Smith Corona Corp.

65 Locust Avenue
New Canaan, Connecticut 06840-4725
U.S.A.
(203) 972-1471

Public Company
Incorporated: 1985
Employees: 3,000
Sales: $278 million
Stock Exchanges: New York
SICs: 3579 Office Machines, Not Elsewhere Classified; 3955 Carbon Paper and Inked Ribbons; 2675 Die-Cut Paper and Board: 2678 Stationery Products

Smith Corona is a world-famous designer, manufacturer, and marketer of portable and compact electronic typewriters, personal word processors, electronic reference products, and accessories. Having achieved considerable success in the typewriter business beginning in the late 19th century, the company saw its fortunes decline in the late 1980s, when personal computers, capable of performing more sophisticated word processing functions, began to replace the typewriter in the office as well as the home. To offset the effects of this trend, Smith-Corona branched out into word processing and computer products in the early 1990s but eventually filed for bankruptcy in 1995, hoping to restructure and reemerge a more stable corporation.

Smith Corona was established in 1886 as the Smith-Premier Typewriter Company. Its founders were four brothers formerly in the gun manufacturing business: Lyman, Wilbert, Monroe, and Hurlburt Smith. The typewriter concept had first been introduced ten years earlier at the Centennial Exhibition in Philadelphia, and a designer and inventor named Alexander Brown became intrigued by the newfangled writing machine. Brown had studied the device and decided that he could build a better one himself. Not overly concerned with portability, he aimed to build an office writing machine that would be solid, durable, and attractive.

When Lyman and Wilbert Smith hired Brown to help redesign a gun for them, Brown presented them with his typewriter idea and they agreed to finance its production. Brown’s typewriter, like the others of its day, was a “blind” writing machine: the typist could not see what he typed without lifting the carriage. It had a double keyboard, with “a key for every character.” Reflecting the classical style of the era’s office architecture, it featured fluted pillars resembling Ionic columns and a frame decorated with flowers and cattails. The Smiths named the typewriter and their new company Smith-Premier, achieving immediate success with the public for what became the most popular double-keyboard machine in America.

During this time, the typewriter was becoming standard office equipment, but the typewriter industry had no standard keyboard. Each of the 30 emerging typewriter manufacturers in the United States arranged the letters on the keyboard in its own way, leaving the public bewildered. There was great variation in the way the machines operated as well. Some manufacturers produced double keyboard machines without shifting ability, while others had single-keyboard machines with the shift function. Some machines were capable of producing only capital letters; others printed both capital and lowercase letters.

Some of these problems were alleviated in 1893 when Smith-Premier merged with six other leading manufacturers to form the Union Typewriter Company of America, based in Syracuse, New York. Headed by the Smith brothers, Union Typewriter proceeded to make the Smith-Premier the most popular of the “blind” writing machines. The company’s slogan claimed, “The pen is mightier than the sword, but the Smith-Premier type writer bends them both!” By 1894, more than 60,000 No. 1 Smith-Premiers were sold. In fact, throughout the 1890s, Smith-Premier sales were second only to Remington’s typewriters.

An industry standard among typewriter keyboards finally materialized in 1895. The following year, the first “visible” typewriter was introduced, allowing the typist to see what he typed without lifting the carriage. Its introduction to the market caused a rift at Union Typewriter, since, while the Smith brothers quickly recognized the new machine’s advantages, their associates did not. The disagreement prompted the Smith brothers to resign and start a new venture; the L.C. Smith & Brothers Typewriter Company of Syracuse was founded on January 27, 1903 to manufacture “visible” typewriters.

To produce such high-quality machines in great quantities, L.C. Smith & Brothers soon found that they needed a new factory. Eager to commence construction, company president L.C. (Lyman) Smith had a crew begin digging the foundation for the factory in March 1903, before the architect had even finished his drawings. Throughout the construction, in fact, the architects rushed to stay ahead of the builders who not only erected the plant but laid a branch railroad and stretched a bridge across a nearby creek to bring materials to the site. The factory was finished in December 1903, and Carl Gabrielson, who had accompanied the Smith brothers from Union Typewriter, took over the designing of the company’s new product. Late in 1904, he developed a visible single keyboard typewriter; eventually, visible typewriters would come to dominate the market and blind writing machines would fall into disuse.

During this time, another typewriter company was also achieving considerable success. In 1906, the Corona Typewriter Company introduced its Corona model, a light-weight, 3-bank portable typewriter. By 1914, Corona was the leading manufacturer of portable typewriters. Though typewriter production practically ground to a halt in Europe during the First World War, American typewriter production did not suffer as much since the United States entered the war relatively late. Moreover, American exports continued for a significant time during the war years and the Corona, in particular, achieved immense popularity. It was a favorite of the military and the journalists at the front. British forces used the portable Corona in the trenches and in patrol aircraft. Many important documents were typed or duplicated on Coronas, including the surrender papers for German South West Africa.

Corona typewriters won fame and success in peacetime also, and without substantially changing their design. Despite the dramatic technological change between the two World Wars, the Corona portable’s design survived as the industry standard. Part of Corona’s peacetime renown came during the Dempsey-Firpo fight in 1924 when Firpo knocked Dempsey through the ropes onto a Corona portable typewriter. Dempsey climbed back into the ring and was able to continue the fight. Surprisingly, the Corona on which the heavyweight had landed continued to work as well as it had before. This incident gave Corona a new slogan, “Dempsey knocked out Firpo, but he could not knockout Corona!”

In the 1920s, the typewriter industry underwent dramatic changes. In 1923, there were over 300 kinds of typewriters on the market, most of them American; by 1929, the market had consolidated considerably and only five kinds of typewriters were being manufactured in the United States. One of the successful mergers of this decade resulted in the January 1926 formation of the L.C. Smith & Corona Typewriter Company, occasioned when Corona merged with L.C. Smith and Brothers, giving the new business the second half of the most recognized name in typewriters.

After the stock market crashed in 1929, sales of typewriters to businesses declined sharply, and, suffering some setbacks in the wake of the Great Depression, Smith & Corona responded with a major change in strategy: the company began to market portable typewriters to the home in addition to the office. Departing from its practice of focusing on a basic black model of typewriter geared toward business use, Smith & Corona began marketing entire lines of brightly colored portable typewriters, as well as new models, branded Silent L.C. Smith and Sterling, which were quieter than their predecessors. Other new brand names included the Clipper and the Zephyr. The company also made an acquisition during this time, taking over the Portable Adding Machine Company in 1934.

During World War II, as the country’s industrial sector shifted its focus to assist with the war effort, the U.S. government ordered major manufacturers to cease production of typewriters. Smith & Corona’s facilities were converted for the production of percussion primers for bombs as well as rifles. The company’s sales force was kept busy helping the government purchase used typewriters. By 1943, however, the armed forces’ demand for rifles was filled, and they again needed writing machines. Smith & Corona was asked to return to making typewriters; fortunately, it had saved the necessary manufacturing equipment.

Smith & Corona became known as Smith-Corona in 1946 and in 1953 was renamed Smith-Corona Inc. During the postwar years, the company worked to meet the challenge of the newest technology, the electric typewriter, which began to dominate the market in 1948. In 1955, Smith-Corona introduced an electric typewriter for the office. The result of a decade of research, the new machine featured a scientifically sloped keyboard fitted to natural finger movements, more controls in the keyboard area than any other electric typewriter, and automatic repeat actions on all keys. Continuing to branch out into other areas, Smith-Corona merged with Marchant Calculators in September 1958; the resulting company, Smith-Corona Marchant Inc. (SCM), became world renowned as an aggressive and diversified corporation.

Throughout the 1960s, Smith-Corona Marchant competed in the electric typewriter, home, and office equipment markets and increased sales both at home and abroad. Their electric typewriters of the 1960s and early 1970s featured a smaller compact design and keys that were more easily depressed than their predecessors. By 1974, Smith-Corona had become a division of Kleinschmidt and had ceased to manufacture manual and electric standard office typewriters, concentrating instead on portable machines and compact electric typewriters.

That year, Smith-Corona also filed a complaint against Brother Industries Ltd., beginning a 20-year imbroglio between itself and the Japanese competitor. Specifically, Smith-Corona’s complaint charged Brother with “dumping” portable typewriters, exporting the machines for sale in the United States at prices below cost. Arguing that Brother was in violation of the Antidumping Act of 1921, Smith Corona saw its sales decline in the face of what it deemed an unfair trade practice. In 1979, the U.S. government imposed an import fee on Brother’s typewriters, and throughout the 1980s the courts modified these antidumping orders and import fees to include new products such as Brother electronic typewriters and word processors.

Then an ironic role reversal occurred that complicated matters further. In 1985 Smith Corona was incorporated as a wholly owned subsidiary of SCM Corp., and the following year, the London-based conglomerate, Hanson PLC, acquired SMC Corp. Adapting to an increasingly global economy, Smith Corona began manufacturing typewriters in Singapore for export to the United States, gradually eliminating jobs at its factory in Cortland, New York, and bolstering its work force at its Singapore plant. At the same time, Brother Industries opened a plant in Bartlett, Tennessee, where it manufactured 600,000 typewriters annually for the U.S. market. It was Brother’s turn to file dumping complaints against Smith Corona, and the fight continued.

Also during this time, Smith Corona was struggling to adapt to the changes wrought by the personal computer (PC) revolution. Under increasing pressure from recent innovations and changing economic conditions, the company undertook a variety of efforts to meet the challenges of the new era. It introduced several word processing machines, hoping to entice consumers with their facility of use and low price. However, few anticipated the speed with which the quality of PCs would go up and prices would come down.

Nevertheless, in 1989, Smith Corona led the personal word processor (PWP) market. That year, the company introduced the portable, economical PWP 270, marketing it to those waiting for laptop PC prices to drop, as well as to those already convinced of the benefits of a PWP. Smith Corona hoped to win over the former group with the PWP 270’s spelling, merging, and automatic saving capabilities, in addition to the letter quality printer that came in the same package. The company also marketed the first laptop PWP, dubbed the 270LT, that year. Despite these innovations and high hopes, the spring of 1989 saw the beginning of a strong and steady decline in Smith Corona stock prices that lasted through July 1990. The growth of the PC industry and the competition from overseas were taking their toll on Smith Corona’s finances. In June 1989, Hanson PLC spun off 53 percent of Smith Corona stock in a public offering, and Smith Corona laid off ten percent of its work force.

In 1990, Fred Feuerhake, vice-president of marketing for Smith Corona, stated in Dealerscope Merchandising magazine that the industry was “in a period of transition between typewriters and word processors.” Though he had not lost faith in the typewriter, he predicted that the greatest growth in sales would be in word processors. Still, Feuerhake believed that there was a niche for Smith Corona among consumers who wanted word processing capability without the complexities and expense of a PC. The only obstacle to the success of this strategy was an unexpected drop in PC prices.

A drop in PC prices was observed in a July 1990 report in Business Week, which also noted that manufacturers were making the more powerful PCs easier to operate and less intimidating. The PWP market, once forecast at 1.2 million units per year, had peaked at 250 thousand units per year. Although revenues of the PWP market increased from 1990 to 1991, sales of PWPs and typewriters were poor overall throughout the early 1990s.

Smith Corona responded by entering into the competitive PC market. In April 1991, the company introduced a seven-model line of PCs called Simply Smart. The Simply Smart line was intended for first-time users and buyers looking for a PC that was easy to use and inexpensive. At that time, Smith-Corona CEO Lee Thompson told Dealerscope Merchandising that, despite this development, his company was not abandoning the typewriter or word processor markets. Computers are “a logical extension of our line,” Thompson said, “not a replacement for other products within our line. We strongly believe in the continuing need for the typewriter and will maintain our lead position in the market place.”

In 1992, Smith Corona introduced the PC340 as its top-of-the-line word processor. The PC340 was faster and therefore more competitive than previous models, featured easy, one-touch access to Smith Corona’s proprietary PWP Word Processing 6.0 program, and came with a generous software package that included Microsoft Windows and some graphics programs. That year, the company also announced that it was moving its manufacturing operations to Mexico. The company maintained that this would result in a ten to 12 percent reduction in costs.

In February 1994, Smith Corona and Brother Industries finally ended years of litigation over the dumping issue. In a joint statement, the companies admitted that it was better to direct their energies toward the marketplace rather than the courtroom. They asked the commerce department to cease their investigations of typewriter dumping and revoke the added import taxes.

Despite the end of its litigation woes, however, Smith Corona still faced financial challenges. In October 1994, the company reported that its fiscal first quarter profit had decreased 70 percent. Poor sales and low competitor prices were blamed for the net income drop from $4 million in the fiscal quarter ended September 30, 1993 to $1.2 million in the same quarter in 1994. Typewriter and PWP sales were down 15 percent from the previous year. After a 100-year history of manufacturing in the United States, Smith Corona moved the last of its U.S. production from New York to Mexico.

On July 5, 1995, the Smith Corona Corporation filed for bankruptcy protection in Delaware. Typewriters, the product so successfully manufactured and marketed by Smith Corona in its various incarnations for more than a century, were becoming obsolete. Despite the company’s forays into word processors, facsimile machines, and other office products, customers still associated Smith Corona with typewriters and typewriters had remained the core of the company’s business. Smith Corona planned to stabilize its operations, obtain additional financing, and restructure. At the end of June 1995, new management took over and Smith Corona hired R.H. Stengel & Company to turn its finances around. The company that had once declared, “The pen is mightier than the sword, but the Smith-Premier Typewriter bends them both!” had seen the computer replace both pen and typewriter.

Principal Subsidiaries

SCM Office Supplies, Inc.; SCM (United Kingdom) Ltd.; Histacount Corp.; Smith Corona Overseas Holdings, Inc.; Smith Corona Private Ltd.; Smith Corona (Canada) Ltd.; Smith Corona Australia PTY Ltd.; Smith Corona France S.A.R.L.; Smith Corona GmbH.