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HP Quality: How It Happens
Sister City Salute
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from the chairman's desk
O PERATI G RESULTS for the first half of our current
fiscal year were extremely gratifying. Despite a rather
unfavorable business climate in the electronics indus-
Looking ahead to the second half, it appears that modifica-
tions in defense programs and the government's efforts to
reduce over-all Federal expenditures will continue to have
try as a whole, our company had the best first half in its an unsettling effect on the electronics industry. As you are
25-year history. As reported in detail elsewhere in this issue, aware, many companies in the industry, particularly those
sales were up 9 percent in comparison with the first six that are heavily committed to the defense effort, have suf-
months of 1963, and incoming orders rose 11 percent. Even fered sharp reductions in sales and earnings. Some have had
more impressive was the 25 percent gain in net profits to a to layoff large numbers of employees and cut back expendi.
level of nearly $4,000,000. tures for new plants and equipment.
The fact that we were able to improve our after-tax profit Despite this trend, I see no reason why our second half
margin from 5.8 percent of total sales in the first half of can't be substantially better than the first. Our order rate is
1963 to 6.6 percent in 1964 indicates that we are achieving holding up well and we traditionally enjoy a moderate
greater efficiency and economy in our operations. This is seasonal upswing in business during the summer months.
largely the result of your day-to-day efforts to reduce costs Moreover, we introduced a number of important new prod-
and do a more effective, productive job, whether it be in ucts at the IEEE Show in March and these should begin to
engineering, manufacturing, marketing, or administration. add significantly to our over-all sales volume during the
As an indication of how our performance compares with latter part of the year.
that of other companies in the industry, you might be inter-
ested in some recent figures compiled by the First National While I am basically optimistic about the future, I think
City Bank of New York. Each quarter, the bank analyzes it well to point out that we are in an increasingly competitive
the profit performance of major U.S. industries. Its summary market. The fact that several of our competitors are caught
includes a category labeled "electrical equipment and elec- in a profit squeeze means that they will be working all the
tronics" which covers 94 manufacturing firms. The bank harder to take some business away from us. It also means
noted that for the first quarter of calendar 1964, these firms that we can expect new competition to develop in areas where
increased their profits by an average of only 10 percent over before we had little or none.
the first quarter of 1963. Furthermore, their profits in the Our answer to this challenge is to increase the output of
first quarter of '64 were down 13 percent from the last new and significant products from our laboratories, con-
quarter of '63. So it's quite obvious that our 25 percent gain stantly improve our manufacturing and selling techniques,
in profits represents a considerably better performance than and, above all, to design and build superior quality into each
the industry as a whole. of our instruments.
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Before presenting Sanborn EKG machines to two hospitals in Costa Rica, President Francisco
Orlich learns how they operate from Pasos and HP rep Gallegos. L to r: Pres. Orlich; Alfredo
Gallegos; San Jose, Calif., Mayor Robert Welch; Mrs. Welch; Rudy Pasos; Ambassador Ray-
mond Telles; and San Jose, Costa Rica, Governor Guillermo Castro.
Dymec's Rudy Pasos
is a project engineer.
Sister city salute
W HEN RUDY PASOS came to the United States as a
teenager in 1948, he left a Costa Rica which was a
rich green land with one of the most beautiful capital
contagious, and the idea won the support of many. Station
KNTV showed its interest by sending a television crew to the
tiny Central American country to film a documentary. Con-
cities in the world. gressman Charles Gubser made it possible for Mayor Welch
He returned last month to that country, but found it sadly to obtain a surplus street-sweeping machine for the Costa
changed. The people are just as he had remembered them- Rican sister city. HP's Sanborn Division responded with
industrious, intelligent, freedom loving. But much of the two badly needed electrocardiograph machines.
land, including the capital, San Jose, is suffering from a On May 3, Mr. and Mrs. Welch and Rudy Pasos arrived
strange and whimsical trick of nature. Dust is everywhere. at EI Coco airport near San Jose. They were greeted by
Each day, the monster volcano, Irazu, belches forth great Alfredo Gallegos, HP Costa Rican representative; Guillermo
clouds of ash and prevailing winds carry it in a wide path Castro, governor of San Jose; and Raymond Telles, U.S.
across the once lush republic. ambassador.
He visited San Jose, Costa Rica, with Robert Welch, mayor In the following days, the Welches, Pasos, and Gallegos
of San Jose, California. Rudy performed a role of interpreter met with government officials and finally, on May 7, they
for the mayor during the trip, which was organized by the visited the presidential palace where they were greeted by
mayor and several organizations, including Pacific Neigh. President Francisco Orlich. They showed President Orlich
bors. The purpose of the trip was to "further weld the bonds the Sanborn EKG equipment being donated to two hospitals
between the sister cities," and to assist the Costa Ricans in and Pasos gave a brief talk on Hewlett-Packard.
their fight against the volcanic fallout. Now back at his job at Dymec, Rudy says he will continue
Since he joined HP's Dymec Division in Palo Alto two to help Costa Rica. "Getting rid of the ash from the monster
ears ago, much of Rudy's spare time has been spent assisting is like trying to empty the ocean with a thimble," he says.
in the development of the San J ose