Owners Draw Battle Line : Flag-Waving Group Tries to Stem Selling of Firms to Foreign Companies
Three times, foreign-based companies have tried to buy the Orco Block Co. And three times, the Muth family has rejected them. Others American businesses, however, have not resisted the temptation.
Rick Muth, the Stanton company’s principal, says that 60% of the U.S. concrete industry is now in foreign hands. While foreign deals such as Sony Corp.’s buyout of Columbia Pictures received worldwide attention, most takeovers of small firms receive scant notice. Little by little, he says, America’s basic industries are being bought.
To try to stem the tide, Muth and an Arizona concrete block maker have formed a flag-waving association that plans to urge Congress to enact legislation that will help their industry.
Called USA Owned/USA Made, the organization will be formally announced at a press conference scheduled for Friday in Flagstaff, Ariz. Muth said he and co-chairman Wally Smith, president of the Block Lite division of Tri-Smith Investment Corp. in Flagstaff, plan to contribute about $30,000 of their own funds to get the organization started.
“We give away our natural resources to foreigners,” Smith complains. “The average citizen doesn’t know how much they own.”
Muth and Smith say they have signed up about 40 companies who meet the group’s qualifications. Most of those firms are in the concrete block and related industries. But the group hopes to gain members from a broad spectrum of American manufacturing.
They have hired a graphics firm to design an eagle-emblazoned logo, which Smith said he will have made into patches for his workers to wear on their uniforms. Company managers and administrative employees will be provided with lapel pins to wear as a condition of employment, Smith said.
Muth and Smith contend that they are not seeking protectionism, just equality. Muth said foreign owners receive tax breaks on their American investments that leave domestic producers at a disadvantage. Added Smith: “We’re playing on two different playing fields.”
Also, he said, more and more families are selling their businesses rather than handing them down to succeeding generations because of the inheritance tax law.
Muth and Smith, who both head companies founded by their fathers, say they have spurned offers from foreign owners.
“Three foreign firms have tried to buy us. They say, ‘If you don’t sell, we’ll build our own plant,’ ” Muth said. “We say that’s the great thing about the United States. You can do what you want, including getting your nose bloodied.”
One Irish-owned concern followed up on its promise, he said, buying a domestic block maker in Arizona. The result, he said, has been a price war on concrete block. Prices for basic concrete block have fallen from 71 cents each to 58 cents in Southern California. Muth asserts that its costs more than 58 cents to produce a block.
One of the group’s goals, he said, will be to push for enactment of stronger laws against “predatory pricing” by foreign-owned firms.
A Flagstaff publicist hired by the two men said the organization fills a void left by other business groups. And the formation also comes at a time when much attention has been focused on the foreign-ownership issue.
“I have a real good feeling that not only is the timing right but that people who own their own businesses want representation they are not going to be able to get (from other business organizations),” said publicist John F. Hagen. “No one has looked out for their interest collectively as 100% owners of companies. They kind of have been on their own. . . . This offers them the first opportunity to be the dog rather than the tail on a national issue.”
To join USA Owned/USA Made, companies have to be 100% U.S.-owned and privately held. Public companies are not eligible because the nationality of their stockholders cannot always be determined. Members must have a reputation for selling quality products and a majority of their raw materials must be bought from U.S. manufacturers.
