How Smith-Corona tapped its way into black ink after several years in the red

A notice now posted at the entrance to the Smith-Corona plant at Cortland, N.Y., advises: ``You Are Entering a U.S. Foreign Trade Zone.'' Establishing a foreign-trade zone within the plant is one of many cost-cutting measures that have helped Smith-Corona show a profit for the first time in five years.

Smith-Corona and the Japanese manufacturer Brother -- each with about 40 percent of the United States market in terms of units sold -- are by far the leaders in an industry expected to move 2.2 million low-end typewriters in 1985.

This year Smith-Corona went groping for the right market niche. It trimmed the electronic typewriter line to three basic models and introduced an inexpensive word processor unit -- a display screen, a small keypad for word processing commands, and software. The add-on unit can be used with any Smith-Corona typewriter that has a computer-type interface.

The veteran typewriter-maker also took on a distinctive new logo, and references to diversified parent SCM Corporation have been dropped from Smith-Corona products to bolster name recognition. SCM is also a maker of paint, chemicals, and food products, and it has recently been the subject of takeover bids initiated by Hanson Trust PLC and an investment group led by Merrill Lynch & Co.

Twenty-four brands of typewriters now compete with Smith-Corona in the US, although most are very minor players in the portable and compact field. ``Just about anybody with a good brand name and a distribution system can come into the market,'' notes Clifford M. Lindsey, vice-president of the market research firm Dataquest Inc., of San Jose, Calif.

Canon, a relative newcomer already regarded as No. 3 in terms of units shipped, is an example.

Far East manufacturers who excel in high-volume, low-cost production have been pushing down typewriter prices for years, and Smith-Corona felt the pinch: Operating losses in the first half of this decade ran to many millions of dollars a year. This occurred even though is share of the US volume remained fairly steady.

But Smith-Corona operations, a group organized under the Consumer Products Division of SCM Corporation in New York City, reports an upturn in the wake of several years of plant closings, layoffs, and the consolidation last spring of manufacturing and design engineering activities and the introduction of a new product line.

The add-on word processor unit is the most talked-about product offering. It brings within reach a word processor and typewriter combination that lists around $1,000. This price makes such a product the cheapest of any supplier's, although whether mass merchandisers will carry the add-on unit is still an open question.

Smith-Corona, along with the rest of the typewriter industry, is going electronic. A facility in Singapore still produces conventional electric typewriters, while Cortland makes the electronic ones, which use daisy wheels as the print element.

The eight hours of labor required to produce an old-style electric typewriter makes Singapore's low-cost labor attrac-tive, says James Sherrill, vice-president for Smith-Corona manufacturing and engineering operations. The electronic models produced in the US have fewer parts, and less than two hours of labor content.

Today the Cortland plant produces about 15 percent more typewriters than it did in 1979, yet the number of employees on the payroll has plunged fourfold. A big reason is that the parts count of the electronic models run to 700, compared with 3,600 for the electrics.

Reducing manufacturing costs has become the battle cry at Cortland; automated assembly is evident throughout the production floor. Workers are methodically replaced with ``captive machines'' once an assembly line is up and running smoothly.

Another very significant cost-saving move was rung in on July 1, the beginning of the current fiscal year, when the Cortland plant became a US foreign-trade zone. Now Smith-Corona is shipping finished products without incurring duties that had been levied earlier on imported parts used in manufacture.