Verona tool firm fights the odds, Chinese - Digital Collections

Verona tool firm fights the odds, Chinese - Digital Collections

iU/00 2 562 or>37 09:49 SENATOR HF-INZ +•>-* OOG *• at- Verona tool firm fights the odds, Chinese By Len Boselovic The Pittsburgh Press T HE...

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Verona tool firm fights the odds, Chinese By Len Boselovic The Pittsburgh Press

T

HE MANAGERS who led a 1985 leveraged buyout of Wood ings- Verona Tool Works fet-i like they've been hit oti the head by a sledgehammer. Their headache wouldn't be as worrisome if the blow had been delivered by one of the sledgehammers the 117-year-old Verona company makes. Trouble is, it's made in China and sold in this country for about what it costs V/oodings- Verona to buy the steel for its hammers. The same is true for most of the hammers, crow bars, hatchets, axes and other hand tools Woodings-Verona makes. Chinese-made tools cost less and are being gobbled up in increasing numbers by U.S. hardware stores. Tool imports from "China totaled $7.98 million last year, according to the International Trade Commission, 83 percent higher than in 1987. So Woodings-Verona is asking the U.S. Department of Commerce to impose antidumping penalties on the Chinese products,

raising their price to what U.S. manufacturers say is a fair market price/The company won the first round of its case May 15, when ITC ruled there was "a reasonable indication" that domestic tool makers are suffering because of Chinese imports. The case was then sent to the Commerce Department, which has launched a four- to six-month investigation. "We're very confident that we'll win this and it will be good for American industry, the American consumer and the American worker," said Robert Baiz, director of strategic planning. Many would say Baiz's optimism is unfounded, given the difficulty of making antidumping fines stick and the "'state of the industry. One by one, Woodings-Verona's domestic competitors have dropped out of the market because of low-priced imports. "This typically has not been a very attractive business to invest in because of the low rate of return on investment, and those low rates have been caused by foreign competition," Baiz conceded. That didn't stop Baiz, then working for PNC Merchant Banking Co., from joining

Wocdings-Verona management in buying the company from Budd Co. in June 1*938. The $10 million deal $8.5 million for th? company and $1.5 million in working capital and expenses was financed by Pittsburgh National and Equibank, Baiz said. The company's sales have grown since the sale Baiz wouldn't say how much and now total $30 million. The growth came largely because import dumping has bludgeoned Stanley, True Temper and cthe: competitors out of the forged loolmaking business. Woodings-Verona has survived by cutting operating costs 8 percent enough to pay ihe interest on the LBO debt. "We've sort of reached the point where we really can't cut our costs substantially more," Baiz said. "This company rues lean and mean and ekes out every penny it can." The company also invested $1.5 million in equipment, doubling productivity for some operations. Most of the investment went into Woodiogs-Verona's Falls City, Neb. plant, which employs 155. Baiz said the aging Please see Tool. D5

too! from Page Di rona plant, a rusting, sky blue mill ire 2,000-pound drop hamai?rs sily stamp out a:: heads and ether ts, would be improved if Wood > Verona wins the dumping c^ise i profizs increase. 32:2 said Wnodings- Verona is .king money, fi'ji b« declined to how much, rj&t that it's not ugh. \ 3.n &?barding, director of msau.irirg, said competing against Chinese is "a whole new bal! na" from fighting Japanese xirts. Wher: we were fitting with the anese, at least we were fighting the sajne thing. They were in it to
costs **Voodings-Verona 51.70 just to buy the steel for a sledgehammer. Then the company must heat it in a 2,200 degree furnace, shape it on a drop hammer or mechanical press, paint it, polish it and ship it. "We can't beat t!ie Chinese as long as they keep doing it the way they're doing it," Scharding said. In papers filed with rhe ITC, the Chinese said their products are "of such substantially lower quality" that they can't be coin pared to Woodings- Verona's tools. WoodingsVerona also has hi.pher steel costs, plus interest payments from the LEO, the Chinese argued. "I was amazed the Reu Chinese would say their stuff is so cheap

because it aia't no good," Scharding said. Nevertheless, the 75 workers at the Verona plant and headquarters know what they're up against. ''They know we have- a big competitor out there who sells to people who could be our customers. And they know customers make pay days possible," Scharding said. iVfike Babincak, 26, who's worked at the plant for five years, is worried. He just bought a house. "It's a bunch of crap. They're taking our jobs," be said of the Chinese. From Babincak, who operates a

drop hammer, to Baiz, who ch Woodings- Verona's long term sir gy, employees are optimistic. they also are realistic. ii said other companies tav? \vcn dumping cas*s 43 last year, according to ITC f igrrf haven't necessarily woa ih* \ Many times. ;he Importing cou just reroutes the product ihrr-afthird country. Bai?. raid Wood.': Verona and its Ijwvers will hiv keep a close eye on'impcrts to rr. sure that doesn't happen. "If you file one of these durnr petitions, it's an annuity for lawy You have to constantly watcn if,' said.