Box 1, Folder 28 – General Speeches
March 5-6, 1962 – Background of HP Development Program, HP R&D engineers
This was a general training program for engineers – and over 400 attended the day at a local hotel. Several managers spoke, including both Hewlett and Packard. There are two speech outlines in this folder. The first is clearly for the conference on March 5 – the second may have been prepared for another training seminar at an earlier date. Both are covered below.
3/5/62, Outline of first speech handwritten by Hewlett on notepaper
I Introduction
Will talk about the R&D programs in general terms – its importance to the Company, what it costs, and return on investment. Source of projects and where ideas come from. How projects are scheduled.
II The Vintage Chart – based on HP parent – instruments only
A) Comparison of 1954 products to 1961
1) Same items 13 mil, now 18 mil
2) In 7 years new products have added 30 mil – 2 ½ times larger
B) Life History of a product
1) Fast start – peak – tail off
2) Considering products in production in 1954
a) 1955 – 100%
b) 1958 – 81%
c) 1961 – 56%
C) How is HP doing – Comparison-wise?
1) HP 14.5 in 1955 to 49 in 1961 = 3.4 : 1
2) U.S. Mil. & Ind. 3.25 in 1955 to 8.19 in 1961 = 2.5 : 1
3) In six years have increased penetration 35%, or 5%/year
4) Validity of U.S. Mil.-Ind. 1954 to 1960
a) U.S. 2.44
b) Electronics market data 2.27
D) Return on Engineering $
1) Cost of Engineering 1955 thru 1961: $16M
2) Increased sales 1955 thru 1961: 92 ½ M
3) Assume pre-tax profit to be 17%, profit would be $16M
4) Run down 5 year life 4:1, 10 year life 7:1
E) Effect on Development Policy
1) Engineering one of greatest assets – must use wisely
2) Specials uneconomical – Dymec
3) Effect of military contracts – policy
F) Factors determining proper level of R & D
1) Conservation practices – payout in three years, 3/4 of growth is from industry [?], ¼ from penetration. If doubled engineers effort would require 5 fold increase in penetration rate.
2) Rate at which we can assimilate new people and train leaders from within – also space
3) Mention a balanced staff
4) A level that we might maintain even if the industry took a turn for the worst
III Source and Selection of Products
A) Basic policy: Make a contribution to art: scopes
B) Obvious field requirement 606 sig. gen., 560 printer, scopes
C) Logical extension of line: 614-616-618 sig. gen.
D) Matching requirements and techniques: 650, 202A, 428, 524, 185 sampler scope
E) “Redesigns”: 400D, 400H, 400L, 96G, 80G, 110G, 100G,
F) External Sources: 803 bridge, 415 USWR, noise factor, 721 power supply, sampling recorder
G) Project Selection
1) Seat of pants – own best judge – basic contribution
2) Factor of merit – modifying factors
3) Support of total line
IV Character of recent projects and instruments
A) Reliance on proprietary components
1) Better performance
2) Protection
3) 40% of equipment now use proprietary components
B) Integrated Electro-mechanical design
Microwave – sig, gen, recorders, clock
C) Vast increase in sophistication
1) More performance – simpler operation
2) Requirement to work as part of system
3) Greater reliability – customer should not field test
V Problems
“What are the most pressing problems facing HP? In the case of R&D it is organization.
“How can we set up so that we may have all the advantages of flexibility of a small company, and still capitalize on advantages of large one?
“How can we provide an environment in which you can contribute both to the individual engineer…and also stimulate the basic thinking that leads to technical breakthrus that lead to new families of instruments?
“How can we organize so that all the steps necessary to carry a project from conception to production can be planned and executed so that this total cycle will take a minimum of time thus reducing costs and guarantee maximum mileage out of new ideas?
“When Warner of BTL [Bell labs?] was out here last month he commented to Dave that ‘It was generally understood that HP had the best capability in circuit design of any organization in the country.’ We intend to retain the reputation.”
Undated, outline of second talk to engineers
I) Professional Judgement
A) New trend in Eng. Education
B) Corollary in industry
C) [?]
D) Means open for professional development
1) Formal
a) Honors Coop
b) College extension
c) HP policy not to give [training] material that is available on outside
2) Informal
a) Technical reading, Stoft program, discussion with colleagues
b) Technical talks
E) Application of knowledge
Collection of knowledge for collection sake is fruitless and stupid. The important element is application of knowledge. Application leads to more creative work – better and more creative work leads to advancement. I would like to point out there is a great deal of lateral movement.
II) Personal Development
A) Professional Societies
1) Make contacts that are so important later on
2) Gives experience in working with diverse group
3) Forced feeding by listening to papers
4) Is a responsibility to support anyway
B) Community Activities – Church, government, charities
1) These are important functions and deserve support – it is company policy
2) How does it help you
a) Get engineer out of his shell
b) Provide an opportunity to develop a broader base of thinking – to develop the necessary logic for conviction and vital experience selling and putting over your position – this is essential as a good supervisor both up and down
c) You learn to work with people
C) Reading
1) Business related
Organization Man
Management Theory
Technical Manager
3) Non-Business, Non-Fiction – U.S. and World around
Ugly American, Nation of Sheep
Rise and Fall of the German Reich
How much history have you read since school?
What do you read in the newspapers each day?
What do you think is the solution to the segregation problem – to unemployment?
Should the U.S. work towards a general dismantling of tariffs?
Become interested in some special subject of great personal satisfaction
4) Theater, opera, symphony, folk dance – take season seats
“It all comes down to the question of motivation. You can become a happy, uninformed, obsolete vegetable, or you can be a creative productive engineer or manager with a keen interest in the world around you and what makes it tick.
“One requires nothing more than an 8 hour day at the plant, and a TV at home. The other requires a dedication to self-improvement and a willingness to allocate and schedule time and effort for this purpose.
“One leads to stagnation, one leads to advancement.”
3/5/62, Copy of a sheet containing charts of operations data
2/23/62, Copy of a memo from Lee Seligson to Barney Oliver discussing arrangements for the conference
2/27/62, Copy of a memo from Ray Wilbur to various managers outlining arrangements and the program for the engineering conference
February, 1962, Several lists and pages of questions submitted by engineers for the conference
Undated, copy of several pages of notes handwritten by Packard for an engineering development session
Box 1, Folder 29 – General Speeches
March 8, 1962 – “European Integration and the Industrial Electronic Industry,” World Affairs Council, San Francisco
(See also speeches dated September 13, 1960, April 14, 1961, and June 16, 1962)
3/8/62, Typewritten copy of Hewlett’s speech
Hewlett says he is like a “homespun economist” [one] “who develops basic ways of thinking on certain broad problems. It is in this context that I would like to comment about my views on the industrial strength of the U.S. and the factors that have affected it.”
Hewlett feels Americans may not be any more creative or smarter than people in other countries, nor work any harder. But he says the big advantage we have had “has been the tremendous mass market that exists within the U. S. The U. S. has tailored its economy to serve this mass market and as a result found itself in recent years with a considerable competitive superiority over other nations of the world who were denied this advantage….If the basic national requirements for a commodity are large enough in a given country to justify mass production and distribution techniques, it is pretty obvious that someone in that country will take advantage of this situation. In such cases, mass produced U.S. products will have greater difficulty in successfully penetrating such a market. A case in point as far as the electronic industry is concerned is that part related to consumer goods such as radios, TV, phonographs, and the like. As a group, these products have not kept pace with the rest of U.S. electronic exports.”
Hewlett explains that, in contrast to the radio and TV group, American industry finds its greatest advantage where its market in the U.S. is large enough to warrant mass production techniques, but the market in other major countries is below that threshold. “An example,” he says, “is in another major sector of the electronic industry, the fields of industrial, scientific and military related electronics. In addition, domestic industry in this sector has full advantage of the very large Government expenditures resulting from our space and defense activities.” Taken as a whole, Hewlett points out that in the field of military and industrial electronics, the U.S. has had a commanding lead over practically any other country in the world. This is the area where HP operates.
Thus, when the Treaty of Rome was signed, and when the countries of Europe supported its provisions, “…it became pretty evident,” Hewlett says, “that the great advantage the American economy had had in the past, that of its mass market, would soon be shared with those countries within the European Common Market. To assess the situation Hewlett made a trip to Europe in 1958. “As a result of this visit,” he reports, “ I became strongly convinced that we should establish a manufacturing operation abroad, and at that time Germany appeared to be the logical country.”
Hewlett recalls the days after World War II when the U.S. put Europe “back on its feet. We taught them all we knew about production techniques and about modern management methods and they were very good students. In addition, due to war damage many of the plants abroad had much more modern equipment than their U.S. counterparts….In one area, however, either we did not teach them or they did not listen carefully, and this was in the field of marketing. I feel very strongly, and many people share this view, that American marketing practices are considerably ahead of those in Europe.” This encouraged HP to establish an “aggressive marketing organization in Europe in addition to the more obviously needed manufacturing unit,” according to Hewlett. So, implementing this course of action, a marketing centered organization was established in Geneva in the Spring of 1959 – with the first products “out the door” from the new European plant in the fall of 1959.
To show how successful the European venture was Hewlett cites some before and after figures. He says “In 1958, the year before we made our European move, we sold about 1.75 million dollars worth of equipment in Europe. Three years later, we sold 5.6 million or about a three-fold increase.”
Looking back, after 18 months of operation, Hewlett says the new plant “produced about $800,000 worth of equipment and is operating at a profit level which is quite comparable to our costs here despite the fact that due to unavailability of proper materials and components we have found it necessary to import almost 75% of such items from the U.S….All in all, I would say we are very pleased with the total program in Germany.
Moving on to discuss activities in England, Hewlett says that in 1961 they became “greatly concerned about the trend of our business in England. This was primarily due to the very strong protective tariff that exists for our type of products.” As a result, he says they decided to establish a plant near London. “It is really too early to comment on the success of this program but I think it is interesting to note that we felt it necessary to take this step.”
Concluding his remarks, Hewlett says “I would like to say that in the consumer electronics field, the rise of the ECM probably will have very little effect upon U.S. based industry. For the section of the electronic industry in the industrial and scientific fields, the ECM will continue to be a strong market for U.S. exports. Where production quantities are large enough to warrant, it will probably be desirable for many companies to establish their own manufacturing facilities abroad. I am bullish about the effect of the ECM on the electronics industry – at least for the next five years.”
3/8/62, Two pages of handwritten notes by Hewlett which appear to be the start of outline for this speech.
Box 1, Folder 30 – General Speeches
March 27, 1962 – “The Reciprocal Trade Agreements Program,” The House Ways and Means Committee, Washington D. C.
3/27/62, Copy of a typewritten text of Hewlett’s speech before the Committee
HEWLETT-PACKARD COMPANY
Hewlett says he appears before the Committee as a representative of the Hewlett-Packard Company, which he says “is a concern specializing in the development and manufacture of precision electronic test and measuring apparatus. In size, we are one of the largest firms in the United States concentrating in its field. We employ somewhat over 5000 people and our gross sales last year were about 85 million.” And he goes on to tell where the major plants are, both in the U.S. and abroad. He says “Foreign sales are an important element of our operation as they account for approximately 14% of our total sales, or reduced to people, represent jobs for about 650 Americans.
THE ELECTRONIC INDUSTRY
Hewlett explains that HP’s principal customer “is the electronic industry itself, specifically those firms operating in the industrial, military and scientific fields….A realistic evaluation of the segment of the industry we serve, indicates that the United States is substantially ahead of the rest of the world in both technology and production practices.”
Hewlett mentions two major reasons why this is so. “Perhaps the first…is the increasingly large percentage of the military budget which is being spent in the electronics field. Much of the technology so derived becomes an important and exportable by-product of such spending and serves to give U.S. industry a great competitive advantage.…A second important source of technological competence is the very high general level of industrial research maintained by U.S. firms, specifically those in electronics. These factors combined with the increasing domestic demand for electronic products throughout industry, give every indication that U.S. electronics is going to maintain its superiority for a number of years ahead. What I am saying is that in a field like electronics, superior technology will demonstrate and that should tariff restrictions be reduced or eliminated, the U.S. would be in a position to increase substantially its balance of exports over imports.
HEWLETT-PACKARD EXPERIENCES ABROAD
Hewlett tells what two things HP did when it became apparent that the European Common Market would be a reality – “establish a manufacturing operation within the Common Market to protect against the adverse effects of foreign tariffs, and [secondly], …mount a major European sales program. The results since 1958 are of interest for total sales in Europe have increased four fold even though there is an average effective tariff against our products of about 20%. Had this tariff been lower, there is every indication that our exports from this country would have increased even more sharply. A corresponding reduction in U.S. tariff, we feel, would have had little effect upon our domestic sales. If we can compete successfully with foreign competitors in their own country we are certainly not going to worry about competition from them on our own home ground.
“Our experiences in the manufacturing field were equally interesting. Contrary to expectation, we found that by-and-large the quality of foreign electronic components, the basic building blocks of our assembly operation, were inferior to those of U.S. manufacture. To maintain comparable performance standards for our equipment, we have been forced to procure almost three quarters of such items from U.S. sources. I am sure that should European tariffs be reduced on such items there would be a substantial increase in their export from the U.S.
Hewlett says he wants to give another example of the adverse effect of foreign tariffs. “Most of the equipment we manufacture,” he says, “is classified by the United Kingdom as equipment that may enter duty free if there is no comparable product in the UK. If, however, such a product is available from local sources, then our product carries a 33 1/3% tariff. We enjoyed a sizeable and growing business with a certain class of instruments in England for which there was no local counterpart. Two years ago, a well known British firm introduced what appeared to be an almost identical copy of our instrument. We lost our preferred tariff rating and the sales on this instrument were reduced by fifty percent -–a dramatic indication of how U.S. exports can be affected adversely by foreign tariffs. Our only course was to either give up our position in the market or to set up a subsidiary to produce this item in England. We chose the latter course and I am happy to report the latest figures indicate that we have recaptured our position in this field, but it was done at the expense of setting up a second manufacturing facility in Europe long before we would have normally chosen to do so.
SUPPORT OF PROPOSAL
“The Hewlett-Packard Company is strongly convinced that House Resolution 9900 is a major and important step in liberalizing world trade. Should it be passed and implemented by the President, there is every indication that our exports would increase even further. We are not fearful of the effect of competition from foreign imports.”
.
Box 1, Folder 31 – General Speeches
April 2, 1962 – Boblingen Plant Dedication
4/2/62, Typewritten text of Hewlett’s talk
Hewlett says “It is with great pleasure that he and Mr. Packard take part in the dedication of this plant, our company’s first permanent home in Boblingen, indeed our first permanent plant outside the United States.”
He indicates they started negotiating for this site some two and a half years ago. “In the intervening period we have moved from temporary quarters in an old building on Karlstrasse to more modern quarters on Konigsbergerstrasse, and now to this fine building.” He thanks the many “fine people” who made the move possible.
“Many of you may not realize,” Hewlett says, “that not only was this our first foreign endeavor but that it was our first plant located away from our home city, Palo Alto. In establishing this operation we had much to learn, not only how to live and work in your country as good corporate citizens but also how to operate a truly independent manufacturing operation.”
He says about a hundred people are employed at this plant now, and “we are really proud of their skills and achievements. The production per employee has been rising steadily and is now equal to, or better than, several of our operations in the United States. [This], despite the fact that the production quantities are smaller than those common in the United States, making it more difficult to achieve a high degree of efficiency.” Hewlett says the plant is now making over twenty-eight standard HP products, and more are coming.
An R & D operation has been authorized for the plant, he says. “We feel that by drawing on the fine engineering and technical schools of this country we will be able to set up a research and development program, that not only will design equipment for the European Market but will also form an important part of our total corporate engineering program.” He adds that they have enough land here to build three more buildings, and he sees the possibility of the first in “not too many years.”
Hewlett says that [Ray] Demere, an HP manager from the U.S., will be leaving shortly. He announces that Mr. Schroeder has been appointed as plant manager. “I am sure,” Hewlett says, “ that under his directorship this company will continue to prosper and grow as it did under Mr. Demere and will develop into one of the major plants in the Hewlett-Packard family.”
In closing, Hewlett says that they “have recognized the importance of the establishment of this plant by including a comment about it in our most recent ‘Quarterly Report of Earnings’ sent to all our shareholders as well as a picture of this building.”
Box 1, Folder 32 – General Speeches
May 7, 1962 – ”Electronics and Medicine,” Hewlett Club, San Francisco, CA
5/7/62, Outline of speech, handwritten by Hewlett
The following is a summary of topics listed in this outline.
Hewlett starts with a review of electronics and electronics in medicine. He mentions Galvani, Waller EKG in 1880, Eindhoven, Roentgen, X-Ray 1895.
Hewlett discusses various electronic applications in medicine:
Diagnosis:
EKG, X-ray, EEG, endoradiosona…?
Treatment:
X-ray, isotope, electronic bombardment, diathermy, defibrillator, coherent light
Monitoring Equipment
Operating room, recovery room, ICO
Automatic processing
Automated blood testing, blood cell counter, cancer cell studies
Data storage
EEG, group statistics – analysis and retrieval
Scientific and Instrumentation uses
Brain process, theory of vision, medical engineering and physician team, blood flow, circulation studies, reaction studies, muscle studies
Under Economic aspects of Medical Electronics, Hewlett lists return on engineering dollars, and the effect of hardware, computer people, bio-medical engineers
Some basic problems
Diagnosis and monitoring
How to get what is needed for data acquisition – fetal heart beat, blood flow, continuous blood pressure
How to determine if medical correlation exists between what we can measure and medical needs
Treatment
Hewlett discusses the economics of medicine in modern society. He says “More and more people will have the right and the means for better medical care. The supply of doctors is limited – must find a way of utilizing M.D. more effectively.
“It is through education and people who are trained to see both sides of the problem.
“It is through research both within and without the university.
“It is through government support where the cost or the scope is too great for industry or the university to carry alone.
“HP has no interest [in this area], but this is where the government can really help in giving more medical care to more people.”
Box 1, Folder 33 – General Speeches
June 14, 1962 – Talk to University of California School of Business Administration, Berkeley, CA
6/14/62, Typewritten draft of speech with many handwritten notes by Hewlett-Packard
This speech is very similar to speeches dated March 8, 1960, September 13, 1960, and June 14, 1962. In this speech Hewlett again describes the HP organization, its products and the events that led to the decision to expand to Europe. He discusses some of the difficulties in integrating into the European world. We will up pick the story here with their decision to expand further into England.
Hewlett says the decision to establish a plant in England was “partially forced by economic developments. Most of our products are classed by the UK as essential items and essential items of our type carry an import duty of 33% if there is a comparable item made in the country. If not, they come in duty free. On a major class of equipment, we had enjoyed this duty free status for several years, but a well known and reputable British manufacturer chose to produce an almost Chinese copy of our product, and thus impose on our imports a very heavy duty.”
“Our choice,” Hewlett says, “…was to [leave] the market or try to set up a manufacturing operation and compete there. We chose the latter course and I am pleased to report that the sales trend has now been reversed.”
In conclusion, Hewlett says that “it is certainly evident that we have benefited greatly from this expansion program. This year we will probably sell about $9,000,000 worth of corporate products in Europe.” He says “…that this program of ours in its own small way has contributed in a helpful sense to the U.S. balance of payment problem. Further, it is certainly not exporting jobs, on the contrary, it has generated more jobs at home.”
He says the U.S. Government’s policy on taxing foreign earnings really “bugs” him. “We must look forward to the country drawing ever closer to a community of free nations. We must be prepared to accept changing trade patterns throughout the world. For every dollar we lose in foreign trade balance in one area we must be picking up two in some other area. The people of U.S. must understand this. The industry of U.S. must understand this. The government of the U.S. must understand this and support it not by just words but by its actions.
“We are at a critical time in the economy.”
Box 1, Folder 34 – General Speeches
August 13, 1962 – Statement to Palo Alto City Council re Palo Alto Hospital
8/13/62, Very cryptic outline of comments prepared by Hewlett for his remarks, all in his handwriting. He discusses the needs for medical care in the Palo Alto area and the facilities available to furnish it. [See also his speech to the Palo Alto Chamber of Commerce on the same subject, dated January 4, 1959.]
Box 1, Folder 35 – General Speeches
October 10, 1962 – Role of R & D in Future Profits, IRE National Electronics Conference Panel, Chicago IL
Hewlett was invited to be a member of this panel, the objective of which was stated to be ‘…to stimulate research and development in electronics and to create a better understanding between industry and the universities in regard to the advancement of the electronics science….’
10/10/62, Outline of speech handwritten by Hewlett.
Hewlett’s outline starts with a section on the role of R & D in past profits. He lists these topics:
Analysis of past return on R & D
Effect on present policy
Contribution of new products to growth
Under a section on the Role of R & D in future profits
Proper level relative to one’s industry
$ established by industrial patterns
The third section is titled Getting the most out of your R & D
Quality of people
- More R & D demands highest quality of people – best minds, best training, most creative
- Proximity to centers of learning is important
- Rapid tempo of change in our technical world demands sound fundamental training in sciences
- No “all chiefs and no indians” setup, must have full spectrum of personnel for advanced research of top technical and production engineering staff.
Motivation
- One of the finest motivations is the personal intellectual challenge – the selection of projects, the assignment of people
- Conviction of the value of the program and what they as individuals can contribute
- Recognition. A job well done, association with a successful product, pay
Program Selection
- Importance of a device that does an old job a better way, or that does a brand new job
- The importance of leading, vis-a-vis capitalizing on a breakthrough
Project Administration
- Flexible administration
- Discontentment reflects NIH [not invented here] factor
Conclusion
R&D is important and can pay off
There will be a practical limit to how many $ can be spent
If these two facts are true – then the laurels will go to those companies who can select and attract the best people, and who can stimulate and direct these people in the most effective and efficient fashion.
It is a challenge to management.
10/5/62, One typewritten page listing product and production data evidently put together by Hewlett
10/9/62, Copy of a one page typewritten program describing the panel discussion and listing the panelists
6/5/62, Letter to Hewlett from Frank Waterfall, HP’s sales representative in Chicago. He asks if Hewlett would be interested in participating in the IRE panel discussion, and mentions having panelists who could tell of “success stories” emphasizing the importance of R & D.
6/19/62, Copy of a letter from Hewlett responding to Frank Waterfall’s letter above. Hewlett says: “Every time someone wants me to talk about a success story I shudder. I feel this subject is so overworked that I simply can’t develop any enthusiasm to expound on the incredible foresight that Dave and I had some 234 years ago about the future of the electronic industry. Nor to get up before a crowd of people and publicly acclaim that I am one of the smartest guys you have ever seen.”
6/21/62, Letter to Hewlett from Angus A. MacDonald of IRE Asking if Hewlett will participate in their panel discussion.
7/2/62, Letter to Hewlett from Cletus Wiley asking if Hewlett plans to submit an abstract of his remarks ahead of time
7/17/62, Copy of a note from Hewlett to MacDonald saying: “If I run true to form on this one, I won’t have a draft copy until the night before. I’m sorry I can’t accommodate you further on this point
8/24/62, Copy of a letter to panel participants from the Panel organizing committee discussing approaches to the subject of R & D
8/28/62, Letter to Hewlett from Jean Paul Mather of the Purdue Research Foundation extending an invitation to join other panelists for lunch on October 9
9/21/62, Letter to Hewlett from Jean Paul Mather saying the proposed luncheon on October 9 has been cancelled.
Box 1, Folder 36 – General Speeches
October 13, 1962 – Talk at the Dedication of the Loveland Plant, Loveland, CO
10/13/62, Outline of remarks handwritten by Hewlett
Hewlett says HP has a partnership with the State of Colorado, the County and the Loveland community. He expands on this partnership theme under three headings:
Common objectives
Cooperation and understanding
Both partners receive a share of the benefits
Common Objectives – HP
- to build a sound autonomous division of parent company in a community that could grow and develop with it. Sometimes have to go slowly so will not have to step back
- To build as a firm foundation for long-term growth and not just for profit
- To provide stable employment
Cooperation and Understanding
- Mostly what HP has received
- Reason we came because you wanted us not because of concessions
- Understanding – Problems that our being here may cause – growth and expansion
Value Received
- HP
- Everything that a friendly understanding government can give – not just the big things, but the little things too
- Some of the hardest working and most concerned employees have been associated with the feeling of being a part of something new and growing and important
- You have taught us the great advantages associated with an independently run geographically separated operation
- Community
- Balance of payments
- Opportunity for citizens of this growing community to find stable long-term job opportunity both for themselves and for children who wish to remain here
- Taxes
