Radio Manufacturing in the United States, 1920-1970: An Economic History

Bruce DomazlickySoutheast Missouri State University

Cape Girardeau, MO 63701bdomazlicky@semo.edu

573-651-2013

Manufacturing in general, in the United States, has experienced a steady decline since the 1970s in employment, both absolutely and relatively. However, manufacturing output has increased slowly during that time and is perhaps, the better measure of the importance of the sector to the economy. Radio manufacturing, in particular, is nonexistent domestically, except for some specialized broadcast equipment. However, at one time, radio manufacturing was an important part of the national economy. Herbert Hoover estimated in 1925 that 200,000 men were dependent upon the radio for their employment (this would include manufacturing, broadcasting, and repair). This paper has several goals. First, it attempts to measure the significance of radio manufacturing to the United States economy during a fifty year period, 1920-1970. Second, some tentative hypotheses concerning efficiency in radio manufacturing are developed with respect to the learning curve, economies of scale, etc. Third, reasons for the rapid decline in radio manufacturing in the United States after the 1960s are offered.

JEL Categories: N62, L69

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I. Introduction

If one were to purchase a personal radio in the United States today for use in the home, it is a

guarantee that it will not say “Made in America” on it. Personal radios sold today in the United States

are primarily manufactured in Southeast Asia, though a few still come from Western Europe, primarily

Germany. The closest to radio manufacturing that still exists in the United States today consists of

NAICS code 334220, Radio and TV Broadcasting and Wireless Communications Equipment

Manufacturing. This industry employed 73,140 workers in 2010 (0.7% of all manufacturing

employment) with a value added of $18.1 billion (0.8% of all manufacturing value added). There is also

NAICS codes 334310, Audio and Video Equipment Manufacturing, which includes the production of

personal radio and TV sets, but the sector only employed 6,860 workers in 2010 and was not producing

any radio or TV sets.

Given the near nonexistence of radio manufacturing in the U.S. today, it might be surprising to

learn that radio manufacturing, including the export of radios, was once an important domestic industry.

Herbert Hoover remarked in 1925 that 200,000 men were dependent on the radio industry for their

livelihood. As late as 1947, there were 178,595 employees involved in manufacturing radios in 857

establishments. Total production in 1947 amounted to nearly 17.5 million units (mostly AM and

portable radios). After 1947, radio manufacturing in the United States steadily declined due to

saturation, competition from television and foreign competition. By 1954, domestic production was

already only 50% of what it had been in the late 1940s.

In addition to radio manufacturing, there was a substantial industry in radio repairs. Radios

were a relatively expensive product in the 1930s and 1940s, with average prices that approached the

weekly wages of those producing them. Therefore, a cottage industry quickly arose in radio repair. By

1939, there were 10,732 establishments repairing radios with 11,000 proprietors and an additional

2,591 employees. It is evident that most of these repair shops were very small (one-person operations)

with total receipts of $21.7 million or about $2,025 per shop.

This paper will first outline a history of the development and the decline of radio manufacturing

in the United States from earliest times in the 1920s to about 1970, when radio manufacturing had

declined to insignificance. As part of this history, market structure in manufacturing as well as efficiency

and productivity will be addressed. In the latter part of this period (basically the mid 1950s forward),

radio manufacturing declined rapidly; some reasons for this decline will be offered.

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II. Radio Manufacturing in the United States: An Economic History

Radio manufacturing in the United States took hold in the 1920s and grew rapidly. As Table 1

shows, the volume of production of radio sets and tubes increased almost 40 times in the decade of the

1920s. By the middle of the decade, Herbert Hoover claimed that 200,000 men owed their employment

to the radio (this, of course, would include manufacturing, sales, repair and the broadcasting industry).

[Jome, 1971] This may be a bit of an overstatement, but it is clear that the new industry by the end of

the decade was already well established in the nation. As an interesting side note, in 1927, the average

worker in radio manufacturing put in a 48.5 hour work week. Males earned 59 cents per hour while

females were paid 38.4 cents per hour.

Table 1. Value of Radio and Tube Production, 1921-1929

YEAR Value of Production (000s) Index, 1921=100

1921 $10,648 100.00

1923 $29,679 278.73

1925 $147,538 1,385.59

1927 $149,658 1,405.50

1929 $411,637 3,865.86

Source: Statistical Abstract of the United States

U.S. exports of radio sets and tubes were already making an important contribution to the

country’s balance of trade by 1926. Table 2 shows the quantity and value of radio sets exported in the

last half of the decade of the 1920s as well as the average price. One item that stands out from the

table is that the average price of an exported radio was in the $40 to $50 range, a rather high price at

the time. For comparison, the average male worker in radio production earned 59 cents an hour in

1927. (Females earned 38.4 cents per hour; apparently, gender wage discrimination was more

acceptable then.) This implies that to buy a $45 radio set would mean the average male production

worker would have to work about 76 hours or about a week and a half (the average production worker

spent 48 hours a week on the job). Vacuum tubes were a big part of radios and needed to be changed

often so that the export of tubes was also an important contributor to the nation’s balance of payments

as shown in Table 3.

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Table 2. Exports of Radio Sets during the 1920s

YEAR Number of Sets Value of Exports (000s) Average Price

1926 69,482 $2,874 $40.97

1927 75,839 $2,961 $39.04

1928 96,341 $4,550 $47.23

1929 200,936 $9,776 $48.65

1930 245,192 $11,550 $47.10

Source: Statistical Abstract of the United States

Table 3. Exports of Vacuum Tubes during the 1920s

YEAR Number of Tubes (000s) Value of Exports (000s) Average Price

1926 665 $868 $1.31

1927 722 $1,004 $1.39

1928 558 $1,018 $1.82

1929 1,233 $1,997 $1.62

1930 1,774 $2,363 $1.33

Source: Statistical Abstract of the United States

In the 1930s, radios came to be more standardized in terms of their technology. With the

introduction of the super heterodyne set, “…the radio receiver reached practically the form it retains to

this day, and progress during the 1930’s and subsequently, was mainly a matter of detail.” [Sturmey, p.

178] The basic AM radio used what is sometimes referred to as five-tube technology, which exhibited

little change for at least three decades. The major innovation over time was miniaturization as tubes

became smaller, allowing for smaller radios. (See Diagram 1.) Short wave radios, which were popular in

the 1930s and later, as well as radios that included FM, which came much later, required more

complicated circuitry, but these involved minor extensions of existing technology.

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Diagram 1. Radio Tubes from the 1930s, 1940s and 1950s.

Despite the Great Depression, radio manufacturing remained an important sector in the

national economy. It, of course, experienced significant variability during the 1930s as evidenced by

Table 4, which presents details on wage earners and production value for selected years in the 1930s.

The effects of the Great Depression in the early part of the decade and then the recession of 1938 are

apparent from the data.

Table 5. Production of Radios, Tubes and Phonographs in the 1930s

YEAR Establishments Wage Earners Wages (000s) Production Value

(000s)

1931 217 36,490 $35,146 $193,143

1933 156 32,879 $29,655 $121,802

1935 196 44,796 $42,906 $200,973

1937 162 48,343 $52,002 $277,807

1939 224 43,508 $47,026 $275,870

Source: Statistical Abstract of the United States

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Table 5 includes the production of phonographs as well, but the bulk of the production is in

radios and tubes. It should also be noted that annual earnings of production workers range from about

$900 in 1933 to close to $1,100 in 1939. Exports of radios also continued to grow in the 1930s. During

the decade, exports averaged 528,600 sets per year with an average annual value of $12.5 million. This

translates into an average price of an exported radio of $23.75 (about $438 in today’s dollars).

The market structure in radio manufacturing during the 1930s and beyond is probably best

characterized by monopolistic competition. Entry was relatively easy as RCA (Radio Corporation of

America) freely licensed its numerous patents to any firm willing to pay the price. Many firms were

what Sturmey calls assemblers; that is, they bought the necessary components (tubes, capacitors,

resistors, etc,) from the major suppliers, designed their own housing and then assembled the parts into

a finished product. The smallest of the assemblers might be best labeled “garage” type producers who

put out a limited number of sets and only a few different designs. It is estimated that over the period of

radio manufacturing in the U.S., there were 3,205 different brand names producing 75,480 models

(Radio Museum). Information from the 1947 Census of Manufactures indicates that the four-firm

concentration ratio was 25.6 and the top 20 firms had 54.4% of the market. So the market was one of

several large producers with many smaller ones. Competition tended to be on the design of the product

since all used the same technology. “Each year the advertising and sales departments wanted something

new to talk about and each year the engineers obliged…the engineer was too often at the mercy of the

whims and profit considerations of the management and the opinionated instructions of the sales

department. So long as the public was willing to buy the goods thus devised and manufactured, there

was no great urgency and little encouragement for radical technical innovations.” [MacLaurin, pp. 140-

141] In the long run, firms operating under conditions of monopolistic competition can be expected to

earn normal profits. This appears to have been the case with respect to radio manufacturing. “As more

and more firms were drawn into the industry, profit margins were reduced; and by the end of the 1920’s

they had largely disappeared for many companies.” [MacLaurin, p. 262]

The competitive conditions in radio manufacturing meant that the incentive and the ability to

undertake research were limited to a few large firms. “Between 1920 and 1940, outside of the larger

patent holding companies-RCA, GE, Westinghouse and the Telephone company-conditions were so

competitive in the radio manufacturing industry that most firms found it difficult to undertake research.

The RCA licensees were primarily concerned with achieving volume production, lowering costs and

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obtaining brand preference for their radios through advertising and promotion.” [MacLaurin, p. 251]

What research that did take place during this time was directed toward improvement of the existing

product as opposed to the creation of new products. [MacLaurin, p. 252] Patent cross-licensing was also

an important feature of the radio manufacturing sector. Political pressure in the 1920s forced RCA to

freely cross-license its patents to all manufacturers so that by 1928 an RCA license was necessary for any

firm embarking upon the manufacture of radios. But what this meant is that new firms would be unable

to develop their own patent positions and, therefore, they had little incentive to devote resources to

research and development. (MacLaurin)

The bigger producers such as Zenith, Crosley, RCA, Emerson, etc. were able to develop line

production methods where the empty chassis starts at one end and the various components are put in

place as it passes along on a conveyor belt. Sturmey, speaking of Great Britain remarks, “The adoption

of mass production methods in the 1930’s made the possession of capital a vital attribute for success in

the industry and entry more difficult.” [Sturmey, p. 173] While this is likely the case, it must be

emphasized that even with assembly line techniques, the production of a radio was very labor intensive.

Wires had to be cut to the correct lengths, something that could be done by machine, but the wires and

other components had to be put in place and soldiered by hand. This limited the advantages to being

larger and meant that economies of scale were not likely to be very extensive in the industry. Diagram 2

is a picture of the underside of a 5-tube technology radio from the 1940s. All the connections and

soldiering as mentioned, had to completed by a worker using very little capital. In addition, the learning

curve was not very steep. Most of the operations involved were fairly simple and routine so that

workers, after a few days on the job, probably were as efficient as they were going to get.

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Diagram 2. Five-Tube Technology

It is difficult to get a read on the efficiency of production and improving productivity in

manufacturing, given the data that are available. Hints on efficiency and production methods are found

in various sources, but are very general in analysis. (See, e.g., Frankel, 1955) It is possible to estimate

production value per worker from the data, but of course, the items being produced changed over time

to an extent, though technology remained fairly constant. Table 6 gives an estimate of production value

per worker for selected years in the 1930s. The numbers are adjusted using the implicit price deflator

(1958 = 100). The values in Table 6 give the suggestion that labor productivity increased modestly

during the 1930s. Note that the price index changed very little during the 1930s so that increases in the

value of production per worker are likely to reflect increases in output.

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Table 6. Production Value per Worker, 1930s

YEAR Production Value per Worker

1931 $11,815

1933 9,427

1935 10,530

1937 12,915

1939 14,154

As to be expected, radio manufacturing shifted heavily towards the production of radios for the

military after 1941. Details on the production of personal sets for consumer use versus radio sets for the

military are not available. However, we can get an idea of the switchover by looking at excise taxes on

radios during the war period. In Table 7 we see that excise tax collections by the Federal Government

declined by about 75% in 1943 through 1945. Such tax collections then increased quickly once the war

ended and the production of sets for consumer use resumed to prewar levels. The Federal excise tax on

radios was first implemented in 1933 (the trough of the Great Depression!) at 5% of the value of the

radio or phonograph. The Revenue Act of 1941 increased the rate to 10%, which accounts for the

significant increase in revenues in 1942. The excise tax was eliminated on radios, phonographs and

televisions in 1966. (United States Treasury) The huge jump in excise tax collections in 1947 and

beyond is due to the inclusion of televisions in the numbers. Television production, of course, grew

rapidly after the war, adding to the revenue collection of the Federal government.

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Table 7. Excise Tax Receipts from Radios and Phonographs

Year Receipts (1000s of

dollars)

1933 $2,207

1934 3,157

1935 3,625

1936 5,075

1937 6,754

1938 5,849

1939 4,834

1940 6,080

1941 6,935

1942 19,144

1943 5,561

1944 3,402

1945 4,753

1946 13,385

1947 63,856

1948 67,267

1949 49,160

Radio manufacturing after World War II peaked in 1947 as many firms entered and quickly

exited the industry. Major firms such as Zenith, Crosley, Philco and Emerson continued to be important

producers and employers. Table 8 is an index of radio production from 1947 to 1955, which exhibits a

steady decline except for a jump in the final year. Alongside is an index of television production by

comparison. One factor that gave a modest boost to radio production after the war was the

manufacture of radios for automobiles, which remained strong even after the production of home sets

leveled off.

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Table 8. Indexes of Radio and Television Output (1947-49 = 100)

Year Radios Televisions

1947 133 13

1948 99 70

1949 68 217

1950 77 561

1951 64 396

1952 53 436

1953 67 541

1954 52 522

1955 77 578

Radio manufacturing in the United States faced three main headwinds in the 1950s that led to

its rapid decline. One factor in the decline was simple saturation. By the 1950s, over 96% of homes had

at least one radio. As a mature industry, the room for further growth was limited. A second factor as

seen in Table 8 was competition from television. As people fell in love with the new medium, the days

of the family huddling around the console radio in the living room were coming to an end. Radio

programming changed with the times as the medium’s former stars switched to television, leaving radio

to concentrate more on news and music. The third factor that led to the decline of radio manufacturing

was changing technology that enabled foreign competition to get a toehold in the U.S. market. A major

change was, of course, the development of the transistor in 1947 by Bell Labs, which could be used to

replace all of the tubes. However, even with this breakthrough, many, if not most radios, were still using

tubes well into the 1960s. Clearly, it took time for this new technology to be adopted. However, in

terms of the manufacturing process, the use of the printed circuit was probably more important in

reducing production costs and leading to greater foreign competition. The use of the printed circuit

greatly lowered labor costs by reducing the need to place and connect wires, and less soldiering was

also required. Diagram 3 shows an older radio next to a later one that used a printed circuit. While the

latter radio still is using tubes (it is from the late 1950s), its assembly would be much easier and less

expensive due to the printed circuit. The labor skill to complete a radio with a printed circuit would be

substantially less than one that required all of the wires to be inserted and connected in just the right

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places. Therefore, relatively lower skilled workers who were in abundance in Southeast Asia in the

1950s and 1960s could produce a product that was very price competitive.

Diagram 3. Comparison of Printed Circuitry with Earlier Designs

The subsequent decline in radio manufacturing in the 1950s and 1960s is evident from Table 9.

By 1972, only 100,000 AM radios were being produced in the United States. Similar reductions in other

categories of radios also occurred. The only exception consisted of radios for automobiles. Partly due

to the captive nature of automobile radios, the manufacturer could require the customer to purchase its

radio if s/he wanted to purchase the automobile, reducing the price sensitivity of the purchaser. In

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addition, a radio would add maybe $90-$100 to the purchase price of a $2,000 - $3,000 automobile, an

amount that was unlikely to deter consumers.

Average manufacturers’ prices for different categories of radios are given in Table 10. The top

half gives prices in current dollars, while the bottom half are prices in constant dollars, using the

Consumer Price Index (1982-84 = 100) as the benchmark. Notice that the average weekly wage in all

manufacturing is given in the constant dollar table of prices. Whereas in the 1930s, a typical worker in

manufacturing may have to work almost a week and a half just to buy a simple AM radio, by 1967, the

worker could purchase an AM radio for less than 4 hours of work.

Table 9. Radio Production After World War II (Thousands of Units)

Type of Radio 1954 1958 1967 1972

AM 2,842 2,336 1,300 100

AM-FM 124 251 1,100 300

Clock 1,862 2,076 4,000 900

Portable 1,569 3,332 3,000 800

Automobile 4,306 3,935 8,200 11,200

Source: Census of Manufacturing

Table 10. Average Manufacturers’ Prices, Current and Constant Prices

Type of Radio 1947 1954 1958 1967

AM $16.37 $14.56 $13.28 $10.00

AM-FM 44.44 33.54 34.19 27.10

Clock NA 20.10 18.28 16.45

Portable 21.77 NA 24.71 14.20

Automobile 29.92 25.87 25.86 25.74

Weekly Wage-

Manufacturing

$48.90 $71.64 $83.50 $114.90

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Table 9, Continued, Constant Dollars (1982-84 = 100)

Type of Radio 1947 1954 1958 1967

AM $73.31 $54.13 $45.95 $29.94

AM-FM 199.01 124.68 118.30 81.14

Clock NA 74.72 63.25 49.25

Portable 97.48 NA 85.50 42.51

Automobile 134.00 96.17 89.48 77.07

Source: Computed from Data in the Census of Manufacturing

The last tube-powered portable radio manufactured in the United States was by Zenith

Corporation in 1962. In 1982, Zenith marketed its last radio. [Bucher] While I do not have any

reference yet, it appears that Zenith manufactured its last tube radio of any kind around 1967. Zenith

did produce some transistor radios domestically for a time after 1966, specifically its popular Trans-

Oceanic Radio; however, most transistor radios after the 1960s were produced in Southeast Asia. Other

major manufacturers were out of the market much earlier, though some held on for awhile. Philco, for

example, was acquired by Ford Motor Co. in 1961 and mainly produced radios for Ford vehicles.

Motorola sold its radio and TV manufacturing division to Matsushita in 1974. Hallicrafters was sold to

Northrup Corporation in 1966, but even by then, competition from Asian producers had pretty much

ended domestic production of radios.

III. Summary and Conclusions

Radio manufacturing was once a vital part of the manufacturing sector in the United States.

Nearly 206,300 individuals were employed in the manufacture of radios and tubes 1947. By the end of

the 1960s, very few individuals in the United States were employed in the manufacture of radios. A

combination of saturation, competition from television and overseas competition led to the demise of

the domestic industry.

During the heyday of the industry, it could be best characterized as monopolistic competition.

Product differentiation was the main method of competition as opposed to price. While some

companies might boast of the superiority of their products, in the end, the technology used was

basically the same and the performance of individual radios was quite similar.

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It is interesting to compare the development of the radio industry in the United States with that

of the personal computer. While the technology of the radio remained constant for most of the period

covered in this paper, the personal computer has been marked by constantly improving technology.

This has led to computers with generic designs as consumers select their models based on the

computing power that they afford. Also, given changing technology, the consumer expectations are

such that the current PC will be replaced by a new one in a few years at most. By way of contrast, radios

were relatively expensive items well into the 1950s and so were not bought with the idea that they

would soon be replaced. Hence, features emphasizing style would be important to consumers.

While PC manufacturing still exists in the U.S., much has rapidly moved overseas, again mostly

to Southeast Asia, similar to radio manufacturing. Given the experience of the domestic radio

manufacturing industry, it seems likely that most PC manufacturing, except for specialty equipment and

peripherals, will also eventually move overseas.

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References

Bucher, E.E. “The Radio Industry,” in The Development of American Industries, J.G. Glenn and W.B. Connell, eds., New York: Prentice-Hall, 1941.

Frankel, M. “American Productivity Differences: Their Magnitude and Some Causes,” American Economic Review, May, 1955, volume 45(2), 94-112.

Jome, H.L. Economics of the Radio Industry, N.Y.: Arno Press, 1971 (Reprint of 1925 edition published by A.W. Shaw & Co.)

MacLaurin, W.R. Invention and Innovation in the Radio Industry, N.Y.: MacMillan Co., 1949

_____________ “Patents and Technical Progress-A Study of Television,” Journal of Political Economy, April, 1950, vol. 58(2), 142-57.

Radio Museum, http://www.radiomuseum.org/cy/cym-num.html

Scott, C.E. “The History of the Radio industry in the United States to 1940,” EH.Net.Encyclopedia, edited by Robert Whaples, March 26, 2008http://eh.net/encyclopedia/article/scott.radio.industry.history

Sturmey, S.G. The Economic Development of Radio, London: Duckworth, 1958.

Watkins, T. :The Economic History of the Radio Industry,”http://www.sjsu.edu/faculty/watkins/radio.htm

U.S. Bureau of the Census, Annual Survey of Manufacturing, various years

U.S. Bureau of the Census, Economic Census of Manufacturing, various years

U.S. Department of Commerce, Statistical Abstract of the United States, various years

U.S. Treasury, Annual Report, various years

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