Bell & Howell coming up with ways to ease inflation through automation
Automating the business of baking English muffins and controlling inflation may seem like two very different issues. But Donald Frey, chairman of Bell & Howell, says the best way to lick inflation is productivity, and the best way to achieve productivity is to automate. "It's $2 English muffins that led to inflation," he said over breakfast recently at the Ritz-Carlton Hotel here. "If the bakeries were all automated, we wouldn't have to pay so much for a muffin. And if all industries were automated, they would be more productive, costs would go down, and inflation would be licked."
Higher automation, he explains, means higher productivity, which, in the most basic sense, is the best way to lower prices, or at least prevent them from rising so fast. And lower or steadier prices mean less inflation. Thus companies like Bell & Howell, with heavy emphasis on computer research and development, are trying to lead businesses to automate more and, as a result, hold down prices.
Traditionally associated with camera equipment, the Chicago-based Bell & Howell has moved out of the "home movie" business, selling that portion of the company to its former Japanese partner, J. Osawa & Co. The equipment continues to be manufactured in Japan under the name of Bell & Howell/Mamiya, although the company is still marginally involved in professional and classroom photo equipment.
The sale of the photo business in December 1979 was the most important step in the corporate restructuring Mr. Frey has undertaken since he became chairman in 1971.
The ambitious Mr. Frey had his work cut out for him when he started at Bell & Howell. Beset by lagging profits since the early '70s on the photo side of the company, plus antiquated manufacturing facilities and a drop in demand, the photo operation ran a $4 million operating loss during the first quarter of 1972 .
But Mr. Frey is a corporate sort who enjoys the free-enterprise system and its inherent challenges. "Nobody is bailing us out," he says, referring to Chrysler's recent financial reprieve. "We got where we are after some mistakes and some hard times."
In 1979, the company's sales totaled $538 million, up from $319 million in 1975.
The newly revamped camera company has swung its emphasis from photo equipment to mail-handling equipment and microfilm systems.
Mr. Frey explains that information processing is a virtually untapped market. "Of course we have plenty of competition," he explains -- "from 3M and Eastman Kodak for microfilm and Pitney-Bowes for mail-handling, and from Japan in everything." But the move to mechanize is so new that the R&D frontier is huge. And Mr. Frey wants Bell & Howell to be one of the pioneers.
In fact, the company has tried to be a trailblazer when it comes to mail-handling innovations, he says. Handling, sorting, and processing equipment is manufactured by three Bell & Howell subsidiaries: Phillipsburg, DocuMail, and Business Data Products.
The computerized mail systems vary. One system, the NXP-770, made by the Business Data Products division, fully processes incoming payments for credit card companies or any businesses with large numbers of chechs to process.
The complete system will open envelopes, remove and read checks and billing stubs, enter the amounts into a central computer bank, sort out and check on any discrepancies, and send out notices to anyone who sent in the incorrect amount who points out the mistake and politely requests a correction.
A similar system, particularly useful in mailrooms, can cut, fold, insert, seal, and meter outgoing mail. The DocuMail S-IV presorts outgoing mail according to ZIP code or general destination.
Mr. Frey is particularly proud of the interoffice mail robot, which tools along from floor to floor (even putting itself on the elevator), following invisible, ultraviolet paint routs. The robot enters an office, stops while the secretary removes the mail from a cubbyhole-like opening in the robot's "chest." The secretary then places any outgoing mail in the same cubby and the robot is off to the next office.
Does Mr. Frey find this extensive automation frightening? "There is not a smidgen of evidence that robots will take over," he says. "The jobs they perform are unpleasant drudgery. They take over in all the hot, dusty, dirty places where no one wants to work."
Of course, the main attraction to such a setup is the money-saving aspect. The computerized billing system is already saving millions of dollars for companies like Bank of America and its Visa subsidiary.
And when the company saves money, the consumer saves money, he notes.
Mr. Frey looks to an increasing emphasis on information processing in his company. Already an export-minded company, Bell & Howell is expected to increase its export market in the coming years -- if all goes according to Mr. Frey's plans.