However, while Sigma positioned itself for a new period of expansion, storm clouds were gathering in Europe as Nazi Germany’s territorial aggression further aggravated tensions to the point that a European war became a distinct possibility. For Sigma, the storm clouds were to have a silver lining.
Chapter 5 : Sigma – Tromax, the 1930s Depression, 21st birthday and economic recovery
1928 opened with the announcement by E.H. Leete that, after sixteen years, he would not stand again as a director of the company. Leete’s interests were also turning elsewhere. He noted that he was assisting another company as its agent in the motor trade to set up along similar lines to Sigma and he wanted to give his time for services to that company. Leete was replaced as chairman by George Bartleman; there was a sense that a new era was beginning.
Sigma lines were doing well, and there was a new and positive development when Tromax, a manufacturing chemist company which was in financial difficulties, agreed to provide its assets and trademarks to Sigma in return for debentures. By 1929, soon after the crash of the Wall Street stock market heralded the beginning of the 1930s economic Depression, the directors had concluded that Tromax products were ‘the best way to fight the competition of the big stores’, for they were quality product and Sigma was the sole distributor.
The company engaged Rocke Tompsitt & Co, to both manufacture and test Sigma galenical products. It also explored the possibility of establishing a Students Analytical Laboratory at the College of Pharmacy. In 1930, the directors reduced dividends in order to build up a reserve, noting that ‘they had been influenced by the unsettled conditions existing in financial circles through the adverse balance of trade’.
The company manager, George Applegate, resigned in August 1930. Applegate had the support of a number of shareholders who considered that it was he who had instigated successfully the changes made in 1927 which had resulted in higher dividends for them all. However, the directors stood firm on the question of not asking Applegate to stay on. Applegate was replaced by Ben Haigh, a man who was ‘well known to the majority of pharmacists in Victoria with fifteen years experience working for Felton Grimwade & Co. Pty. Ltd.’.
The confidence of the shareholders continued to grow as the company appeared to weather the conditions of the 1930s Depression. This was partly due to the efficiency and positive impact of Haigh, who was already making changes as the necessity for economies began to become more obvious.
Some chemists began to default on bills and cheques to Sigma were dishonoured. Sigma was forced to restructure some businesses or take over others – there was a ‘falling off of purchases’ and some were ‘experiencing bad times’. By the end of 1930 profits had declined to £2,400 against £3,585 in 1929. When Sigma had to take over the business of one Yarraville pharmacist, he asked for permission to sleep on the premises ‘as he had nothing and nowhere to go’. Nonetheless, despite the background of the depression, by 1931 the directors were reporting to shareholders that although turnover had fallen, the company had obtained its share of trade. By March 1931, profits had increased to £3618.
Two new General Motors delivery trucks were purchased in 1931. The company offered a prize of £3/3/- for the Pharmaceutical Society College’s course on organic chemistry. Limited ‘show cards’ advertising was taking place at the manager’s discretion. The first two show cards were for Honey Balsam and Bronchitis Remedy, at a cost of one shilling each. A country traveller was employed and the company agreed to develop a provident fund for employees and a business club for its members. The first two lectures to the club members were ‘The Developing and Printing Business’ and ‘How to meet competition of door-to-door business’. By November 1931 Sigma was investing in radio broadcasting for Bisby, Sigsal, Chlorodine and Salve on three radio stations, but as the Depression continued radio advertising was discontinued in April 1932. The business club was also allowed to lapse.
In March 1933 a fire at the Flinders Lane warehouse caused £20,000 damage (covered by insurance). As a result a new property in Little Bourke Street was purchased and manufacturing moved there; by 1935, there were about ten people employed in the manufacturing department. Manufacturing produced a comprehensive range of proprietary lines supported by generic tablets and the Tromax brand range of chemist staples and household packs. By 1936 a full range of ladies cosmetics under the ‘Lorna Rae’ brand had appeared. Sigma finally acquired the Tromax company name in 1934.
It was Sigma’s twenty-first anniversary in 1933. A special anniversary dinner was laid on in the Melbourne Town Hall for over two hundred guests (including several ladies!). In speaking of the company’s success, one of the directors explained that:
“Sigma was born without funds, without stock, without a home; yet, year by year, it grew and gained in wisdom, until to-night it can truly be said that Sigma Co. stands as the friend of every pharmacist who cares to take an interest in it.”
As part of a marketing strategy, a ‘Sigma School of Merchandising’ was established, using lecturers from the School of Commerce at Melbourne University. Meanwhile Sigma looked for its first sales and advertising manager, although the appointee to the position also attended to warehouse and other duties. During 1936 the powerful British retail pharmacy chain Boots Ltd. appeared set to open operations in Australia. Sigma contributed substantially to Drug Trade Defence funds and the threat was neutralised. Concerns continued in 1937 from the increasing competition from non-chemist retail outlets, such as G.J. Coles.
In 1937 Sigma celebrated twenty-five years of successful operation. Its letterhead described Sigma as ‘wholesale druggists and manufacturing chemists’, and a bold new logo incorporated the original lamp and the catchphrase ‘Service to Pharmacists’. Company manager, Haigh urged shareholders to not simply ‘visualize tremendous potentialities’ but to work to make a positive contribution to annual dividends by making ‘it a rule to sell an extra Sigma line a day…to place Sigma in the forefront of wholesale pharmaceutical suppliers’. That year Sigma had paid out a total of £6527 in shareholder dividends – an increase on the previous year and an indication that the worst of the 1930s depression had ended.