Design West Plans to Market the Goods It Styles
Centuries from now, when anthropologists unearth the remnants of homo 20th Century, the Samsonite attache case--that molded plastic box with ingenious pop-up locks and slick chrome striping--should stand out from most of the fossilized litter.
And, just maybe, a historian’s footnote somewhere will credit the styling of that case to Design West Inc., the upstart Southern California company that parlayed the runaway success of its first major assignment in the early 1960s into a prominent position among American industrial design houses.
Over the years, and to the envy of its smaller competitors, the Samsonite connection helped Design West attract a client list studded with such Who’s Who of American industry as General Motors, RCA, Xerox and Apple Computer. By the early 1980s, the company--which moved to Irvine in 1970--was the West Coast’s largest independent product designer and the only publicly held firm of its type in the country.
Competitor ‘Jealous’
“I’ve always been amazed and somewhat jealous at what they do,” admits competitor Lawrence McCain, founder of a Beverly Hills design firm bearing his name. “Design West has been a force in this business for years.”
And now, Robert Fujioka, the company’s founder and chairman, is looking to increase Design West’s presence by producing the firm’s creations in addition to selling its design talents to others for a flat fee.
It is a chancy venture, industry analysts say, but Design West officials believe that the potential rewards are well worth the risk.
“The company would be a far different one today if we worked for royalties, not just design fees that average $60 an hour. Just think of what the Samsonite case would have generated,” said David Sharbaugh, Design West’s president.
The move comes as Design West is struggling--along with the rest of its industry--through a slowdown in new design commissions. And because Design West’s strategy has always been more grandiose than the average mom-and-pop design outfit, it has been hit harder than many of its competitors.
After three consecutive years of losses, culminating in the 1985 fiscal year loss of $673,000 on $3.6 million in sales, the staff at the company’s Irvine headquarters stands at nearly 45 employees, about half the peak number of two years ago. In addition, earlier efforts to create a one-stop center for corporate design have been curtailed, closing the company’s interior design, corporate logo creation and furniture sales operations. The contractions leave Design West with its original product design and prototype building businesses.
Interesting Assignments
Nevertheless, interesting assignments are still coming in.
Within the last year, the company designed a possible configuration of the living quarters for the space station in which NASA astronauts and scientists will orbit the earth for three months at a time.
In addition, the company is laying out interiors of a proposed line of Chevrolet autos for the 1990s, designing a new contact lens case and fashioning a new style of protective head gear for boxers.
But beyond the highs and the lows of business, the story of Design West offers a glimpse into the rather obscure world of product design through the eyes of one of the nation’s estimated 6,000 practicing industrial designers, a man who has consistently played by his own rules.
Rather than settle for a hole-in-the-wall sole proprietorship or a position with a bureaucratic corporate design staff, Fujioka repeatedly has tried to line up “deep-pocket” benefactors, such as Samsonite, to accomplish his goals.
“The history of the arts has always included a primary role for the patron,” Fujioka explains. “Artists need a good, nurturing sponsor. Michelangelo had one. And without them, the artists and arts wither.”
Wooing Potential Sponsor
These days, the soft-spoken, patient and determined Fujioka is wooing yet another potential sponsor, perhaps the most off-beat partner in Design West’s 24-year history, to help him get what he wants.
Late last year, Fujioka proposed merging Design West with a San Francisco-based real estate development company that recently emerged from a Chapter 11 bankruptcy reorganization.
Fujioka says the pending stock swap with Otec Corp. is an attempt to tap a ready source of cash to pay for his plan to manufacture and market Design West’s own creations. Early potential products include a Rube Goldberg-like soda fountain pump and a sophisticated 3-D video screen for hospital operating rooms.
Initial plans call for the merged company to sell part of Otec’s real estate holdings, which include tracts in New Mexico and Hawaii, and use the money to push Design West’s products into production.
“It seems like a natural alliance to us. Otec doesn’t want to be just a real estate company,” Fujioka explains. “And there’s only so much money you can make charging a straight fee for your design services. We’re going for the possibility of generating more money. . . . We want to build Design West to operate on more than a few bases.”
Details of the proposed merger are still sketchy, largely because when the two companies announced their possible marriage in November they had not begun the lengthly process of examining each other’s businesses and books. But even if the merger is not completed, Fujioka is determined to have Design West’s creations manufactured and sold, with the company retaining an ongoing interest.
Fujioka, a 59-year-old former Japanese internment camp prisoner, has always had grand designs for his business.
From the beginning, when he and Arthur Ellsworth, now the company’s vice chairman, started Design West in 1962 in downtown Los Angeles, the goal was to go beyond the small partnership or corporate art staff positions that typically attract the vast majority of designers.
Joined With Samsonite
So, when Samsonite, then Fujioka’s and Ellsworth’s principal client, offered to make Design West a wholly owned subsidiary with few strings attached, the partners readily accepted.
Over the next several years, Design West created the look of Samsonite’s patio furniture, luggage, brief cases and folding chairs and tables in addition to handling a variety of outside clients.
If Design West was fortunate to wind up under Samsonite’s wing in 1962, it was twice-blessed in 1973 when Beatrice Cos., a food and retail products conglomerate, bought Samsonite. As part of the Beatrice family, Design West operated both as an in-house design team for its corporate siblings as well as an independent firm capable of serving outside clients.
Although Design West had, in effect, the best of both design worlds, Fujioka, Ellsworth and Laurence A. Smith, their director of finance, teamed up in 1980 and bought the company back from Beatrice for about $1.6 million. Fujioka says the leveraged buy-out was suggested by Beatrice executives who wanted to eliminate the new product development operations Design West was working on.
However, Design West’s first dose of total independence in 20 years has proved more difficult to handle than Fujioka initially envisioned.
Needed a Partner
The losses, failed attempts at new operations and unsuccessful efforts to raise capital through limited partnership tax shelters for the product development program convinced Fujioka that he needed a merger partner.
“We’re designers,” Fujioka says. “We’re limited in our financial and management skills. We need a partner that has those. And if we’re going to manufacture our own products, we’ll need help with marketing skills, too.”
Outsiders agree. The most common reaction to the company’s plans to embark on a product development course is a warning that the strategy will expose Design West to a variety of manufacturing, accounting and sales problems not normally encountered by companies whose chief business is designing products for their clients to bring to the marketplace.
“I wouldn’t bet on a design firm putting all this together,” says competitor McCain. “Designers typically aren’t good businessmen.”
Although few design companies veer off into actual product manufacturing, the numbers increase during lean years for design commissions. And industry insiders say that the recent slump in computer and high-tech industries has particularly hurt designers on the West Coast, home to a large number of the nation’s consumer technology companies.
Brian Wynne, executive director of the Industrial Designers Society of America in McLean, Va., says he has noticed increasing interest in proprietary product manufacturing and cautions that is it, indeed, a risky business.
“A lot of new products fail, for everyone,” Wynne says. “A designer still needs normal billings to cover his expenses.”
Pitfalls of Production
The pitfalls of production are already a somewhat familiar story at Design West. In 1984, the company licensed its design for a video display terminal radiation screen for manufacture and marketing by a Illinois company. However, sales have been disappointingly slow and the licensee still owes Design West about $500,000 in connection with the deal.
In addition, negotiations are proceeding slowly on Design West’s attempts to entice a large medical marketing company to handle its three-dimensional imaging system for operating rooms. The system, designed to aid endoscopic and arthroscopic surgeons who work through tiny incisions with microscopic scalpels, allows physicians to see the depth of the tissue they are operating on, a vast improvement over the current two-dimensional viewing systems.
Design West acquired the video system from a small Orange County company that wanted to use the three-dimensional video technology as the basis for a new video arcade game and hired Design West to design its machine. When the bottom fell out of the video game business, Design West took the technology as payment for its fees.
Design West also is waiting for the royalty payments to start flowing from sales of its “linear injection pump,” a contraption Fujioka says will revolutionize the mixing of carbonated water and soft drink syrup at soda fountains. The system, which eliminates the need for pressurized carbonated water containers, also could be used to mix fertilizers and other agricultural spray products in the fields, where it is difficult to drag bulky and heavy equipment.
“For sure, what we are trying to do is not normal” for a design firm, Fujioka concedes. “But we have an interest in doing anything we can with our skills. . . . We could stay with our fee business and be comfortable, but we want to enjoy more.”
