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Thomson closings alter big picture for TV industry

| Friday, March 19, 2004

Thomson SA's announcement this week of the closing of two picture-tube production plants in Ohio and Indiana leaves only two other companies making television sets or their components in the United States, industry spokesmen said.

Thomson SA, the largest supplier of TVs in the United States -- primarily under the RCA brand name -- announced the closing of plants in Marion, Ind., and Circleville, Ohio, on Wednesday, shedding a combined 1,535 jobs.

The Paris-based company was forced to shutter the two traditional cathode-ray tube and glass manufacturing and assembly plants because of its inability to respond to increasing consumer demand for flat-panel TVs with liquid-crystal displays or other new technologies.

"We were literally losing money every day with the plants open," said Dave Arland, spokesman for Thomson's consumer products division, based in Indianapolis. "There is a huge drop in demand for cathode-ray tube televisions. ... CRT has gone the way of buggy whips," he said.

Last year, Sony Corp. began production of four liquid-crystal-display television models at its Sony Technology Center-Pittsburgh television manufacturing complex in Westmoreland County in an effort to get ahead of the curve of surging market demand for flat-panel models.

As consumers replace bulky, glass-tube televisons and monitors for flat-panel display models, the market for LCDs is expected to grow 23 percent annually through 2007 to $48.8 billion, according to DisplaySearch, a market research and consulting firm specializing in the flat-panel display market.

Sony Technology Center-Pittsburgh spokesman Michael L. Koff said the situation mirrors a turbulent, constantly-evolving electronics industry.

However, Koff disagrees that cathode-ray tube based televisions have gone the way of the dinosaur.

"There's still a good, healthy market for cathode-ray tube televisions," Koff said. Along with four different models of LCDs, the television plant in East Huntingdon and Hempfield still makes traditional tube models, including 51-inch and 57-inch rear projection televisions, a 65-inch high-definition rear-projection television, and 36-inch and 40-inch direct-view televisions.

Illustrating his point, Koff said Sony Technology Center-Pittsburgh will soon be producing 34-inch direct-view, wide-screen televisions, which use CRTs. Also, American Video Glass, which is part of the television making complex, will start making wide-screen panels for the wide-screen picture tubes used in Sony's 34-inch and 30-inch models.

Koff said Sony and Thomson serve different markets. "I don't know for sure, but the primary market they serve, 27-inch televisons and smaller, is different from ours, which is large screen, direct-view rear-projection televisions. He said Thomson may have been hurt by growth in Asian imports, particularly from China and Malaysia.

Thomson had previously signed an agreement to merge its television business with China's TCL International Holdings Ltd. -- a marriage that would create the world's largest television manufacturer.

The shutdown marks the end of the company's 75-year-history of making televisions and radios in Indiana, a legacy dating back to 1929 when RCA bought a radio tube plant in Indianapolis. RCA was acquired by Thomson in the mid-1980s.

Three years ago, Thomson also closed a television tube manufacturing plant in Scranton, a move that put 1,000 employees out of work.

Thomson's exit leaves only two direct-view television tube manufacturers in the United States -- MT Picture Display, a Matsushita-Toshiba joint venture with plants in Ohio and New York -- and Sony Technology Center-Pittsburgh.

Earlier this month, officials at Sony here said market demand for 42-inch and 50-inch liquid-crystal-display televisions has exceeded expectations to the degree that Tokyo-based parent Sony Corp. decided to split new 2004 production of those two models between the Sony plant here and a sister plant in Tijuana, Mexico.

Last week, Sony launched a restructuring at the local plant, which will reorganize and consolidate television production and various support operations. The plan also includes a voluntary separation program for hourly workers that could reduce employment by about 200 positions. The television manufacuturer currently employs about 2,500 workers.

Thomson's Arland said other contributory factors to the plant shutdowns included a glut of Asian imports; and price erosion caused by competitors which dragged down the price the company could charge for its products.

Much of Thomson television tube production will move to its factory in Mexicali, Mexico. "This is the end of manufacturing television components in the United States for us," Arland said.

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