"Thomson Sounds Good"

Of postwar Europe's many economic miracles, one of the most notable has been wrought by a Paris-based firm improbably known as La Compagnie Franc,hise Thomson-Houston.* Within barely a decade, Thomson- Houston has not only risen from relative obscurity to the top rank of French industry, but also has succeeded in persuading Frenchmen that its name is as Gallic as De Gaulle. "Thomson sonne bien" (Thomson sounds good) is the company's slogan.

Thomson sounds not only good but loud in every phase of electrical and electronic production in France. Still outranked in the rest of Europe by such rival electrical giants as Holland's Philips and Germany's Siemens (and only one twenty-fifth the size of America's G.E.), Thomson-Houston has outstripped all domestic competition in France and is still growing. Today the company's 21 factories turn out 50% of France's telecommunications equipment, 20% of its television sets, produce everything from electric light bulbs to antiaircraft missiles. Thomson's sales have doubled since 1955. Last year they reached $161 million, and gross profits were a healthy $12.5 million.

"You Need Ponderation." Organized in 1893 to handle the installation of electric trolley cars in Le Havre, Thomson-Houston soon became primarily a holding company with a small staff quartered on Paris' Boulevard Haussmann. In 1952 its directors, looking ahead, decided that the future belonged to producing companies.

They bought up as many small electrical companies as they could, poured 10% of earnings into research and set out to sell to industry, the government, and to the French consumer -- who is fondly referred to as "Monsieur Tout-le-monde" (Mr. Average Man). But its forced growth came close to being fatal. When the French government suddenly cut back military orders as a deflationary move, Thomson found itself overexpanded. Control of the new acquisitions was so loose that the result, recalls one Thomson executive, was "anarchy."

Into Thomson-Houston inner offices to rout out anarchy came new managers. Among them was Jacques Dontot, 46. a flexible but outspoken engineering graduate of France's prestigious Ecole Polytechnique, who had risen to technical director of the nationalized Saar coal mines, but was casting around for "a different working silhouette." Dontot, who became managing director of Thomson in 1960 after only four years with the company, is described by his colleagues as a "managerial genius." His rebuttal: "You don't need genius in top management. You need ponderation. You need to accept good news and bad with calm."

Down to a Fig Leaf. Along with ponderation. Dontot has imbued Thomson-Houston with a dedication to long-range economic planning. Though French house wives have as yet shown scant enthusiasm for automatic washing machines, Dontot is convinced that they will come around in time, has doggedly plastered France with posters of a little man loading a Thomson-Houston washer with such enthusiasm that his sole remaining clothing consists of a straw hat and a fig leaf. Such investments in the future have paid off handsomely for Thomson-Houston. Currently, the company is swamped with or ders for short-wave transmitters from new African nations. "It takes over two years to put a transmission facility together." says Chief Engineer Mario Sollima. "We'd be lost if we hadn't prepared."

Along with selling short waves to Africans. Thomson is reaching into other world markets, last year exported 10% of its sales, mostly to Common Market nations. Nonetheless, Thomson, faced with heavy competition, is openly uneasy over the speed with which Common Market customs duties and quotas are being lowered. "We agree with the goals," says one executive, "but not with the timetable."

Discouraging the Wild. One reason for this uneasiness is that, although Thomson wants its share of foreign markets, it prefers to keep France's Mr. Average Man for itself, Generously protected by French law, Thomson is usually able to persuade potential foreign competitors that rather than try to invade France themselves, they stand to make more money by letting Thomson handle their French production and marketing. With ties to General Electric dating from the Le Havre days, Thomson keeps a permanent engineering staff at the G.E. plant in Schenectady, produces under license products ranging from toasters to turbines based on G.E. patents.

Thomson is also adept at discouraging too much domestic competition. Says Dontot: "Competition is good if it's not wild. It has to be somewhat orchestrated." In cooperation with other big French companies, Thomson is sometimes accused of orchestrating overly aggressive little new comers clean out of business through "exclusive dealer" relationships and offers of easier credit terms to dealers than its rivals can afford.

Confidence In & Out. Determined to keep ahead of the technological revolution, Thomson has furnished much of the electronic equipment used in France's atomic tests, currently has its scientists at work trying to find a role for the company in space. Outside the company, too, there is confidence in Thomson-Houston's future. In a recent survey, 50 French stock market analysts were asked to name the company whose stock they thought had the best chance of rising in 1962. Free to choose from the entire array of French and foreign industry, 13 of the analysts picked Thomson-Houston.

* Name derived from that of an affiliated U.S. firm that has long since disappeared in the mergers that ultimately produced General Electric.

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