Revell-Monogram Inc.

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Revell-Monogram Inc.

8601 Waukegan Road
Morton Grove, Illinois 60053
U.S.A.
(708) 966-3500
Fax: (708) 967-5857

Wholly Owned Subsidiary of Hallmark Cards Inc.
Incorporated: 1945 as Monogram Models, Inc.; 1955 as Revell Inc.
Employees: 500
Sales: $100 million (1995 est.)
SICs: 3944 Games, Toys and Children’s Vehicles

Revell-Monogram Inc., a wholly owned subsidiary of Hallmark Cards Inc.’s Binney & Smith unit, is the largest plastic model kit manufacturer in the world. Formed in 1986 with the merger of one-time arch-competitors Revell Inc. and Monogram Models, Revell-Monogram boasts brands and products that have dominated the model industry for generations. In addition to the company’s leading position in the American industry, Revell-Monogram’s German subsidiary, Revell A.G., provides a strong entry into the European market.

Company Origins

Monogram Models was founded in Chicago in 1945 as a manufacturer of balsa wood model kits. The company’s first kits reproduced World War II ships and airplanes and provided the first inexpensive yet accurate wartime models for beginner builders. Monogram’s kits featured better quality balsa wood, wider subject selection and more precut and preshaped parts than other kits on the market at the time and were largely responsible for a postwar surge in model building in America. Meanwhile, across the country in California, a small toy manufacturer named Revell Inc. took advantage of the post war boom in cheap plastic to introduce scale models made entirely of the newly available synthetic compounds. Good quality, inexpensive plastic revolutionized the toy industry in the early 1950s by providing a versatile, light construction material at a fraction of the cost of wood or metal. Plastic’s ability to be molded quickly and cheaply in a huge variety of shapes was particularly attractive to the growing modeling industry, which relied on exploiting emerging fads in a timely fashion. In addition, plastic models were easier to build and could include more detail than their wooden counterparts. Plastic kits quickly became so popular with consumers that by the mid-1950s all other materials had been virtually eclipsed in the modeling industry.

Revell’s first big success came in 1951 when it introduced a scale replica of the luxury Maxwell car made famous by the immensely popular radio comedian Jack Benny. Encouraged by the success of the Maxwell, Revell quickly brought out a fleet of vintage car models called “Highway Pioneers.” This new line of models proved so profitable that Revell soon dropped all the other toys in its line to concentrate exclusively on plastic model kits. Chicago-based Monogram Models, whose balsa wood models of World War II airplanes had popularized model building in America, quickly jumped on the plastic model bandwagon by introducing a bright red plastic model race car called the Midget Racer. Revell and Monogram soon became fierce competitors in the plastic model industry, each company racing to introduce more intricate and innovative model designs.

Growth in the 1960s

The 1950s baby boom and postwar prosperity saw record sales in toys of all kinds and both Revell and Monogram Models were able to capitalize on the growing generation of underage consumers. The American love affair with the automobile that reached a peak during the 1950s also contributed to the growth of the modeling industry as Revell and Monogram sought both to capitalize on current trends in automobile design and to develop “fantasy” collectible model cars. In the early 1960s Revell signed an agreement with custom show car designer Ed Roth to produce miniatures based on actual show cars as well as vehicles created exclusively for Revell. Among the memorable models produced by Roth was the “Surfite” single seater beach car, equipped with a surfboard instead of a passenger seat, whose real life duplicate was popularized in the teen movie “Beach Blanket Bingo.” Not to be outdone, Monogram hired designer Tom Daniel to create a series of exclusive “fun cars,” models based not on actual vehicles but on vintage and contemporary fantasy automobiles. Among Monogram’s original creations in the early 1960s was the Li’l Coffin show rod model kit complete with skeleton which was to become one of the company’s bestselling kits ever and which was re-released in 1995 to mark Monogram’s 50th anniversary.

Public and Private Ownership in the 1970s

Although the history and growth of these two leading model companies closely paralleled each other through the 1950s and early 1960s, their paths would diverge in the mid-1960s. In 1965 Revell went public with an initial public offering of 150,000 shares. By this time annual sales for the California company had reached $12 million with profits of $1.19 per share. Although Revell’s primary products remained automotive, naval, and military model kits, the company also began to experiment with a variety of new merchandise. In addition to capitalizing on such fads as the Beatles by producing three-dimensional model figures, Revell introduced a Lego-like block toy, n-scale trains, and racing car sets. Although each of these products enjoyed initial success, invariably their faddish appeal would wane and Revell would fall back on their core model business. Towards the mid-1960s one of these transient fads, slot-car racing, would land the company in serious financial difficulties. Revell entered this field in 1965 with the acquisition of International Raceways, a small company that had initiated the slot-car racing phenomenon. These scaled up racing cars required large, elaborate track layouts and “commercial” slot-car racing centers began to spring up across the nation to service enthusiasts. In spite of initial enthusiasm about this new form of entertainment, the notoriously fickle teen customers that the racing cars appealed to quickly turned to other amusements and, in 1967, Revell was left with a large inventory of unsaleable slot-car paraphernalia and a $438,000 net loss.

While Revell was going public and diversifying its product line, Monogram maintained a more conservative and focused approach to growing their core business. After revolutionizing the military model industry in the early 1960s with a line of intricately detailed model airplanes at a new scale of 1/48, Monogram chose to develop its adult modeling business as well as building on its line of youth-targeted miniatures. An important innovation in the children’s modeling industry came in 1968 when Monogram introduced the first snap-together models that required no messy and potentially toxic glue for assembly. Parental concerns over glue fumes had become a public relations problem for the modeling industry and the glueless model went a long way towards reviving parents’ trust in model building as a safe and educational experience. This new “snap-tite” brand would become one of Monogram’s top selling categories for the next 30 years.

The late 1960s were banner years for the toy industry as the baby boom generation reached prime toy-buying age and American incomes were on the rise. Among the many toy companies that peaked during this period was toy giant Mattel whose Barbie and Hot Wheels brands were bringing in record sales and profits. The booming company began a program of acquisitions in an attempt to grow its share of the toy market. Monogram, which would provide an entry into the model category for Mattel, became the target of interest by the huge toy firm in the summer of ’68 and by Christmas of that year Monogram was acquired in full by Mattel. Under Mattel, Monogram continued to produce traditional military and automotive models but also began to expand into licensed properties such as Superman and Snoopy.

International Expansion for Revell in the 1970s

Through the late 1960s and 1970s Revell also continued to experiment with new products, branching out into educational aids such as filmstrips and scientific models intended for the institutional market as well as expanding their own licensed product line. The company, whose products had traditionally had an almost exclusively male market, now also introduced a girl-oriented craft line featuring fabric art and other craft kits. Most importantly, this was a time of significant international expansion for the growing California firm as the company opened subsidiaries in Germany, Great Britain, Australia, and Switzerland. The annual Revell sweepstakes became the company’s most important marketing tool during this period. Prizes such as around-the-world trips and motorcycles were intended to raise awareness of Revell models among boys aged eight through 15. The sweepstakes were tremendously successful and continued to be a crucial component of Revell marketing policy into the late 1970s. The 1970s were a decade of substantial growth for Revell with sales rising from $16 million in 1969 to $47 million in 1978. Nonetheless, the company encountered difficulties turning sales into profits in the late 1970s and in 1978 Revell recorded a net loss of $2.5 million.

Company Perspectives

Revell-Monogram will be the best model hobby company in the world. We will protect, grow and leverage our proud heritage. We will also use our expertise to capture a leading position in hands-on products which build upon the enduring values of modeling…the building experience, fantasy and collectibility.

Changing Ownership in the 1980s

Faced with this debilitating loss and with family management undergoing changes, Revell decided to accept an offer by the leading French toy company, Generale du Jouet, to buy out the California firm. Revell’s already strong presence in the European market through its British and German subsidiaries facilitated the merger of the company into Generale du Jouet’s marketing structure but Revell nevertheless continued to flounder. Not only were overall sales of model kits diminishing at an alarming rate but Revell’s share of this market, although still over 50 percent, started to erode in the early 1980s. In addition, parent Genérale du Jouet ran into serious difficulties itself because of overexpansion in the late 1970s and in 1982 the French toy giant was faced with a loss of over 50 million French francs. Bailed out by the Edmond de Rothschild financial firm, Generale du Jouet undertook a massive reorganization in 1983 which included a selloff of Revell to American investors.

The toy slump of the early 1980s was as damaging in the United States as it was abroad. Mattel had overextended itself on the development of videogames and, when toy sales dropped in 1984, the huge company posted a net loss of almost $400 million. Like Genérale du Jouet, Mattel was forced to undertake a massive reorganization that included selling all of its non-toy divisions. Monogram Models was acquired by a group of investors that included former company president Thomas A. Ganon.

Joining Forces in the late 1980s

With the two largest model companies now under independent ownership, and with the model kit market under duress, it did not take long before the advantages of joining forces became overwhelming. In 1986 the two longtime competitors, Revell Inc. and Monogram Models, were merged to form the largest model kit company in the world, Revell-Monogram. Although the joining of the two companies was officially termed a merger, the operations of Revell were essentially brought to an end with all molds, tooling, and designs transferred to the offices of Monogram in Illinois.

The newly revitalized company began to see a renewal in the modeling industry, which had taken a hard hit from the videogames that had become the new obsession of pre-teen boys. By 1989 sales had risen to $88 million and, with the addition of a line of science toys and die-cast replicas, Revell-Monogram had regained much of the market lost to videogames. In 1991, under CEO Timothy Cawley, Revell-Monogram was brought public with an initial public offering of 1,825,000 shares. Profits that year were a comfortable $2.6 million on $106 million in sales and analysts were positive about Revell-Monogram’s prospects. As the company entered the 1990s a new form of competition for the attention of eight- to 14-year-old boys came in the form of the CD-ROM-based computer game and Revell-Monogram felt that an entry into this market would help maintain its presence among this traditional modeling customer base. The company invested about $4 million into the development of an interactive CD-ROM racing car game called Power Modeler that would be sold together with plastic model kits for the featured vehicles. The idea was to encourage collectibility and to give youngsters a new vision of the excitement inherent in the Revell-Monogram models. The hefty retail price of about $70 per kit, however, discouraged parent shoppers who were not sure if they were buying a model or a game. After a year on the market Power Modeler had sold fewer than 50,000 units and the project was scrapped, leaving Revell-Monogram with a $4 million loss in fiscal 1993. Newly appointed CEO Theodore J. Eischeid commented on the failure of the Power Modeler in Advertising Age: “Our idea was the model makes the game better and vice versa. In this particular case, the experiment didn’t quite work the way we hoped it would.”

Acquired by Hallmark in 1994

In spite of the Power Modeler debacle, Revell-Monogram’s domination of the modeling industry made the company an attractive target for acquisition and, in 1994, Hallmark Cards Inc. purchased the model-kit maker and its foreign affiliates for $85 million. Revell-Monogram became part of Hallmark’s Binney & Smith division, which also distributed Crayola crayons around the world. Although the exact nature of the company’s products might change, it seemed clear that the youthful urge to build in miniature would carry Revell-Monogram into the 21st century.