History Part 3

Copyright © 2004 by Davis Multimedia, Int'l. All Rights Reserved.
As Printed in March 2004, Volume 29, No. 9 of The Engravers Journal.
By Kristin Huff


Dahlgren’s first ad in The Engravers Journal (July/August ’80) kicked off a new generation of engraving machines.




This Concept 2000 ad ran in the September/October ’81 issue of EJ. "Allegedly" it was a cardboard cutout of the upcoming Concept 2000 covered with a white bed sheet. The competition was fierce and the manufacturers were doing whatever they could to keep their loyal customers from defecting.


    Most engravers today recognize names such as New Hermes, Vision, Xenetech, Newing Hall, H-Square and Signature Engraving. A few industry history buffs will recognize other names such as Domiteaux, Meistergram, and H.P. Preis. Perhaps you’ve even heard the near-mythological name of Will Dahlgren, sometimes called the “father of computerized engraving.” But do you know the story behind the names? Have you ever wondered how, when and where the technology now known as computer controlled engraving started out? It’s a story of creation and turmoil. It’s a story of a series of inventions that changed an entire industry, in a very big way!
    Let’s go back in time to the late 1970s. You are the sole proprietor of an engraving shop. A job comes in for a set of 1000 custom industrial plates. What do you, the engraving shop owner and pantograph user, need to do for this job? First you will spend many hours hand picking letters from a large and hefty box of master copy type. Once you have set the type and arduously created the special template you need, you sit down and begin to engrave the tags, one by one, on your pantograph. If you’re good, you can finish about twenty in an hour. And if you’re like most pantograph operators, you’ll only be able to keep up that pace for about two hours at a time. Whoops! What’s that, you slipped? That plate, which you were almost done with, is ruined. You’ll have to do that one over again. If you can manage to finish six hours’ worth of plates per day, that’s 120 plates in a day. So for a thousand it’s going to take . . . way too long, really.
    Computerized engraving machines changed all that, but the transition to computers was not an easy one. It took the work of entrepreneurs and inventors to blaze a technological trail and change an industry. Things would never be the same again.

Engraving pioneer Will Dahlgren meets engraving pioneer Randy Paul, in 1982.

The Hartford Model 2 Engraving System was produced by Hartford Engraving in Buffalo, NY. Founded in 1979 Hartford had one of the first turn-key engraving systems, which never met success in the marketplace.

The Early Days
    The path for the first computerized engraving machines was laid down in the 1960s and 1970s by early predecessors to computerized engravers: computerized numerical control (CNC) milling machines.
    A vertical milling machine called the Bosto-Matic, made by Boston Digital, was one such machine available in the 1960s. It cost about $100,000 and took a team of engineers and mathematicians to program it. The machine worked on the principle known as “numerical control”, where an area to be machined can be likened to a sheet of graph paper covered with equally-spaced lines. Each line intersection represented a particular X-Y coordinate, which is given a pair of numbers based on its position in terms of the number of lines from the left side of the sheet (X coordinate) and the distance from the bottom edge of the sheet (Y coordinate). Now imagine defining the path of a cutter by plotting a series of points. By doing this, you can make a cutter engrave any shape, merely by moving from one point to the next, just like tracing a connect-the-dots picture in a coloring book.
    That’s the principle used in computer controlled engraving. The two main obstacles to the development of the computerized engraving as we know it today were the lack of inexpensive, powerful personal computers and the lack of firmware and software that would allow the user to bypass the sophisticated programming needed to engrave even simple designs.
    During the late 1970s, early PCs made their debut. These machines were affordable and had enough computing power to drive an engraving system. It didn’t take long for a few inventors in the engraving industry to realize the potential of combining a PC with a pantograph.
    One of the early pioneering efforts was by Randy Paul, owner of Tresar Products Corp. in Ann Arbor, MI. In 1977-78, Paul patched together his own hand-made electronic components and developed his own programs and fonts. In lieu of developing the mechanical portion (spindle, belt, linkage, etc.) to engrave, he mounted a pair of stepper motors to the copy table of a New Hermes model VB pantograph. According to EJ Publisher Mike Davis, who saw Paul’s creation at the time, “It looked like a Rube Goldberg machine with hand soldered components and wires running all over the room, but it engraved!”
    After successfully demonstrating the principle of computer controlled engraving, Paul realized that he had neither the money nor the ability to develop and market his invention, so he did the logical thing: he offered his system to every major player in the industry at the time. They all turned him down, and his efforts fell into obscurity.
    Another pioneering effort that significantly surpassed Paul’s was the development of the Hartford Model 2 Engraving System, produced by Hartford Engraving in Buffalo, NY. Founded in 1979 by partners Fred Fischer and Richard Crooks, Hartford Engraving was an engraving company with one of the first commercially viable computer engraving systems on the market. The Model 2 was available with four different size worktables. The spindle remained stationary except for the up-and-down cutter movement. The actual engraving was performed by worktable movements that were controlled by stepper motors and leadscrews located under the worktable.
    The Model 2 also incorporated memory into its system. For an extra $2000, an optional disc drive was available that would accept most 51/4" floppy discs and allow the user to save jobs. The system also touted the fact that the operating system remained stored in the computer’s permanent memory and would not need to be reloaded each time the computer was turned on and off. Imagine today needing to re-install Windows every time you turn on your computer!
    The downfall of Hartford’s system was that the company was not marketing-oriented. Like so many engraving businesses, Hartford operated out of the owner’s home. Their lack of marketing and advertising led to very slow sales for the Hartford Model 2, and it wasn’t long before Hartford was eclipsed by the competition. They stopped selling the machine about ten years ago.

The Automark trophy-marking typewriter, which cost as much as a new car in the 1960s, was a precursor to the computerized engraver, although the latter eventually caused its demise.

In the early days Will Dahlgren rented a 500 sq. ft. office space where he also lived and showered in a plastic Flintstones sandbox. Photo circa 1981.

The AutoMark
    Although one might not think of the then-familiar Imperial and AutoMark trophy-marking typewriters as a precursor to the computerized engraver, these machines did their part in paving the way for the revolution that was coming. Although they were expensive, they made life much easier for the engraver who needed to crank out a load of trophy plates quickly. According to Roy Brewer, owner of Brewer Sales and one of the industry’s most respected salesmen, it was these two factors (they cost a lot and made life easier) that created a path for computerized engravers.
    “When I started selling AutoMark typewriters, people would say, ‘Buy that? For how much? That’s what I paid for my car!’” exclaims Brewer. “But when they did buy the AutoMark, it made them a lot more money than their cars did. I believe that by the time computerized engravers came out, maybe 30–45% of trophy dealers, or at least the larger shops, had already bit the bullet and bought a typewriter. It made them much more productive and made the work much more enjoyable. All it could do was stamp lettering into trophy plates, but enough people found out that spending money could make them money, so later on they were more apt to buy equipment that could do for plaques what the metal-marking typewriter did for trophies.”
    Brewer was among those to see computers on the horizon in the late 1970s and early ’80s, and he realized that they would impact the engraving business, just as they’d impacted other industries all over the world. “In 1980 I read a book called Megatrends,” he says. “The gist of the book was, if you’re not doing something with computers, you’re going to be hungry in just a few years. The information explosion has hit, and that’s the future. It scared the fire out of me, because I had never touched a key on a computer. So I started watching for an opportunity to get involved.”
    Less than six months later, Brewer found his opportunity in the form of Michael Hu, who was among the first to enter the world of computerized engraving. But let’s not get ahead of ourselves. There’s a lot of story to tell here.
    The year was 1980. Ronald Reagan was about to defeat Jimmy Carter to become the 40th President of the United States. The energy crisis was behind us. John Lennon was still alive. In the engraving industry, New Hermes had been, for more than forty years, the reigning king of pantograph manufacturers. And in California, Will Dahlgren, Lew Silverstein and Ted Claire were about to embark on a newfangled machine that would change the face of the engraving world.

Ted Clair was Dahlgren’s chief engineer and developed much of the early mechanical hardware. Photo circa 1989.

Lew Silverstein handled sales and administrative functions during Dahlgren’s first two years. Photo circa 1989.

Hippie Days
    Will Dahlgren and Ted Claire were living in San Francisco when they met. Claire played music by night and worked in a cabinet shop by day. Dahlgren was a magician and fire-eater, performing for the audience in between sets at the club where Claire played. Dahlgren’s stage name was Willie the Wizard – a name that had significance for him in childhood and would play a part in his engraving adventures as well. By day, Dahlgren made Appalachian Mountain dulcimers.
    The same things drove Dahlgren and Claire that drove most of the innovators in the world: they were independent, and they liked to find a better way to do things. “We’re really just ‘go-do-it’ kind of guys,” Dahlgren explains. “We get into a business more out of curiosity and interest, or anger that someone wants to charge way too much for something. We’ve never had a business plan–we do things more because it’s a project that’s interesting and worth pursuing.”
    At one point, Dahlgren and a friend decided to get into the business of restoring antiques. “Antique restoration!” laughs Dahlgren. “It sounds like I knew what I was doing, when really it was repairing old furniture. A friend and I decided to canvass San Francisco’s Union Street, which was full of antique stores. We were thinking we’d just hand out business cards, but it didn’t work out that way. We’d walk into a place and the owner would say, ‘How much to repair this?’ We’d give them an estimate, and they’d give us the furniture. By the time we got to the end of the street, our truck was crammed with probably $4000 worth of antiques!”
    Dahlgren’s story illustrates San Francisco, and really, most of the country, in those days. “People were very trusting,” he says. This trust also played a part in the coming of the computerized engraving machine.
    “I don’t remember how I came upon the engraving shop that day,” says Dahlgren. “I’ve always been curious about how things are done. But I remember walking into the back of this shop where a guy was working with a New Hermes pantograph. I thought to myself, Wow! In this day and age, that’s how you engrave something?
    “I had already been playing around with computers. The first ones that were available to the public, you had to practically solder them together yourself. Some were actually sold as kits. And there were already these mini-milling machines around. They weren’t computer controlled, but you could digitally control them. They worked with independent circuits and counters, and they were cleverly designed. But I thought maybe I could make something work with a pantograph along those lines.”
    Dahlgren went out and bought a computer kit for about $2000 and started looking for a way to make X-Y movements with it. “The first thing I did was build an electronic interface so my computer could drive stepper motors. Next, I programmed my first letter – an L. I chose L for my first letter because it only had straight lines. I engraved it on a wooden board – a length of 2"x 4".
    As someone who has always been fascinated by the idea of getting a computer to make something move, Dahlgren was thrilled. “I thought, I’ve gotta figure out how to engrave an X, or something complicated! But you have to understand, the computer I was using had very little memory. It was totally underpowered.”
    The computer technology that we use now didn’t exist back then, and a simple font had to be digitally programmed, point by point, line by line, letter by letter, until Dahlgren had completed the entire Gothic font. “We take it for granted what we can do today,” he says. “You can take a font and condense it, expand it, flip it over, flip it backwards. To do that back then was tricky. We had to create the definition (the basic digital recipe) of every letter of a font first. There were no instructions, and the computer had little power.”
    It took Dahlgren six to eight months to complete that entire font of upper and lower case letters and variations. “I’d wake up every day and think, hey! I can make it do this! And then I’d program something like italics. Then I’d think, hey! Maybe I can do this! It all evolved on a step-by-step basis.”

One of the original New Hermes reps, Bob Domito became vice president of sales prior to the introduction of the Concept 2000. Photo circa 1985.

The Dahlgren System One (circa 1980) consisted of a Radio Shack TRS-80 computer with 16K of RAM, a control unit which many users said resembled an “old suitcase.” The engraving table had a 6" x 8" working range and the programs were loaded using a $10 cassette tape player.

World’s Biggest Job Shop
    But Dahlgren wasn’t creating his machine with an eye toward selling the world’s first computerized engraving machines – he wanted to own the world’s biggest engraving job shop. “The first machine that I developed was a single-computer machine. You typed in your job and then it engraved. You didn’t have the ability to put in your next job while it was engraving the first. I thought it would be nice to do large engraving jobs for other shops, especially if they had to make a lot of multiples for the job. So I put an ad in The Engravers Journal, and I was looking for wholesale work. I got only two or three inquiries. Then I realized I knew nothing about the other skills required for engraving, things like sharpening cutters, etc. And I was starting to go broke.”
    As it turns out, Dahlgren did get a few other calls – but not about engraving. People had seen his ad and wanted to know about the machine he was using. “At this point,” explains Dahlgren, “it wouldn’t have been successful as a commercial machine. It was just a giant X-Y table that weighed 2,500 pounds. We had to use a forklift to get it through our second-story window.
    “One day a fellow called me up. He was in the business of making dog tags, the kind you buy at a pet store. He said, ‘Well, if you can make one of those engraving machines for me, I’ll take three of them, and I’ll pay you $18,000 for each.’ That got my attention!”
    Dahlgren realized that he was in the wrong business. Instead of looking for engraving jobs, he needed to be selling engraving machines. Since the prototype machine was not saleable at that point, he needed to redo much of the programming to turn it into a viable unit that could do real work.
    At this point, Dahlgren enlisted help from his friend Lew Silverstein. (The two met at a party where Silverstein asked if anyone wanted to help him bring his sailboat from Acapulco to San Francisco. Dahlgren immediately accepted, and they became friends during the month-long sail.)
    The new machine consisted of a Radio Shack TRS-80 computer with 16K of RAM memory. Dahlgren also created the System One control unit, which many users said resembled a very old suitcase. The control unit had a second computer to accept jobs and was able to store up to eight fonts on EPROM chips, pressed into slots on slide-in circuit boards. The engraving table was made of aluminum components and held a 6" x 8" plate. Hard drives were not yet available, so you loaded the programs from an audio cassette tape using a $10 tape player.
    The software could be finicky. You had to first load a cassette containing an “assembly language” program, followed by a cassette containing the front-end program, written in BASIC computer language.
    The development of Dahlgren’s first system took most of a year, and toward the end of the year, Claire joined Dahlgren and Silverstein. However, by 1980 Dahlgren had a fully-operational prototype.

Michael Hu (left), born in China, educated at Stanford University, earned a degree in engineering, and formed a Palo Alto, CA-based machine design and manufacturing business named H-Square. H-Square became one of the industry leaders and developers of computerized engraving machines. Photo with sales rep. Tom Franklin, circa 1983.

Don Morrison briefly served as president of New Hermes in the early 80s and was the driving force behind the development of the concept 2000. Photo circa 1985.

The Offer
    After investing substantial time and money in his machine, Dahlgren was still, as he recalls, “going broke.” He realized that in order to recoup his investment, he was going to have to start selling the machine. And that meant going up against the industry giant, New Hermes. Maybe, thought Dahlgren, his San Francisco outfit wasn’t in a position to do battle with the Goliath, and they should see if New Hermes was interested in buying their machine. Not knowing about Randy Paul’s unsuccessful attempt to sell his system to New Hermes, among others, Will Dahlgren thought it sounded logical to allow the industry leader to develop and market his machine.
    “My brother Jack had met Dahlgren,” says Bob Domito, who spent nearly 35 years at New Hermes and shortly thereafter was named Vice President of Sales by New Hermes. “Jack called New York and spoke with Company Chairman Norbert Schimmel. Jack convinced him this was something New Hermes should look at.”
    “We needed some help in the manufacture, but the basic design was manufacturable,” says Dahlgren. “New Hermes had the experience we lacked in manufacturing. So Lew went to New York to talk to them. We made them an offer for $80,000, and that included the machine design and software, and I’d go to New York and spend six months there refining the program to their specs. But they turned us down.”
    Domito elaborates on the refused offer. “A guy in engineering convinced Schimmel that the whole thing was a ‘Mickey Mouse’ affair and that there was no future in computerized engraving. He convinced Schimmel that we shouldn’t get involved. All Dahlgren wanted was to get his money out of the machine, and get a job with New Hermes to oversee the continued development of it. He would have worked for a nominal salary, when they should have been showering him with gifts!”
    The decision was, of course, no reflection on the management of New Hermes today. Schimmel and Dannheiser, who were well into their 70s at the time, simply didn’t see the revolution that was headed for the industry. But the rejection cemented the decision for Dahlgren and set the stage for the future. Dahlgren would produce the machines themselves. As Will Dahlgren told Mike Davis at the time, Dahlgren Engraving Systems Inc. was going head-to-head with New Hermes.

Jim Bernstein, nephew of Paul Kahn, one of New Hermes’ original salesmen; joined the company in 1980 and remembers when the Concept 2000 was just a concept of cardboard boxes. Photo circa 1999.

New Hermes was rapidly losing market share to Dahlgren in 1983 and needed to stop them from taking over the market. Together, New Hermes and Gerber Scientific began working on the Concept 2000.

Launch the Machine!
    Having realized that they needed some input from people who knew engraving, Dahlgren and Silverstein took the machine to Michigan to meet with a group of engravers, including Mike Davis and Jim Farrell, who, as founders of The Engravers Journal, had offered advice, encouragement and inspiration throughout the creation of the machine. While in Michigan, Dahlgren hosted the first of the company’s new famous traveling road shows held at Farmington Hills, MI.
    “We got some orders for the machine in Michigan, and then we went to New York and got some orders there too,” says Dahlgren. “But then we were confronted by a big question: How were we going to finance it? We had no money, no manufacturing shop. So Lew Silverstein came up with a brilliant idea: We’d ask people to put one-half of the payment down ahead of time, and pay the rest when the machine was delivered. And people did it! It ties into the trust thing that was prevalent among people at the time. We were just some random hippie outfit, and who knows, we could have gone belly-up. But they trusted us with their money anyway.”
    Those first people who were willing to bet on Dahlgren’s machine were not only enthusiastic proponents of the latest and greatest engraving innovations, they realized the invention was going to be big. For the first time, an engraver could have a non-skilled person turning out items that, until then, had to be engraved by a professional. And as many users quickly learned, one computer user could easily outpace four pantograph operators, with virtual, absolute repeatability from plate to plate.
    “After people started using those first few machines,” says Dahlgren, “we started to hear stories. The best was a fellow who paid for his machine in three weeks! It turned out that skilled engravers were not losing their jobs, because with these machines in the shop they could accept so much more work than they could in the past.”
    Dahlgren started turning out engraving machines as quickly as possible – which wasn’t very fast. They continued receiving orders and producing the machines, albeit slowly. In the meantime, another entrepreneur was about to enter the field.
    Michael Hu was born in China, and as a young man he decided he wanted to make a name for himself in the United States. He didn’t understand English, and he knew he needed to learn it. He made his way across the border into Hong Kong and found a YMCA where he could take English classes. Hu worked hard doing odd jobs, and his tenacity impressed the YMCA’s director. The director helped Hu gain contacts that eventually helped him enter the U.S. From there, there was no stopping him. Hu was accepted at Stanford University, managing to scrape together the money to afford the tuition. He graduated with a degree in engineering and, with a partner, Su-ling Hsu, formed a machine design and manufacturing business using CNC machines.
    Hu’s wife, Joan, owned a trophy shop, Contemporary Awards, in Palo Alto, CA. Like many others at the time, she struggled with the limitations of her New Hermes pantographs. Hu found the world of engraving to be fascinating, and his mechanical expertise lent a natural bridge to forming a relationship with the Dahlgren people. Dahlgren needed some help manufacturing parts for their tables, and Hu’s shop was ideally set up to produce that type of equipment, so the two struck a deal that included Dahlgren swapping a System One for some machining services by Hu’s company, H-Square.
    About a year later, the relationship ended when Hu came out with his own computerized engraver, the H-Square Model 1518. The two companies were now competing, and for a while, H-Square was Dahlgren’s only serious competition. Although Dahlgren’s machines still ruled the roost, some found the H-Square machines to be more likeable than Dahlgren’s.
    Scott Bradford, who now owns Artisan Engraving Supply Company, was just entering the world of engraving when computerized engraving machines were first being developed. He had started his own engraving shop in Texas and was struggling with the labor-intensive pantograph when a traveling roadshow came through town.
    “It was the Dahlgren people,” says Bradford. “They set up a show at the airport, and I went and thought, this is the answer to our problems! I was poised to buy one when I saw an ad for a company called H-Square, and they looked pretty slick too. They didn’t have any reps in the middle of the country, so I flew to California. I went out there with the idea of buying the least expensive one they had, which was the 8’ x 10’ table, but I walked away with the 15’ x 18’ table.” Bradford chose H-Square’s product because he thought the design and approach of the software was better than Dahlgren’s. The competition was on.
    In the meantime, although they had not yet entered the growing market of computerized engraving machines, New Hermes was going through some changes of their own.

Jack Domiteaux, at various times worked for New Hermes (twice) and Dahlgren before developing his Domiteaux-brand engraving system. After Jack’s death in 1985, the company and its equipment line were acquired by Pantograph Corporation of America and then by Newing-Hall.

The H-Square model 1518 was the first machine developed by Michael Hu.

New Hermes
    New Hermes was founded by Norbert Schimmel, who ran the company for more than forty years with Werner Dannheisser. The two men were German immigrants who had built up a solid, well-run, debt-free company worth about $25 million in the late 1970s and early ’80s. Jim Bernstein, the nephew of Paul Kahn, one of New Hermes’ original salesmen, joined the company in 1980. “I grew up around Mr. Schimmel and Mr. Dannheisser,” remembers Bernstein, “and after college I started training racehorses. The equine industry was my chosen profession for many years, and finally my uncle Paul said ‘Okay, no more race horses. It’s time for you to get a business.’ He gave me his New Hermes sales territory in New Jersey. I always thought I was making money with the horses. But when I went to work for New Hermes I said, ‘Hey! I like horses, but that’s not real money.’ I realized if I could buy and sell horses, I certainly could buy and sell engraving machines.”
    Bernstein, like most New Hermes employees, loved the company. The company maintained a family atmosphere, where everyone knew everyone else, and closing a sale was not difficult. “Everybody worked hard,” says Bernstein. “There was little dissent, and little unhappiness. It was a very productive company.”
    Not only was it a fun place to work, the New Hermes salesmen were very good. Bernstein tells a story of the training his uncle, Paul Kahn, would give a new recruit.
    “Paul would go into the field with a new rep, and show them how to sell. They played roles: Paul was the customer, and the new guy was a rep. Paul would go into a jewelry store and ask to see a nice watch. He’d say, ‘Hey, I’d like to buy this gold watch for my wife, and I’d like to have her name engraved on it.’ The owner, who didn’t have any engraving equipment, would say, ‘I’m sorry sir, I can’t do that.’ So Paul would leave the store saying, ‘Sorry, I can’t buy the watch from you.’ Then, a half hour later, who walks in? The New Hermes sales rep! It was very effective. He was creating his own demand.”
The Sale
    In the late 1970s, Norbert Schimmel and Werner Dannheisser were retiring and preparing to sell the company. As part of the restructuring for the sale, they hired a consultant, Don Morrison, to come in and prepare the company. “Most old companies have some fat that needs to be trimmed,” says one industry insider. “New Hermes wasn’t a neat and tidy package at the time, so they wanted to clean some things up and make the company really saleable.”
    Don Morrison had been running Roland, New Hermes’ supplier of flexible engraving stock, when he was hired to become New Hermes’ interim president. Morrison realized almost immediately that New Hermes was missing a very big boat – the revolution of the computerized engraver. It was an area that New Hermes had no presence in at all, and Dahlgren was siphoning market share from New Hermes at an alarming rate.
    Although New Hermes had no idea how many systems Dahlgren was selling, they knew that Dahlgren was putting a New Hermes spindle on every system sold. And with Dahlgren ordering batches of 25–50 spindles at frequent intervals, and with Dahlgren systems priced at around $13,000, it didn’t take a rocket scientist to figure out that New Hermes needed a machine, the sooner the better. Although New Hermes was contracted with a company in France called Vitoux that made New Hermes pantographs, they didn’t have contacts with anyone who had the capability to make a machine that would compete with Dahlgren’s.
    To solve the problem, Morrison found Gerber Scientific, a large company that later gained fame by introducing the Gerber vinyl letter cutting machine and other sign-related products. The fit seemed like a good one, or at least the best situation Morrison could find given that New Hermes was rapidly losing market share to the Dahlgren team and needed to stop the now-profuse bleeding. Together, New Hermes and Gerber began working on the Concept 2000.

H.P. Preis’ Cence Engraving System appeared briefly before the company went out of business, following a fire, which destroyed its Hillside, NJ facility.

    To keep their loyal customers from defecting to Dahlgren’s or H-square machines, the Concept 2000 was advertised in The Engravers Journal when the Concept 2000 was literally still a concept. New Hermes created a cardboard mock-up of the upcoming Concept 2000 and covered it with a white bed sheet, running the picture in an ad in EJ. “The Concept 2000 was a direct response to what Will Dahlgren was doing,” says Bernstein.
    Along the road to completion, New Hermes’ deal with Gerber hit some snags. The machine’s production went well over budget, and contractual problems arose between Gerber and New Hermes. “It had to be difficult for New Hermes,” says Dahlgren. “It’s tough to contract with someone else to build what you think you want. You have to be able to really specifically say what you want, but New Hermes wasn’t sure what they wanted. If we made a mistake, it was easy for us to go back and fix it. But if there was a problem with the machine Gerber made, New Hermes had to get Gerber to fix it, and they had to pay more money to get it done.”
    There was also the problem that New Hermes really didn’t understand the new technology as well as the company understood manual machines. At the time, Jack Domiteaux, who at various times worked for New Hermes, Dahlgren and his own company, summed up the difficulty by stating, “Gerber is not building a machine for engraving – they are building a machine for New Hermes.”
    Another issue New Hermes encountered was the fact that the Concept 2000 was a high-end machine, competing against Dahlgren’s System One, which was not. Bernstein explains the problem: “Will was providing a low-end machine, selling for $10,000-$13,000. New Hermes’ machine was high-end, costing about $18,000. Will was literally eating our lunch.”
    The Concept 2000 was not the only revolutionary change occurring at New Hermes. The company was still being prepared for sale under Morrison’s guidance, and in 1981 Schimmel and Dannheiser decided to make some changes to the structure of New Hermes’ renowned sales force.
    New Hermes sales reps were legendary in their knowledge of the industry and ability to close a sale. Indeed, at that time New Hermes and its international partner, Gravograph/Vitoux, was the only company in the engraving machine business which had a sales force and network of international distribution. All New Hermes reps were paid on commission, and some of the best reps easily earned six figures, despite having to pay their own traveling expenses.
    In an effort to improve the company’s bottom line for the impending sale, Schimmel and Dannheiser decided to change the sales force from being paid on commission to being paid a salary. In almost all cases, the salesmen (especially the better ones) would be bringing home much less on salary than they were on commission, and to help offset this discrepancy, New Hermes would pay their travel expenses.
    But the salesmen knew a bad deal when they heard it, and after the sales-force-conversion bomb was dropped at the legendary 1981 New Orleans sales meeting, many packed their bags and defected to Dahlgren’s operation. “These were the guys who owned the industry!” exclaims Bernstein, who, along with the rest of New Hermes’ management team, was devastated to lose so many good salesmen all at once.
    When the company was sold, the new management realized the mistake of their predecessors and changed the sales force back to a commission basis, but the damage had been done. The mass exodus of the sales force didn’t help New Hermes as they struggled to regain market share and become a contender in the world of computerized engraving machines. In the meantime, competition was becoming fierce as the market grew by leaps and bounds, with no upper limit in sight.
    By the early 1980s computer controlled engraving had become a proven fact. But the market was really still in its infancy and a number of today’s major players were not yet involved! A lot of fascinating industry-shaping events lie ahead, so stay tuned for our next installment in this series.