Gross National Products
THE TWO-STORY BRICK STRUCTURE that Chicago's H. Fishlove & Co. calls home is typical of the cheerless survivors from the smokestack era that ring our metropolises. Inside, the occupants -- small manufacturers, machine shops, jobbers, and such -- contribute their little somethings to the gross national product. In the case of the Fishlove factory, however, the little somethings are gross national products: for 73 years, H. Fishlove has been one of the country's prominent names in gags and novelties.
The 1970s saw family-owned Fishlove's expansion, such as it was, flatten at about $2 million in sales, due not so much to rising standards of humor but to the third generation's lack of interest in pandering to it. The company was recently sold to Fun Inc., also deep in novelties. The Fishlove-Fun axis promised more of the same -- only better, inasmuch as one of the new owner's first moves was to replace the production line's archaic gluing stations with ultrasonic welding equipment. Now, emitting a high-tech shriek that also serves to clear the neighborhood of stray dogs, slick electronics bind together the five parts of Fishlove's most renowned product, a set of plastic clacking teeth.
The capital infusion yielded two immediate benefits: not only can Fishlove move more units out the door every day, but, due to the sophistication of the tooling, quality has been raised safely beyond the scope of overseas cloners. Even if connoisseurs have to spend as much as $4.95 at the local joke store, they can rest assured they have acquired the finest talking teeth the world has to offer. On a single windup of its proprietary clockwork motor, Fishlove's heavy-gauge choppers can keep chattering for the better part of a minute. Gum your heart out, Taiwan.
At that, the yakking teeth -- a Fishlove original, conforming to founder Hyman Fishlove's refusal to market anything that wasn't internally developed, which is followed to this day, though no one knows why -- isn't the company's most popular product. That distinction belongs to a pool of multicolored latex the size of a dropped egg, with a consistency you'd rather not read about here. Introduced around 1960, some 40,000 units of the Whoops, "a revolt of the stomach so real it fools everyone," are purchased annually. Which means that more than a million blobs of accurately simulated vomit are hanging around, poised to trigger a few laughs from sidewalks and car seats.
The Whoops and its ilk are key to Fishlove's business longevity. "It's the kind of item you strive for: steady volume year in and year out," explains Fun (and hence H. Fishlove) chief executive officer Graham Putnam, a veteran of the novelty and magic industry with an M.B.A. in marketing. Whoops undoubtedly is outsold by others' similarly off-putting artifacts, "but if an item is superpopular," Putnam rationalizes, "it can be a disadvantage, because there will be a lot of competition from overseas."
For instance, the generic whoopee (no relation) cushion -- an air-filled bladder designed to emit a Bronx cheer when sat upon -- outsells the Whoops probably 10 to one, but the U.S. supply comes from foreign lands. The hard realities of cushion making won't let novelty makers like Fishlove manufacture them competitively despite the steady demand, because getting the razzberry right requires hand labor, and that's expensive, domestically. Hiring local whoopee specialists would drive costs through the roof.
Working latex is labor-intensive, too; each one literally unique, Whoopses are fabricated especially for Fishlove by a low-cost cottage industrialist secreted in the hills of Arkansas. The Whoops market is just right, as far as Putnam is concerned. "It's not appealing enough for people to jump into," he says, "so we can continue to produce it unbothered."
Ditto their Brush for Baldheads, a wad of terry cloth that has been turned out by the annual thousands for six decades running. And the same for such venerable Fishlove inspirations as the Magic Bar Tap, a liquid-spouting phony faucet protected by two patents; the Peter Meter, a half-scale ruler "for the man who has nothing!" (said to be one of the founder's favorites); the realistically melting ice-cream stick "to be left on sofa"; Mr. John, a lifelike urinal that "attaches to any wall"; the Snoz, a false nose "nicely finished to look natural"; and the swollen finger, with its "bloody looking bandage at connecting end."
Indeed, of the company's 100 or so offerings, many dating back well before VJ Day, only the giant toothbrush, comb, and sunglasses are currently attracting Far Eastern competition (although for some reason, Fishlove's similarly elephantine olive, knife, and fork aren't). On the other hand, a few erstwhile favorites are suffering agonizing deaths. "Some of the items in the catalog really aren't selling," Putnam concedes. And since Fishlove can't liquidate inventory through what might be called normal channels, inasmuch as it won't move at any price, "we keep them listed until they run out," says Putnam. Fortunately, there's adequate shelf room in the 50,000-square-foot plant.
A less laissez-faire approach to the novelties market is taken by S.S. Adams Co., of Neptune, N.J., a manufacturer well known for squirting rings. The $2-million-a-year, 81-year-old company aims to add a dozen new listings each year while dumping a dozen old. "There has to be constant turnover," insists its second-generation owner and CEO, Bud Adams. Even so, Adams's fast-changing catalog has its own perennially steady sellers, such as fake bullet holes and the never-fails-to-get-'em bug in an ice cube.
Adams's Joy Buzzer, a windup device that tickles a startled victim's palm during a handshake, has been in the line nearly 60 years and still sells some 150,000 annually. Given that level of volume, no wonder our shores became flooded with replicas after its patent ran out in 1960. Unfazed by the competition, Adams simply stopped producing and filled orders with the unauthorized versions. Buzzer quality went downhill, and as customers were turned off by the inexplicable junkiness of the product, so did Adams's buzzer sales. In 1985, the company retooled and plunged back into manufacturing, reviving a family institution that dates to the four-inch-wide, one-and-a-half-inch-thick prototype that founder S.S. invented and patented in the 1920s. That tickler performed well enough, but it suffered from a reputation among seasoned pranksters that its mass -- about that of a raised doughnut -- aroused the suspicions of intended handshakees when they saw it coming. Undiscouraged, in 1928 Adams scoured Europe in search of a solution, and found a brilliant German machinist who was able to condense its width to a concealable one and a half inches, the size it remains to this day. But manufacturing costs of the zinc-cast implement have risen to about 45?, at which they are squeezing margins. "Very expensive," Bud Adams reflects uneasily. "However, now we have a precision instrument." In the current catalog at a modest $2.49 retail, the shaky old war-horse now bears the proud assertion, "The best quality with a very strong buzz. . . . Made in the U.S.A."
What with cost of returns of merchandise, commissions to sales reps, and distributors who have to be cut in, to calculate a retail price in the novelty industry, a markup of about five times manufacturing plus promotion is a rule of sore thumb. But by the time gross trickles down to the manufacturer, often there's little room for price concession to clear the bins if a product's sales start slipping. The sudden dawning of that fact almost drove Wham-O Manufacturing Co. founders Richard Knerr and Arthur Melin out of business, despite their just having launched the biggest novelty success ever: the Hula Hoop. At the height -- or in this case, girth -- of the fad, between May and September 1958, an estimated 80 million Hula Hoops were sold, Knerr claims. "Yet," he recalls, "we darn near went busted with them."
To meet demand, California-based Wham-O opened nine plants -- three in the United States (the factory in New Jersey alone employed 2,000 people) and one each in Canada, France, England, Germany, South Africa, and Japan. "We had test-marketed, and we thought we knew what we were doing, where to spread them," Knerr says. Trouble was, he admits, "The whole world went crazy. Consumption was getting to the point of saturation. They bought so many there wasn't anybody to buy any more, and we didn't notice." Wham-O factories kept on churning out hoops and piling on inventory. Glutted with hollow tubes, the partners tried to dream up additional applications, but no inspiration struck. They cut off production, and finances forced the Hula Hoop to lie fallow for several years. "We got out of it by the skin of our teeth," Knerr confesses. And he doesn't mean the plastic kind: "It was a hard lesson. We learned the importance of control."
After the success of the Hula Hoop and then the Frisbee (a name that even today commands 85% of the flying-disk market), Wham-O went on to yet a third smash -- the Super Ball. By now its plants were sticking strictly to final assembly and packaging. "We had to stay flexible, so we subcontracted. You pay a little higher price to have someone else put it together," Knerr explains, "but you save a lot, because you don't have that capital expenditure taking up plant. And next time there may be a different type of manufacturing required -- wood, maybe." In which case Wham-O would have come full circle: like Howard Hughes's Spruce Goose, the first Hula Hoop was easier to make out of wood than anything so exotic as extruded plastic. It is in the collection of the Smithsonian Institution.
By the same token, when one Ken Hakuta tried farming out his Wacky Wallwalkers to local labor in the early '80s, the tactic didn't fly. M.B.A.ed from Harvard in 1977, Hakuta ended up buying, equipping, and operating his own factory, just like the courses on start-ups describe. Not in North Chicago, though -- in South Korea, where some 300 laborers ensure that product gets out on time and in working condition.
So far, some 150 million of the rubber octopods have. There's enough margin between their roughly 30?-apiece cost and the up-to-$2.50 retail to enable at least one Harvard graduate never to have to work again for the rest of his life. Granted, the light bulb, the automobile, the computer, and probably even the extra-firm mattress have made people associated with them independently wealthy. But usually those people have toiled for their reward. Not so Hakuta, proud owner of virtually universal rights to the seven-gram toy. "I'm being silly in all this," he admits, "but I'm making more money than people who have serious jobs."
To appreciate how truly silly, return to that momentous day in 1982 when a Japanese manufacturer came up with a chemical compound that shook like Jell-O, felt like a Jujube, and resisted lateral movement along flat surfaces with the tenacity of a cat being dragged off a carpet. Moreover, for all its melted-gumball properties, it didn't leave a residue on bare fingers; and if it got coated with dust, a simple soap-and-water rinse restored it to virgin tackiness. The commercial challenge was to create something useful from the remarkable but cheap substance, as the discoverer of penicillin did with moldy bread. Naturally, the company decided to go into the manufacture of octopuses, a Far Eastern symbol of good fortune.
Great fortune, actually. No one remembers how it happened that the tentacled lump got flung against a wall, but what counts is that it didn't bounce back. It clung there at first, then slowly drooped downward, paused, descended a bit, hung on, dropped some more -- and, for better or worse, the Wacky Wallwalker was born.
"Artists tell me it's intellectual," says Hakuta, limply excusing his rush to get in on the simpleminded toy after his Japanese parents happened to send him some from Japan. The artists claimed they admired its randomness; windups, the aesthetes complained, do the same thing every time. Hakuta came back from his visit to the East with North American distribution rights, provided he bought 300,000 Wallwalkers within six weeks. And, for no money down, so he did, collecting on delivery from retailers at this end to finance the purchase. Soon the octopus world was his oyster. If Hakuta's entrepreneurial finesse seems to have overwhelmed his forebears, no one is complaining. "I made the guy who owned the rights rich, so he was glad I showed up," Hakuta says. "He didn't have to do anything."
Not that the rest came easily for Hakuta. For one thing, his labs had to balance a new glow-in-the-dark feature with their proprietary formula -- as secret as Coca-Cola's -- just right, so that product didn't merely gravitate darkly to the floor in one petulant thrust. More perplexing still, Hakuta ran up against what he came to call "the curse of the Wallwalker." As innocent as the little piece of rubber appears when at rest, when you try to put it away, it confounds automated packaging. And packaging is critical: not only does the toy dry out beyond rescue if left too long in the air, but without the bulk of the printed paper header used to display it on store shelves, the Walker looks very much like the three-bit item it essentially is. "All toys are like that," says Hakuta of the fleshing-out merchandising technique. "A small thing in a big package."
Because air freight was expensive -- some 6? to 8? apiece after packaging -- Hakuta intended to import them in bulk from Japan to Los Angeles and contract for the packaging there. Unfortunately, though, the sticky creatures cling desperately to their cellophane wrappers as soon as they make contact. Because they don't slide gracefully, they can't be dropped by machine; they have to be coaxed carefully, like pit bulls. Even at the lowest rates offered by a Los Angeles job shop, the cost would be 13? each for labor alone, Hakuta was dismayed (considering that he sold them wholesale at only 75? apiece) to learn. And in Japan, labor wasn't much lower. Thus Korea, and his founding of what is said to be the third largest toy factory in the Far East. Wacky Wallwalkers had become a big little business.
Still, Hakuta says with regret, "It's crazy to go into manufacturing. That's not where the money is." Sure, he could just as well have managed the whole ball of wax from the comfort of his backyard, subcontracting the production until it died a trouble-free death. But the Wallwalker wouldn't allow it. Through 1983, the product "stayed hot." Its temperature was boosted considerably by a half-hour, prime-time Christmas TV cartoon based on eight Wallwalker characters, each (in addition to one little boy modeled after his own flesh-and-blood son) profitably licensed to NBC Productions by Hakuta.
Despite the free commercial, Hakuta elected not to produce the collateral lines of Wallwalker gewgaws -- lunch boxes, pens, T-shirts, and so on -- that a less conscionable industrialist might have foisted on the public. "I'm no Mattel," he concedes. "I knew I didn't have enough promotional power to keep it going, and I didn't want to see everything dumped on sale at Toys 'R' Us, which is where these things end up."
Instead, Hakuta conceived a plot to give his possessions a crack at eternity -- through underexposure. To create an aura of scarcity, he pulled them off the market entirely. With Wallwalkers unavailable at the five-and-dime, he could then position them as desirable premium giveaways. He sold the promoting companies on the concept that they wouldn't merely be offering the public a popular product that could be bought for a couple of dollars. "I'll make mine better," Hakuta convinced the promoters. "You'll be giving them something they want that they can't even buy." Pretty soon, Wallwalkers were swarming through Wendy's restaurants and, twice, inside Kellogg's cereal boxes.
"Once I took them off the retail market, demand rose," reports an astounded Hakuta, who kept getting letters asking where Wallwalkers were available. When word got out you couldn't buy them anywhere, aficionados started hoarding the premiums. "My freezer may be full of cereal," one told him, "but at least I have 20 Wallwalkers."
The last Wallwalkers promotion was with Kellogg's cereals in the spring of 1986, and Hakuta understands they'll expire as premiums, too. But if things go according to design, they'll resurge at retail. "I want the Wallwalker in the back of consumers' minds, but not actively thought about. When it returns, they'll react, 'Oh, there they are!' and they'll buy them again as impulse items."
In the premium sector of manufacturing, the idea is that what you sacrifice in price comes back in volume. Hakuta, for instance, sold Kellogg Co. tens of millions of Wallwalkers at less than a dime each, and Fun Inc. turns a pretty mil each year by making some 50 million prizes for boxes of children's confections. But a candy box is one thing, Rice Krispies quite another, Hakuta found: "These companies didn't want to chance a 10? toy destroying the reputation of their product." Now he had to control his production far more stringently than before. Normally, the cheapest way to churn out premiums would be to subcontract to a dozen factories in the Far East. That's unacceptable when you're involved in a promotion with superlarge cereal companies or fast-food chains. "They argue that if you don't own the factories," Hakuta explains, "you're not going to be able to monitor the quality. And they're right. Food and Drug Administration specs aren't hard to meet; the specs of one of these companies are a hundred times tougher." Therefore he was forced to set up his own factory. "And the headache," he moans, "is unbelievable."
So, take two aspirins and call yourself Dr. Fad in the morning. That's now Hakuta's alias, a self-appointed title earned by dint of the Wacky Wallwalkers' numbers having established themselves as a fad. Doctor's telephone number is (800) USA-FADS, where for a couple of hours each day, he assumes the role of adviser to the fadlorn, doling out free manufacturing, marketing, and other business tips to aspiring get-rich-quickers. How to spot the next craze? "It's something you look at and go, 'Wow!" the doctor tells them.
That a-ha factor is how the Slinky, an all-time classic, came to be. When an industrial torsion spring slipped off a shelf in view of naval engineer Richard James one day in 1943, the mass didn't just drop -- it, well, slunk. Eureka! -- almost. James had to spend the next two years trying to get the tension and proportions of the steel just right. It was probably worth it: over the four decades since, millions of the 75-foot (when straightened) coil have been sold each year.
Aside from a version that is smaller and one made from colored plastic, the Slinky has remained virtually unchanged through the ages. The only modification, says Betty James, president of James Industries Inc., is that the ends of the steel spirals are crimped to guard against probing fingers and meddling lawyers. What is more remarkable is that the Slinky can be bought today for only about 60% more than its $1 retail of 42 years ago -- a period in which the consumer price index has more than sextupled. Try to think of another product made of premium steel, employing skilled production-line labor, and requiring specialized machinery that in real dollars actually has decreased by three-quarters.
How can James Industries do it when General Motors can't? By running a tight shop -- 100 employees toil round-the-clock shifts in Slinky's crowded Hollidaysburg, Pa., factory -- that keeps the competition at bay. One reason the Slinky hasn't been copied successfully by foreign manufacturers, James believes, is that it's too hard to make: custom-built automated machinery performs all the operations: injection-molding, extruding, coiling, and assembling. The final product may look like a simple spiral, but it's actually so intricate that when Xerox Corp. had trouble fabricating a coiled spring, it had the work done at the Slinky factory.
"Every year I think, this will be the last -- and then it has another cycle," says the 69-year-old James, who was forced to take over in 1960 when her husband left for Bolivia to become a missionary. "By now," she grants, "I guess it's here to stay." To keep a hand in future possibilities, James is receptive to over-the-transom submissions, and indeed has paid royalties to the inventor of a Slinky-linked pull-toy. "But the best thing for us has been acquiring companies," says James, who has since squeezed two small toy manufacturers into the factory, "because the ideas come already proven." In contrast, Bud Adams keeps his plant humming by breeding one good seller with another and coming up with a marketable mutant. For example, mating Adams's proprietary Bingo system -- a spring-loaded mechanism that explodes a percussion cap -- with a cigarette lighter produced the popular Shooting Lighter, which explodes when picked up. The effect apparently plays havoc with the victim's memory, in that, boasts Adams, it "looks so real the joke may be played on the person over and over again."
But even the masters suffer fallow periods. Wham-O's Super Ball has long since departed, and its peppermint-scented Hula Hoops never really caught fire. Not that three is so bad, but the company has yet to hit on a fourth big fad. Silly String, an aerosol can that exudes colored strands, met some favor in the mid-1970s; it, too, is gone. So is the "gooey pink hunk of goocch" called Super Stuff by the nomenclature-sensitive Knerr, who changed the original Pluto Platter Flying Saucer to Frisbee, and made up the onomatopoetic Wham-O after the sound of its first product, a slingshot. Wham-O was sold to Kransco Corp. in 1982. "After 35 years at it," says Knerr, "we were tired." But neither wretched nor poor.
Fishlove's Putnam still can't explain why the chattering teeth don't stop selling, but his latest creation, a box labeled "The Perfect Gift for the Perfect . . ." won't even start. When the recipient opens the present, he or she automatically fills in the ". . ." as suggested by the sculptured buttocks inside. What bemuses Putnam is that the put-down was given thumbs-up by the tight circle of distributors that for decades has constituted a reliable test market. So Putnam proceeded with designing, tooling, and packaging, and laid in enough boxes and materials to meet a cascade of orders -- which, inexplicably, weren't forthcoming from retailers. "Maybe we would have been better off to go with vacu-formed plastic," Putnam reflects on the filled-fabric hams. "Then we could have come to market a lot cheaper."
In retrospect, price point likely is not the issue. Nor are insults by themselves necessarily seen as off-putting: one of Fishlove's best-sellers is a "Sure Way to Prevent Overeating" -- three table utensils with holes in them. There are things people are willing to be ridiculed about, among them weight, hair, and size of certain appendages. So the problem with the plush tush, Putnam ruefully concludes, was that "there is no specific occasion for anyone to give it."
Nonetheless, should a holiday for . . . s be created by Congress, the Fishlove plant is set to roll. Until then, Putnam has to be concerned with underutilized capital equipment. When he bought the company, he installed a number of vacuum-forming machines -- primeval leviathans that form complicated plastic shapes such as the joke urinal from cast-aluminum dies. To help amortize them and the other instruments of primary manufacturing on Fishlove's floor, the company seeks contract work, even if it has to sacrifice laughs to get it. Recently, a medical supplier who saw Fishlove's false dentures got the factory to come up with a good price on plastic plates that dentists use to take impressions of real teeth.
The Wallwalker, too, is poised to relieve the suffering of humankind. One company already has inquired if the sticky substance is available for coating the tops of surfboards, so that the slippery perils of hanging 10 can be mitigated. And a sports outfitter wants to put it on the fingers of gloves for football players, so receivers won't drop passes.
Dr. Fad is giving it serious thought.