair Trade Commission, this cartel successfully lobbied the Japanese government to establish tariffs and other trade barriers that protected the manufacturers from foreign competition. This protection allowed the cartel to establish minimum prices and control their domestic market. In addition, U.S. companies locked out of the Japanese market began to license advanced technology to the Japanese. In 1962, RCA Corporation became the first company to license color technology to the Japanese manufacturers.
In 1963, the Japanese manufacturers began to export televisions to the United States—using the profits from their protected domestic market to subsidized below cost sales in the United States, in violation of U.S. trade laws. In addition, a Department of Justice investigation later revealed that the Japanese gave American importers, including Sears, Roebuck & Co., illegal rebates on every Japanese television they sold in the United States. Sales of Japanese-made televisions soared while U.S. companies suffered.
The United States Electronic Industry Association filed a complaint about the illegal "dumping" in 1968. However, Japanese manufacturers stonewalled the investigation for more than three years. In addition, the U.S. government was not eager to upset trade negotiations with Japan and proceeded with the investigation...
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