American Tourister, Inc. History

Address:

91 Main Street
Warren, Rhode Island 02885
U.S.A.

Telephone: (401) 245-2100
Fax: (401) 247-0988

Wholly Owned Subsidiary of Samsonite Corp.
Incorporated: 1933 as American Luggage Works
Employees: 1,000
Sales: $140 million (1993 est.)
SICs: 3161 Luggage

Company History:

American Tourister, Inc., is one of the oldest and best-known luggage brands in the United States. Its commitment to selling durable and affordable luggage, which began with the company's founding in the 1930s, continued into the 1990s. Despite several changes in parent companies in the 1970s, 1980s, and 1990s, American Tourister retained its brand recognition with the public, particularly through its association with luggage-abusing gorillas featured in its famous advertising campaign.

Sol Koffler, founder of American Tourister, was introduced to the luggage industry in the 1920s. A recent immigrant to the United States, Koffler worked in a plant that manufactured steamer trunks and in a pocketbook factory. The methods of luggage construction that Koffler learned were typical of the industry; thin strips of wood and plywood were glued together and then covered with either paper or cloth for inexpensive luggage or with leather for expensive luggage. Koffler set out on his own, determined to produce a more durable product.

Early History

In 1933 Koffler founded American Luggage Works by opening a shop in a vacant grocery store in Providence, Rhode Island. Although his first luggage did not revolutionize luggage design, Koffler was sure he had created a significantly more durable product than any competitor's in the same price range. The suitcase sold for one dollar, and, in the first year of operation, American Luggage Works sold 5,000 suitcases. As the company's only employee, Koffler handled all aspects of the business himself that year. Within two years, Koffler had hired several employees, although he himself continued to handle the luggage design and the company's sales. The company's product line had expanded to include two sizes, which sold for two and three dollars. Each size was produced in two colors, black or brown. Retailers throughout the Providence-Boston area carried the line.

The company's major breakthrough came soon after its founding. Koffler adapted machinery used to make plywood radio cases so that it would bend materials to make his luggage. The new equipment enabled him to simplify suitcase design significantly and still increase its durability. Typical luggage of the time was constructed of numerous pieces, making a squat and unwieldy suitcase that tended to split and crack. Koffler's new design was slim and round-cornered but still provided more room than other suitcases did. Other new features, such as linings and zippered pockets, enhanced the product's appeal. To distinguish this line from the previous ones, Koffler named it American Tourister.

The new line was a resounding success and set a new standard for the industry. American Luggage Works grew rapidly as a result; by the beginning of World War II the company enjoyed revenues of more than $100,000. The company's product line had expanded as well, with four colors, four styles, and eight sizes being offered by the early 1940s. The war diverted the company's attention from luggage, however, as it helped with the war effort. At the war's conclusion, American Luggage Works reentered the luggage industry poised to become a national concern.

In 1945, despite its rapid growth in the previous decade, American Luggage Works remained a regional firm. Aiming for sales across the United States, Koffler decided to spread awareness of the American Tourister brand. He apportioned $12,000 for a national advertising campaign, the first ever undertaken on behalf of the company. An amount unusually large for the time, that first national advertising budget set the stage for the company's continued commitment to large-scale advertising in future years.

Pioneering New Materials

Innovation helped propel the company forward during the next two decades. The first luggage manufacturer to make an all-vinyl case, American Luggage Works went on to produce the industry's sleekest and smoothest cases from molded plywood veneer. The year that particular line was introduced, the company records that it sold its entire year's production of leather and vinyl cases in the first two hours of that year's national trade show. One of the first to see the benefits of a revolutionary new material developed during the war, Koffler made sure American Luggage Works introduced molded plastic luggage before anyone else did. Koffler met Don Hawley of Hawley Products at that same trade show and discussed the aqueous plastic material Hawley had first produced for use in shell casings and pith helmets during the war. Koffler recognized that the composition's lightness, malleability, and tensile strength made it a prime material for luggage production. Despite the company's success with its current products and the need to retool production completely to use the new material, Koffler wholeheartedly entered into the new venture, even mortgaging his house to help finance it.

Once again the new line of American Tourister hard-sided luggage introduced a new standard of durability and economy to the luggage industry. Customers immediately responded well to the product. The company improved the chemical composition further in 1954, resulting in a case that was virtually indestructible. When the company started to receive reports of American Tourister luggage surviving incredible accidents, Koffler used them in advertisements to promote the luggage's durability. One true-life account reported that an American Tourister suitcase fell off a car traveling 60 miles per hour and was run over by another car. Other than a few scuff marks on the outer surface, the case was undamaged.

Testimonials and Gorilla Advertisements

These true-life accounts inspired the company's famous gorilla advertisements. Doyle Dane Bernbach agency created an award-winning print and television campaign that combined customer testimonials with photos or film of a ferocious-looking gorilla hurling and stomping on an American Tourister case in a zoo cage. Other advertisements demonstrated the luggage's durability even in unlikely luggage mishaps, such as a case being dropped from an airplane or a speeding train.

American Tourister continued to grow. By the 1970s, the company was one of the most popular manufacturers of mid-priced luggage in the United States. A general industry upswing in the 1970s helped the firm rise to a new peak in sales. Luggage owners replaced cases at a more rapid rate and leisure travel in general was on the rise. These trends and the company's entrance into the growing market for business cases helped the company achieve record sales. In 1978 Koffler, who had remained involved in the operation of the business, sold his company to Hillenbrand Industries. A furniture manufacturer based in Indiana, Hillenbrand was attempting to expand and diversify by purchasing healthy market leaders.

American Tourister's first year as a Hillenbrand subsidiary marked a peak for the company. Sales in 1978 reached a record $83.8 million and operating profits amounted to a substantial $16.2 million. These figures may have simply reflected the market in general, however; Industry Week reported that the luggage industry was "enjoying a banner year." When the economy turned sour in 1980, American Tourister sales declined 7 percent and operating profits more than followed suit, dropping 60 percent in that year alone. The company tried to rally for its 50th anniversary in 1983, investing in prime time television commercials and print ads in such mainstream magazines as Reader's Digest, Better Homes and Gardens, and People. But the company was unable to regain the steady growth it had experienced throughout its history.

Sold to Astrum International in the Early 1990s

Luggage sales did not revive, and in 1992 Hillenbrand announced a $5 million operating loss for its durables segment, which comprised a security-lock manufacturer and American Tourister. The next year Hillenbrand sold American Tourister to Astrum International Corp., a sales and manufacturing holding company, for a reported $68 million. Astrum, formerly known as E-II Holdings Inc., had recently emerged from bankruptcy reorganization, which led to some speculation about the future of American Tourister.

Another factor influencing American Tourister's direction was Astrum's ownership of Samsonite Corp., a major competitor of American Tourister. Although at the time of the purchase Astrum said it would run American Tourister as a unit separate from Samsonite, it clearly planned some connection between the two. In 1994, Astrum named as president of American Tourister the former Samsonite vice-president of sales and marketing, Frank Steed. In a press release announcing this appointment, Astrum said, "With Steed at the helm ... the two companies can establish product plans, marketing and advertising programs that will enhance both the American Tourister and Samsonite brand names. The combination of Samsonite's vast global resources and American Tourister's quality products will insure success as American Tourister enters the international marketplace, while enhancing the value of its name here in the United States."

In an attempt to distinguish American Tourister from Samsonite, Astrum initiated a major advertising campaign in early 1994. Capitalizing on the well-known gorilla ads from a decade before, the campaign featured a gorilla, a family of chimpanzees, and an orangutan. The ads targeted family vacationers, a market clearly different from the business-oriented one pursued by Samsonite. The print ads ran in issues of Parenting, Family Circle, and Ladies Home Journal and used the tagline, "American Tourister: Making travel less primitive."

Spun Off as Subsidiary of Samsonite

In 1995 Astrum split into two public companies, Samsonite Corp. and Culligan Water Technologies Inc., with Samsonite taking Astrum's other luggage brands, Lark and American Tourister, with it. The split was designed to take advantage of the name recognition of Astrum's two largest brands. "Astrum. What's an Astrum?" the company's chief executive officer, Steven Green, said to The Denver Post in April 1995 when trying to explain the market confusion over Astrum's business focus. Green stayed on as chairman at Samsonite.

Although Samsonite was the world's largest luggage manufacturer and distributor in the early 1990s, Green saw much room for growth for it and its subsidiaries, especially overseas. In particular, he cited India and China as ripe for expansion. He also began moving the brands into new products, such as computer and camera cases, car-top carriers, and motorcycle saddlebags. These products required distribution channels that were unfamiliar to Samsonite and American Tourister, however, who relied mainly on luggage stores and luggage departments of mass merchandisers and department stores to sell their goods. Therefore, the focus was likely to remain on the businesses' traditional luggage market.

In February of 1996 Samsonite announced that it would be closing American Tourister facilities in Warren, Rhode Island and Jacksonville, Florida, resulting in the loss of 137 jobs. Hard-luggage production and important central office functions would be consolidated at Samsonite's Denver headquarters. American Tourister hard-sided luggage production from Florida would move to Denver, where the plant had extra manufacturing capacity. American Tourister's soft-sided luggage warehousing and distribution would remain in Jacksonville, however, because many of those products were made in the Dominican Republic. American Tourister's Rhode Island facilities would be split as well, with its finance, accounting, and information systems moving to Denver and its sales, marketing, and product design departments remaining in Warren. Although Samsonite planned to take a $2.4 million charge to cover the moves and integration, it hoped the consolidation would save the company about $3.3 million per year.

As American Tourister entered the late 1990s, its fate remained closely tied with its parent company. Samsonite was still hindered by its obligations to pay Astrum's reorganization debts. The three-year process of charging to earnings about $55 million per year in amortization of goodwill-type expenses was due to be completed in 1996. In addition, Samsonite's operating income fell $5 million in the nine months that ended October 31, 1995, compared with its operating income in the same period of 1994. Citing increased foreign competition and rising raw material costs as the culprits, Samsonite faced uncertain times ahead. Concerns for the company and its subsidiaries, however, were tempered by its brand recognition, its market dominance, and its long history.

American Tourister, Inc. History

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