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Stern Pinball Downsizes To Adjust To Changing Coin-Op Market, Strengthening Dollar

Posted On: 11/3/2008

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Reporting by Kevin Williams, KWP Consultants (London)

MELROSE PARK, IL -- Stern Pinball Inc. is the latest amusement company to streamline its workforce amid rising concerns about the global economic slowdown. The strengthening dollar is among the forces hurting the bottom line of the storied pinball maker, which exports half its new machines to overseas markets.

Company president Gary Stern described the move as "right-sizing." But unlike other companies that are expected to lay off workers as part of the normal business cycle, Stern is under the microscope of websites run by players and fans. After Stern's downsizing plans became known in late October, they voiced consternation about the factory's future plans.

Stern affirmed that his pinball company is still in business and working hard on the development of future games. In the works is a game based on the "CSI" TV series, and another major property is set to get the pinball treatment in 2009.

The U.S. dollar's blistering rally in October is expected to adversely affect many American exporters. Stern said the dollar's exchange rate, combined with weaker domestic sales, has made necessary the restructuring plan, which includes the downsizing of assembly-line staff and reductions in design departments and other development areas.

Stern said the company will be "fit for purpose" and looks forward to a strong 2009. As the only surviving American pinball company, it has a strong public and corporate representation in the amusement scene. And its pinball games touch a strong cord with players and buyers alike.

It is known that other amusement companies in the U.S. and abroad are carrying out similar restructuring plans to create leaner and more appropriate operational structures to address the realities faced by buyers and actual market demands.

Coin-op pinball has experienced significant erosion over the past two decades, and Stern has adopted a rational business model to keep the game alive in the new millennium. Following the shutdown of Williams Electronics Games in late 1999, the company emerged as the only equipment manufacturer supporting the category, which had been supplied by multiple factories developing dozens of titles and producing more than 100,000 units (combined) annually throughout much of its 80-year history. Gary Stern established the pinball company that bears his name in 1999 when he acquired Sega's pinball division; Sega had purchased Data East Pinball, started by Stern in 1986, only five years earlier.

Stern recognized that pinball's nostalgic appeal is its most attractive characteristic and has also adopted the old strategy of releasing only three or four titles a year, in limited runs, to help maintain product value. The company said it will continue on this course, producing classical mechanical-action pinball games, and expects to offer four new models in 2009. This year's games included Batman, based on the blockbuster "The Dark Knight" and "Batman Begins" movies, Shrek and Indiana Jones.