What You See is What You Get

by Sugar, Alan

  We set up a meeting with Morse and showed them our design concept. They were very excited and started rambling on how they could sell them in America. I put a stop to that immediately – I told them that if they made this product for me, they’d have no right to sell it anywhere else, as the tooling and design would be 100 per cent owned by Amstrad. In the end we spent four days in Hong Kong negotiating with Morse, going through the bill of material on every single component, item by item, ending up with an agreement to pay them a labour and overhead cost, plus a 5 per cent margin.

  One has to admire the industriousness and efficiency of the Chinese. They are unbelievable in their work ethic. The deal was struck at the end of February and my requirement was for them to ship the finished product by August, for it to arrive in September, so we could start supplying the market. It was a tight deadline and they started beavering away. A week later they’d produced a mock-up sample of the front panel. It looked a million dollars, with its shiny silver knobs, switches and meters.

  As soon as the mock-up arrived, Harold built a cabinet around it and we photographed it. The target price for this product, fully assembled in a rack, with a record deck mounted on the top and supplied with a pair of speakers was £199 retail. This would undercut the Amstrad separates version by £150, let alone the Japanese competition.

  Armed with photographs of the new tower system, we set about calling on all of our dealers and raised a lot of interest in the traditional channels we sold to.

  In May there was a trade show held in Kensington. We took a room in the Kensington Palace Hotel and proudly displayed the mock-up of our tower system – model TS40 – in its cabinet. John Drazin, the buyer from Wool-worths, popped his head round the door. He was a funny-looking fellow, strange and very abrupt. He didn’t know me from Adam, but I happened to be standing next to the TS40, so he asked me, ‘How much is that?’

  I told him that the trade price was around £120, to which he immediately replied, ‘When can I have some?’

  I knew he was Woolworths’ buyer, so my ears pricked up. I explained that they would be available in September.

  ‘Have you got a sample for us to test?’

  ‘Not yet, but possibly in a month or so,’ I replied, not really knowing when we would get the first working sample.

  ‘Right, well, subject to me testing the working sample, we’ll take a thousand of them.’

  I was taken aback, but tried to remain outwardly calm.

  Throughout the course of that exhibition, we must have taken orders for 5,000 of these units, all based on a mock-up sample. Clearly we had a hit on our hands.

  There were a lot of twists and turns along the way in the development of this product, but in early August, Bob Watkins went off to Hong Kong to start the production line running at Morse’s factory. By the end of the month, the first thousand pieces had been produced and loaded onto a container, the fastest vessel we could get, which had a thirty-day transit time from Hong Kong.

  Bob arranged for ten of these chassis to be airfreighted to the UK, so we could make up working samples and jigs at the Eastwood factory. Harold did a great job setting up the production line and as soon as the bulk cargo arrived, we flew into mass production and started to honour the Woolworths order.

  Malcolm Miller, in conjunction with an advertising agency, took some three-quarter-page advertisements in the national press, which sparked the attention of Comet. I’d mentioned the product to Nick Lightowler, but bearing in mind that his division of Comet specialised in true hi-fi, he’d given a lukewarm response, saying it wasn’t suited to Comet.

  However, the day after our first advert appeared in Thursday’s Daily Mirror, Nick phoned me to say that perhaps he would like to try some of these things. His branch managers had been calling him, knowing that Comet normally sold Amstrad products, asking whether these tower systems were on the way.

  At the bottom of the advert, it said, Available at Woolworths,’ as well as a few other smaller retailers’ names. Nick asked me to add Comet’s name on the next bunch of adverts.

  We started supplying Comet, but I received a rather irate telephone call from Gerry Mason. He bellowed down the phone, ‘If you supply Woolworths then you’re not supplying us!’

  I tried to reason with him that the tower system was more of a consumer electronics product rather than a specialist hi-fi item. I also reminded him that there were other electrical goods that both Woolworths and Comet sold, but Gerry was furious and wasn’t going to give way. There I was, faced with the buying boss of Comet telling me that he was going to halt the purchasing of all Amstrad products unless I agreed to pull out of Woolworths.

  I phoned Nick Lightowler after Gerry’s call. Nick was rather relaxed and told me to forget it. He said, ‘Gerry’s just in a rage – this is his rant of the moment. It’ll all die down in a week or so.’

  I wasn’t convinced, but Nick knew Gerry better than anyone else did, so I guessed it was best for me to keep quiet. Comet started to sell hundreds of tower systems per week, which was good news in the sense that they’d already been delivered, so even if Mason meant what he said, it was too late.

  Around this time, Ashley Morris joined forces with Dennis Hart and Malcolm, amalgamating Audio Supplies with Global. The combined group continued to trade as Global Audio and they then expanded, opening several branches.

  By now, Dennis Hart had changed his surname to Hadleigh, for reasons best known to himself. We all assumed it was to try to replicate the lifestyle of the TV character James Hadleigh, a dashing, handsome country toff. Dennis had illusions of being one of the gentry, with a farm and stables, going horse-riding, clay pigeon shooting and all that stuff.

  However, he had one of those ‘irreconcilable differences’ with the board and decided he didn’t like being relegated from kingpin to effectively Ashley’s lackey. They agreed to part company and Dennis started again on his own. He opened a shop in Edgware Road, right opposite Paddington Green Police Station, and another shop up north, near Leeds.

  As before, the business model was flawed – it was simply selling stuff at low prices to get cash flow. By now, Ashley’s Global Audio was offering Green Shield Stamps to try to boost sales. For every pound they took, they were losing ten pence.

  One day, I received a phone call at home and heard Dennis’s dopey drawl. Alan, if I ask you for some invoices for stuff, will you give them to me?’

  ‘What did you say?’ I replied. ‘Why do you need invoices?’

  ‘I’m going to have a robbery and I need you to give me some invoices to support my insurance claim.’

  ‘What? Are you fucking mad, Dennis? Get lost and don’t even talk to me about this.’

  ‘No, really, Alan, if you give me some invoices, I can make a killing.’

  ‘Dennis, I’m going to hang up the phone now. Don’t ever talk to me about such things again. Don’t be silly – don’t do this.’

  What happened next, you wouldn’t believe. Picture the scenario. His shop is bang opposite Paddington Green Police Station – the biggest and most sophisticated police station in London. As the story goes, he got a young boy who worked for him to smash a hole in the shop ceiling. He then claimed there was a break-in and that all his stock had been stolen. The police took the fact that this robbery had occurred right under their noses as a slap in the face and swung into action. Straightaway they smelt a rat and within a day the young boy had confessed that Dennis had asked him to bash the hole in the ceiling.

  The next call I got was to tell me that Dennis was in Brixton Prison, awaiting processing. What a bloody idiot. I felt sorry for him and went to visit him. I remember bringing him some apples, which were confiscated by the guards who said he could only have two, not the whole bag.

  I was led through a maze of locked doors before getting to the visiting room, where I saw Dennis dressed in a grey prison jacket. His eyes were bloodshot as he cried to me, ‘They locked me up and put me in a cell.’ It was pathetic to see this stup
id man, who had tried to run with the hares and hounds, now banged up behind bars and one could only feel sorry for him.

  I couldn’t get out of there quick enough. When I got home, I told Ann what I’d experienced and called Ashley and Malcolm to report this pitiful sight. That was the last time I saw Dennis. He was sentenced to two years in prison and I have no idea what happened to him after that.

  The inevitable happened at Global Audio and they called in the liquidators. They went well and truly bust, with debts of £400,000, catching Amstrad for about £20,000 in the process.

  One of the side-effects of their demise was that my brother-in-law, Mark Simons, was out of a job and asked if I had a position for him in Amstrad. Mark was a good salesman and at the time we were weak in the sales area. With the addition of our tower system, we needed to expand our customer base to companies such as Currys, Rumbelows and other big chains.

  Mark came onboard and was tasked with breaking into the electricity boards, which sold electrical goods in their High Street stores. The electricity boards were broken up into regions: London’s was the LEB, the north’s was Norweb and so on. They were a powerful retail force, but unlike traditional retailers, their employees were pseudo civil servants. They were not very commercial and were cautious in their approach to purchasing. Lots of testing had to be done to ensure the products were safe and they needed to see certification issued by the British Standards Institute via an authority known as BEAB (British Electrotechnical Approvals Board) which showed that our products fully complied with the relevant standards.

  Our entry into the electricity board market would be like a domino effect in that once we’d cracked one of them, it was a much easier sale next time round. Mark targeted the LEB, as it was local, and after several months of argy-bargy, they eventually stocked the product and he was at the races.

  I concentrated on Currys, which was trusted by the public as the place to go if you wanted a TV, a hi-fi, a fridge or a washing machine. I had tried to contact Michael Curry on several occasions, but he wouldn’t take my calls any more, which fascinated me since many years earlier I had managed to get him on the phone. I think what happened was that their business had grown so large, he’d become a real bigshot who would no longer talk to suppliers.

  I was therefore left to deal with the buyers – a real arrogant lot. I cannot tell you the number of times Dickie Mould, aka Boycie, and I sat in the reception of Currys House in Ealing looking at the fish pond. You’d see the buyers coming down in the elevator, then they’d look at you and simply walk past, saying they were going for lunch. We would have to sit around waiting for them to come back and only then would they graciously grant us a few moments of their time. Now you have to understand that Currys (and later Dixons) had huge buying power and could make or break a business. The buyers knew this and could not help but come across as high-handed and arrogant.

  I managed to get an appointment with Ken Sladen, Currys’ audio buyer, and took Boycie with me. Ken was a bit of a cool character, trying to make out he wasn’t impressed by the numbers I gave him on how many tower systems Comet and Woolworths were buying. Eventually, he agreed to sample a quantity of 200 units in selected branches to see how they went and I told him I’d add Currys’ name to our advertising, along with the words ‘selected stores’ in brackets.

  They started to sell like crazy in Currys. The speed at which the first 200 left the stores was incredible, so much so that, unusually (normally you had to chase buyers), I received a phone call from Ken. Again holding back, not wishing to show too much excitement, he told me that the units had gone relatively well and that perhaps he should roll them out to all the branches and he casually asked whether I’d be able to supply 2,000 units.

  They were on the hook and it was time for me to have a bit of fun. I told them it was very nice to hear they wanted to roll them out, but my production was flat out. I couldn’t deliver 2,000 units quickly, but I’d try my best. The truth was, they had taken customers’ money and were now selling the samples. They already had orders for 450 pieces and they needed them urgently. It was funny to hear Ken suddenly switch from his laid-back tone into desperate mode. Of course, I was fully aware of the importance of a breakthrough into Currys and we managed to accommodate his requirements over the course of the next few weeks.

  Before we knew it, we were making and selling approximately 25,000 tower systems per month, and we hadn’t even scratched the surface as far as France was concerned, the place where the product was first conceived. On various visits to Garman Road, Pierre would see these tower systems knocking around and was constantly asking me when we would be able to supply the French market.

  By this time, our business had got so big that we needed to open our first office in the Far East. Stan Randall was at a loose end, having regrettably had some matrimonial problems, so I approached him to see if he would like to start a new life running our Hong Kong office and liaising with all our Asian suppliers. He said yes. The Amstrad Hong Kong office was to become the hub of design. We recruited a couple of young mechanical engineers, Vitus Luk and Isaac Ip, who were to become two of Amstrad’s longest-serving employees and, in fact, are still employed by them today.

  Stan also appointed a secretary, Callen So. This highly intelligent young lady spoke perfect English and had a brain like a computer. She got to know every detail of the business within a month, and would remember every price, every shipment and every costing. She was so good, I eventually brought her over to England and she became my right-hand ‘man’. I have to say, she was the nearest thing to me when it came to knowing every aspect of the company. Simply amazing.

  Stan had put together a good team who were going to become very important to the future prosperity of Amstrad.

  *

  Word got around the Far East about Amstrad buying large quantities of chassis from Morse. We had become a big fish in the pond and as a result I was contacted by the Taiwanese company Hawson. I had heard of them and knew that their expertise lay in making loudspeakers. Although our speakers were being made at our Eastwood plant, Bob Watkins and I agreed to visit the Hawson factory in Taipei, where we were guided around their speaker production lines.

  They quoted some prices for speakers and, after a few calculations in consultation with Bob and Harold by phone, we found they were able to supply fully assembled speakers at a much lower price than ours because the speaker drive units inside the cabinets were made in Taiwan, whereas ours were made in Italy. Also, with lower labour costs and economy of scale at their factory (which was also supplying the American market), they had a greater buying power with the chipboard makers, the drive unit makers and, of course, the Taiwanese vinyl suppliers.

  There was one problem – the bulky size of the finished speakers. While they were cheaper than ours, when one added 8 per cent duty and allocated at least $4 per pair for shipping, it didn’t look so great. It occurred to me that if we got Hawson to produce the speakers in such a way that we could pack more into a container, then freight costs would come down.

  This next statement is going to make the real hi-fi nutters cringe. The depth and height – in fact, the overall volume of a hi-fi speaker – is something that should be calculated scientifically on the basis of producing the best baffle effect for the sound, but my criteria were different. I asked Hawson to attend another meeting and, after lots of sketching and calculations, we worked out how to get the most speaker shells out of the eight-by-five sheets of wood. We decided the speaker’s dimensions should be the most economic size to ship, rather than be designed for perfect sound quality. Under these criteria, we were able to stuff at least 50 per cent more pairs of speakers into a container, thus reducing the freight cost to about $2 per pair.

  At the last minute, I also insisted that the price must include the speaker cables to connect to the tower system. This eleventh-hour piece of chutzpah shook them a bit, but when I told them we were talking 25,000 pairs of speakers per month, they agreed.

>   The quality of the various veneer patterns one could obtain at that time was getting better and better. They looked authentic, with slight indentations deliberately made in the vinyl, as one would expect to find on real wood. Very clever stuff. We chose a pattern to match the main tower system Harold was making. Initially, Harold was a bit upset about this move, but I told him he needn’t worry – all the employees would still be fully occupied. Sales of tower systems were rocketing and the staff could be redeployed to produce the racks, as well as the larger-sized speakers we were still selling with our hi-fi separates. This storm in a teacup blew over and, after his initial rant, he reorganised the factory with his usual efficiency.

  Hawson was an aggressive and growing company who wanted to go into electronic production and, under their own initiative, they bought some of our tower systems from England and examined the chassis. They suggested that they could manufacture them in their newly acquired factory, which was fully equipped with Toyota-style production line belts and lots of auto-insertion machines. It was far more efficiently laid out than Morse’s factory, which was a typical Hong Kong workshop, with people humping assemblies around left, right and centre.

  Hawson’s boss told me that he would tool up, at his expense and with no obligation, a copy of our tower system and make me some samples. I didn’t want anyone copying my product, so I insisted that if he did tool up the front panel, then we would pay for the tool and have the ownership of it. In fact, I said that I wanted to pay the toolmaker directly, so there could be no misunderstanding, and he agreed.

  The decision to go with Hawson turned out to be quite fortunate, as unbeknown to me there were problems ahead with Morse. Stanley Neichin, the managing director of Morse Hong Kong, asked if I would meet up in Hong Kong with his boss Phil Morse, whom he’d told about the success Amstrad was having.