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Merit Production Will Move To Grand Rapids

Posted On: 3/19/2007

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BENSALEM, PA -- Merit Entertainment will move its manufacturing operations to Rowe International's factory in Grand Rapids, MI. Both companies are owned by Harbour Group.

According to Michael Maas, president and chief executive officer of both Rowe and Merit, the objective of the shift from its longtime Pennsylvania headquarters is to enhance efficiency by consolidating the production functions. Rowe's 250,000-sq.ft. plant, which rolled its one-millionth jukebox off the assembly line last summer, can accommodate all of Merit's manufacturing activities without difficulty.

Maas added that plans call for the Rowe plant to start up production lines duplicating the ones Merit now is running, prior to shutting down the Merit manufacturing facility in Bensalem. This will ensure seamless continuity of manufacture and shipment.

Merit's management and administration, as well as its marketing, engineering, research and development activities, will remain in Bensalem, Maas said.

Merit's key production lines are dedicated to the EVO Edge countertop system; the Force video upright platform; the Gametime system for home sales; and the Boardwalk multigame system.

"We will bring the line up in Michigan to make sure we are able to build and ship high-quality systems while still maintaining the capacity in Pennsylvania. This may not be the most cost-effective, but it's best for our customers and distributors," Maas said. "We'll do this in a way that ensures we don't have any hiccups or interruptions to the market. Our aggressive moving plan is in place, but I'll slow it down in a heartbeat to make sure we do the right thing for our customers."

ModBox, a digital jukebox powered by Rowe's AMI Entertainment subsidiary, is already produced in Michigan. Also due for transfer of manufacturing functions from Bensalem to Grand Rapids are Merit's hardware and software upgrade kits, plus its parts business.

 "Given that the owner of both companies is the same, as is the president, and given that the production requirements are quite similar, it simply made sense to manufacture in one place instead of two," Maas said. "We are focused on quality and believe we can increase it with more volume and focus in one place."

In past years, before the two companies were acquired by Harbour, Merit forged a limited alliance with TouchTunes so that bar patrons could make song selections through its countertop interfaces. The consolidation of Rowe and Merit manufacturing obviously suggests that greater (yet similar) integration of Rowe/AMI and Merit products is also possible.

Equally possible is more linkage between Harbour's video-game and jukebox products in terms of on-location promotions, as well as joint sales and marketing efforts.

"I won't talk about our strategies in detail at this point," Maas told VT. "But I think it would be natural to believe that in places where it is possible to leverage the strengths of both companies, it makes sense to do that. It also makes sense to expect that the AMI Network is another place where we can take advantage of investments and leverage them across multiple platforms. Without officially confirming any plans to do so, I can say that if I weren't considering it I would not be doing my job."

Maas added that Merit and Rowe will be guided by market demand, not technical capabilities, when making final decisions on any functional integration of music and video games.

"We will seek places where it's truly needed by the market rather than pushing technology for technology's sake," he said. "I have not yet seen a killer application in this regard. However, I think the connection of some bar systems to other types of equipment has seen limited but real success in terms of market acceptance."

Rowe's long association with its current site at 1500 Union Ave. in Grand Rapids began when National Automatic Music, which later became Automatic Musical Instruments (AMI), moved there in 1922. Jukebox and vending machine manufacturing moved into another facility across the street in the mid-1980s. Today, the original building houses Rowe's sales, marketing and administrative departments.

Harbour Group Ltd., a privately owned firm that specializes in the acquisition and development of manufacturing companies, established its Entertainment Products Group in December 2002 with the acquisition of Bensalem, PA-based Merit and launched its Music Products Group, which is comprised of Rowe International and AMI Entertainment, in November 2003.

In December of 2005, Harbour named Maas to serve as president of both Merit and Rowe, signaling greater product development and marketing cooperation between the two companies.

Last fall, Jeff Martin, chairman of Merit  and Rowe, who is also a senior-level executive at the Harbour Group, announced "Merit Customer Promise," a program designed to rebuild and improve relationships with operators.