Pasta Makers Use Their Noodle to Cope With Tariffs

Lasagna, vermicelli, mostaccioli and linguine.

For pasta lovers, the parade of products at Mrs. Leepers Noodles creates a certain kind of poetry.

Just a few years ago, however, the parade was much shorter.

“We were making the four products in our line, (but) we needed a tremendous amount of dollars to buy (new) equipment,” said Ed Muscat, who purchased the company from a local grocer four years ago.

Muscat then began importing Italian pasta, using the profits to expand.

Today, half the shipments by Mrs. Leepers’ Noodles--it carries about 70 different products--to stores and restaurants contain Italian pasta that arrives in 44,000-pound containerized shipments that are unloaded from ships docking in San Diego and Long Beach.

But Mrs. Leeper’s growth is threatened by new federal tariffs that threaten to boost the cost of imported pasta by 25% to 40%. The import levies, instituted in June by the Reagan Administration, are linked to a U.S. retaliation against the European Economic Community’s tariffs on U.S. citrus products.

The new tax could severely affect pasta importers because subsidized Italian pasta imports have grown more than 100% since 1982, to 110 million pounds a year, according to the National Pasta Assn., a Virginia trade group.

“The real effect was being felt in New York and down the East Coast,” said John Williams, president of Los Angeles-based Western Globe Products, a family-owned company that reported about $20 million in sales during 1984. “But if (imports) had been left alone to continue, they’d have been out here in six months to a year, selling significantly under what we’re able to sell it at.”

But Ed Muscat--who as an importer must start boosting the price of his imported Italian pasta by 40%--doesn’t think the tariffs are fair.

“I’m going to get hit,” Muscat said. “Quite honestly, I don’t know what I’m going to do. We’ve doubled our sales in the past year, so I’m a little concerned. My profit margins will be lower, but we’ll continue.

“If there’s a quality (imported) product to be had, then the competition benefits all of us. If it means that the Italians make higher-quality pasta and can ship it here cheaper, then there’s something wrong on this end.”

Mrs. Leeper’s Noodles packages, labels and sells the imported pasta to supermarkets, restaurants and small retail stores. It also provides private-label products for customers, giving small markets and restaurants their own brands.

Across the country, there are “a whole bunch of ma and pa shops” producing specialty items that the mainstream pasta manufacturers can’t afford to produce, Williams said of the nation’s $1.5-billion-a-year pasta industry. “We buy specialty products from two or three small companies in Los Angeles (that) our plant just can’t manufacture.

“We’re producing 30,000 pounds an hour, 24 hours a day,” Williams explained. “Now if the average serving is four ounces, that means we’re producing 120,000 meals an hour.”

Muscat, who produces about 300 pounds of noodles an hour using his aging machines, is obviously not threatening Western Globe, which Williams identified as “the 15th-largest pasta company in the country.”

However, to counter the threat from the new tariff, Mrs. Leeper’s Noodles is expanding its line of higher-quality, U.S.-made products.

“We’ve got some domestically made natural items which we’ll use as an avenue for growth,” Muscat said.

That made-in-the-U.S.A. push includes spaghetti made from wheat, spinach and artichokes, and a vegetable rocelli item that includes domestic spinach, celery and beets--along with the standard white product.

Muscat’s wife, Michelle, suggested that the widow who created the company during the Depression would be pleased with the company’s old-fashioned manufacturing style.

“She made noodles in her home (and later at a small plant in Hillcrest) and had her children sell them up and down the street to the neighbors, so the story goes,” Mrs. Muscat said.

The Muscats use noodle-extruding machines that are more than 50 years old. “I’m one of the few people still using the old machines,” Muscat said. “But I swear by them. You can’t make it any other way. You can’t change the formula.”

Muscat, formerly a national sales manager for a Chicago food company, said he doesn’t “want to risk losing our customers because you can make money and make quality at the same time.”

Williams, whose family has owned Western Globe since 1911, said the pasta business is a tough one that has grown tougher as large, well-capitalized national firms have taken over most of the family-owned operations.

“The market doesn’t go up or down much so we try to find niches,” Williams said.

As for the tariffs, Williams said he is “not sure that even 40% is enough to cover the gap (between Italian and U.S.-produced pasta). But you can’t be greedy, and you have to take what was offered.”