Allen Organ Company

Allen Organ Company

150 Locust Street
Macungie, Pennsylvania 18062-0036
U.S.A.
Telephone: (610) 966-2200
Fax: (610) 965-3098
Web site: http://www.allenorgan.com

Public Company
Incorporated: 1961
Employees: 567
Sales: $58 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: AORGB
NAIC: 339992 Musical Instrument Manufacturing

Allan Organ Company is the largest builder of church organs in the world. In addition to its popular organs, most notably the digital electronic church organ, the company operates subsidiaries involved in data communications, electronic assemblies, and audio equipment, all offshoots of technology used in the manufacture of the Allen Organ. The company was founded by the late Jerome Markowitz, who built his first experimental organ in 1936. The founder’s son, Steven Markowitz, serves as CEO and president of the Allen Organ, and the Markowitz family owns 97 percent of the company’s voting stock.

An Early Start

Jerome Markowitz, the founder of Allen Organ Company, became interested in technology at a very young age. By the time he was 13, Markowitz had built a battery-driven electric go-kart, and shortly thereafter, he became fascinated with radio, constructing his own ham radio station using a hand-made receiver and transmitter. Markowitz even built his own television set in his youth, on which he eventually managed to get a picture. News of Markowitz’s technical abilities spread throughout his Jamaica, Long Island, neighborhood, and he became known as a technical whiz kid.

Markowitz’s father owned a textile factory in Allentown, Pennsylvania, and Markowitz had originally planned to follow in his father’s footsteps and join the family business after graduating from college. His parents sent him to Allentown Prep School and later to Muhlenberg College. However, Markowitz soon found that school took time away from his radio projects, and he pursued his education half-heartedly. In 1937, he suffered from an attack of appendix-related peritonitis, missed a month of college, and then left school all together.

The First Allen Organ in 1936

Also during his youth, Markowitz developed a passion for organ music; he had listened attentively to pipe organs in movie theaters and on the radio, and while in college had enjoyed listening to the chairman of the music department play the organ at mass. Markowitz decided his next project would be to build an organ. Markowitz’s radio projects had taught him the fundamentals of electronics that he needed to build his organ. He built an oscillator—a frequency generator—similar to those he had built for his radio equipment and discovered he could connect oscillators to the keys of an organ keyboard. By doing this, he could build an organ without pipes, and he patented the technology that could create sound waves via an oscillator.

After researching other pipeless organs and organ-like instruments, he built his first experimental organ in 1936. Local organists encouraged him, noting that his organ produced a sound not unlike that of a pipe organ. However, Markowitz knew his organ needed more work. After his parents moved to Allentown in 1937, he set up a workshop in their basement. There he frequently visited the Masonic Temple, renting time on its pipe organ so he could master its sound.

Word of Markowitz’s work in building a pipeless organ spread throughout town. In 1939, the Allentown Evening Chronicle referred to him as a “22-year-old Alexander Graham Bell.” During this time, Markowitz moved his basement workshop to an empty section of his father’s textile factory. There he met factory-maintenance man Norman Koons, who was an expert at mechanics and agreed to help Markowitz build a better pipeless organ. Together the men designed the organ on paper, and Koons built the instrument. Markowitz and Koons named the organ after the city of Allentown, calling it the Allen Organ No. 1. Markowitz sold the Allen Organ No. 1 to the St. Catharine of Siena Roman Catholic Church in Allentown. His first sale marked the beginning of the Allen Organ Company. St. Catharine’s used the organ until 1953, when they moved to a new cathedral.

By 1941, Markowitz had sold three more organs. He knew that his primary market would be the church, and this formed a commitment to building organs that would endure the tests of time. He later recalled in Triumphs & Trials of an Organ Builder that “Outside, the world appeared to be rather unpredictable with its many issues, events, and interests that emerged daily but quickly receded from relevance. But inside these churches there was a distinct ambiance of predictability, stability, and lasting values. I wanted Allen organs to fit comfortably into this ambiance of permanence. Therefore, I wanted Allen organs to be built to last.”

Wartime Diversions and Postwar Struggles

Markowitz’s business was put on hold after the Japanese bombed Pearl Harbor in 1941. The following year he enlisted and was employed by the military as a civilian electronics engineer. His military service would keep him away from organ-building until 1945, when he returned home. At that time, he decided to incorporate his business, a move that would allow him to solicit investment money through a sale of stock. In doing so, Markowitz raised enough capital, largely from family and friends, to lease factory space, buy equipment, and hire 15 employees. By 1946, he had sold ten organs locally, as the Allen organ proved less cumbersome and more affordable than traditional pipe organs.

Allen Organ soon needed more space. Markowitz leased 14,000 square feet of factory space at Eighth and Pittston Streets in Allentown and hired college chum Michale J. Mylymuk as shop manager. Getting Allen Organ off the ground was not an easy task, however, and the company struggled from 1946 to the early 1950s. During this time, Markowitz’s cash flow was often not enough to cover his expenses. He was forced to lay off workers, a task that nagged at his conscience.

Despite these difficulties, Markowitz refused to compromise the design of his product. In 1949, his company developed and patented a Gyrophonic Projector. The “Gyro” was a rotating speaker system designed to add liveliness to the sound generated by the Allen organ. Organists could toggle the Gyro off an on as they played. Seeking to bolster sales, Markowitz decided to pursue customers outside of Allentown, and he quickly found them. By 1953, the company was back on track and earning a profit. The following year, Markowitz obtained more space and hired additional employees.

The 1960s: A Time of Growth

While the Allen Organ Company grew quickly over the next few years, the company was still a minor contender in the organ industry when compared to such giants as Hammond, Conn, Baldwin, and Wurlitzer. Amid such stiff competition, Markowitz strove to find a niche for his company. He set Allen Organ apart from competitors by tailoring his organ designs to meet the specific needs of each customer. Few competitors offered such a service, opting instead to produce a line of organs that they sold “off-the-shelf.” Allen Organ also built a line of inexpensive organs for churches with limited funds.

In the 1960s, the company’s products gained national attention, as customers and investors began to recognize the name of Allen Organ. In 1961, Lawrence Welk ordered an Allen electronic harpsichord to use on his popular television show. Also that year, the company made a public offering, attracting an additional 500 investors. At this time, the company had a workforce of over 600.

In 1966, Allen Organ established a subsidiary operation, Rocky Mount Instruments (RMI), in Rocky Mount, North Carolina. RMI produced portable keyboards, portable amplifiers, and other novelty instruments. Through RMI, the company established relationships with popular musicians of the time; the rock group the Doors used an RMI Rock-si-chord in their hit song “Hello, I Love You.” Other musicians and bands such as Hank Williams, Jr., Deep Purple, the Association, Frank Zappa, and the Beach Boys used the Rock-si-chords’ successor, the RMI Electra Piano and Harpsichord, in their music.

By 1970, Allen Organ had sold more than 30,000 organs, and their products were available on six continents. Moreover, the company distinguished itself by building the largest electronic organ in the world for the Tenth Presbyterian Church in Philadelphia. Virgil Fox, one of the world’s top organists, played recitals on an Allen Organ.

Company Perspectives:

When a congregation expresses its faith through music, there is only one instrument equal to producing a sound as elemental, eternal, and exuberant as its celebration —the organ. The majestic sound of organ music will always be the sound of devotion. Sound that sweeps through the congregation in a wave of symphonic power. Sound you feel —in the soles of your feet and the depths of your heart. Sound that equals the spirit of your worship. The sound of an Allen. Quality, craftsmanship, technological superiority. … These are Allen hallmarks. With more than 20 diverse models to choose from and over 75,000 installations worldwide, Allen carries the banner of innovation into the 21st century. Our dedication to producing exceptional instruments is matched only by our commitment to providing unsurpassed customer service for the long term.

The Advent of the Digital Organ: The 1970s

In 1969 Ralph Deutsch of North American Rockwell Corporation (later Rockwell International) in California, contacted Markowitz about entering into a partnership to develop the world’s first digital organ. Rockwell had developed a new circuit technology called Metal-Oxide Semiconductor/Large-Scale Integrated, or MOS/LSI, for the aeronautics industry and felt that this technology could have many applications in more commercial arenas. Under the proposed contract, Rockwell would adapt the digital technology, manufacture the circuitry, and provide technical support, while Allen Organ, which would gain exclusive rights to the new digital organ technology, would fund the project and provide Rockwell with their technical expertise in the fields of music and musical instruments. The partnership involved considerable financial risk to Allen Organ, requiring capital outlay of over $1.5 million, but the potential gains to be realized by the digital innovation were exciting for Markowitz and his team. The deal was signed in 1969, and the partnership was rocky from the start.

When Rockwell provided a working model of the first digital organ, Markowitz soon found that the musical integrity of the organ itself would be compromised to accommodate the circuitry. Deutsch and Markowitz would lock horns several times over the various issues, and Allen Organ’s financial commitment to the project deepened. In 1970, right before the completion of an acceptable the prototype, Deutsch approached Markowitz about expanding the partnership to include the development of a smaller organ. Not wanting to commit further funds to the project, Markowitz refused, and the relationship between Rockwell and Allen Organ was further strained.

Nevertheless, Allen Organ approved the prototype of the world’s first digital organ in 1971, and that year Allen Organ began marketing its Allen Computer Organ. Markowitz decided to call the instrument a computer organ rather than a digital organ because he thought the name would have more appeal to the public. The press hailed the Allen Computer Organ as “a major industry breakthrough.” St. Mark’s Evangelical Lutheran Church in Easton, Pennsylvania, became the first customer to purchase an Allen Computer Organ. In September 1972, the Allen Computer Organ was named by Industrial Research as one of the best 100 new products of the year, marking the first time a musical instrument had ever received such an award.

The strained relationship between Allen Organ and Rockwell would continue over the years, resulting in litigation, cases that were eventually settled out of court. Moreover, as Markowitz strove to defend his patent rights to the digital organ technology, a series of lawsuit with competitors ensued, including Yamaha, Klann Organ Company, and others.

Diversification in the 1980s and Beyond

While Jerome Markowitz moved gradually toward retirement, purchasing a farm and leaving day-to-day operations to an executive staff that included his son Steven Markowitz. During this time, the computerized organ, which mimicked the sound of traditional pipe organs better than the founder’s analog organ had, became increasingly popular, and Allen Organ began a program of vertical integration, making its own circuit boards. The company also strove in the 1980s to automate its facilities, keeping up with new technologies that allowed for quicker production.

The production of circuit boards took on a life of its own, and in 1989, Allen Organ formed a subsidiary, Allen Integrated Assemblies(AIA), to oversee the sideline. By the mid-1990s, AIA was producing about 150,000 circuit boards annually, slightly less than half of which were sold to outside companies. The majority, however, were used in Allen organs and other musical instruments.

After Jerome Markowitz’s death in 1990, his son took over the reins as CEO. Steven Markowitz had joined Allen Organ in 1975, after graduating from Penn State University, and had assumed the company’s presidency in the 1980s. Under the younger Markowitz, Allen Organ continued to expand its size and scope. Several acquisitions were made and subsidiaries organized, as the company focused on keeping product costs low by manufacturing parts in-house. Among the new subsidiaries were Eastern Research, Inc., a manufacturer of digital components established in 1992, and Linear Switch Corporation, a manufacturer of matrix switches formed in 1993. Moreover, the company became involved in the manufacture of audio speaker cabinets for home theater systems through subsidiary Legacy Audio Inc. Nevertheless, the company continued to generate most of its sales from its digital organs, which had gained worldwide recognition.

By the late 1990s, Allen Organ was organized among four industry segments: musical instruments; electronic assemblies; data communications; and audio equipment. While sales continued to increase, profits were somewhat hampered by the costs incurred in investing in sales, marketing, and product development, particularly for the company’s diversified subsidiaries. In February 2000, the company’s stock soared to $82 per share, up 26 percent, on rumors that Allen Organ intended to jettison its Eastern Research data communications subsidiary.

In January 1999, several Allen Organs were used for major events associated with Pope John Paul IFs visit to St. Louis, Missouri. An Allen Organ was installed in the Trans World Dome for the principal mass. A second Allen Organ was installed at the Kiel Center for the Youth Prayer Service. As it prepared to enter a new century, the Allen Organ Company maintained a dominant worldwide position as a manufacturer of church organs.

Key Dates:

1936:

Jerome Markowitz builds his first experimental pipeless organ.

1939:

The Allen Organ No.1 is completed.

1945:

Allen Organ Company is incorporated.

1949:

The company introduces the Gyrophonic Projector.

1961:

Allen Organ goes public.

1966:

Rocky Mount Instruments is acquired.

1969:

Markowitz signs a deal with North American Rockwell to produce the world’s first digital organ.

1971:

Markowitz approves the prototype of the digital organ and unveils the first Allen Computer Organ.

1990:

Founder’s son Steven Markowitz inherits leadership of the company.

Principal Subsidiaries

Allen Audio, Inc.; Legacy Audio, Inc.; Linear Switch Corp.; Eastern Research Inc.

Principal Divisions

Allen Integrated Assemblies; VIR Linear Switches.

Principal Operating Units

Musical Instruments; Data Communications; Electronic Assemblies; Audio Equipment.

Principal Competitors

Casio Computer, Ltd.; Cisco Systems, Inc.; Yamaha Corporation.

Further Reading

Markowitz, Jerome, Triumphs & Trials of an Organ Builder, Macungie, Perm.: Allen Organ Co., 1989.

Orenstein, Beth W., “Allen Organ Strikes Note of Success with Electronics,” Eastern Pennsylvania Business Journal, June 5, 1995, p. 2.

Shope, Dan, “Allen Organ May Sell Division,” Allentown (Penn.) Morning Call, March 8, 2000, Bus. Sec.

—Tracey Vasil Biscontini