Autolite: (12) Fostoria Spark Plug Plant For Sale

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The Supreme Court decision of 1972 made it mandatory that Ford Motor Company sell the Fostoria Spark Plug Plant, and to do so, the owner faced certain rules laid down by the court. The problem was to find a buyer who could adhere to all the conditions. Stipulations were that Ford had to relinquish the manufactory in 18 months, and it was required to purchase from the new proprietor, a minimum of 50 percent of its spark plug requirements for five years.

The new processor was faced with many problems--it was buying a modern factory with the manufacturing capabilities, but minus a sales organization that could compete with the other two big companies. The fact was that the three major producers of spark plugs controlled 90 percent of the market, with Autolite the smallest. Anyone securing Autolite would be faced with the situation that Ford would be a captive customer for at least five years. Traditionally, profits in the spark plug business had come, not the installation of the plugs in new cars, but from the replacement in old cars. This required distribution in thousands of service stations and repair shops. Very few customers, then and now, ask for spark plugs by brand name. Mechanic seemingly have always made for their customers the decision of the type of plugs to use. In most cased, the spark plugs are replaced by the brand formerly used in the car. Hence, it was necessary that the new purchaser have an aggressive sales system that could deal in the replacement market, and could furnish plugs to Ford's Motorcraft Division, which supplied genuine replacement parts in their own "after-market" distribution. The company also should be capable of servicing other engineering producers not related to Ford .

The announcement that the Fostoria plant was for sale brought forth a listing that exceeded over 100 potential buyers, who were most anxious to bid for the facility. One of the most unique proposals was made by the citizens of Fostoria, who were very apprehensive of the future of the factory and its employees. Fostoria community Industrial Association, headed by Floyd Weber, a prominent businessman of the city, instituted a group that was named "Fostoria Spark Plug Company". This organization was duly registered with the Secretary of the State of Ohio.

May 17, 1971, the local paper the Fostoria Review Times, printed the following:

The `heart` of the Fostoria plan was to demonstrate the community's enthusiasm and support for a continued strong, competitive employer and spark plug manufacturer to replace Ford at the helm of the local plant. This support could be demonstrated by purchasing subscription rights to the new Fostoria Spark Plug Company. With the community actively participating in the new company, residents were optimistic that an agreement could be reached with the Ford Motor Company to purchase the local plant and the Autolite name.

The plan also included the active participation of a major corporation, not yet selected, which must have the management, financial, and marketing capabilities necessary to assure a continued success of the spark plug plant as an employer and a good corporate member of the Fostoria community.

The preliminary prospectus revealed that $5,000,000 of subscription rights would be offered solely to persons in the Fostoria area for a period of 30 days after SEC approval. After the initial 30 day period, any remaining rights would be offered to the public generally. Each subscription right was priced at ten dollars and would permit the owner to exchange each right without further payment of one share of common stoch in the Fostoria Spark Plug Company, in the event that the company is successful in purchasing the Autolite assets from Ford.

The Moines realized from the sale of the subscriptions were deposited in a Fostoria bank, with the under standing that if the plan was not successful, the subscribers would be refunded for their investment amounts. The interest earned on the proceeds held in escrow was used to offset expenses involved in the offering and the effort to purchase theAutolite assets.

The prime inspired movers behind this whole plan were Richard H. Carter, Floyd C. Weber, and Robert J. Fast, who enlisted the Jaycees organization to handle the sale of the subscriptions for the newly organized group. Many local companies expressed their desire to participate, by announcing that they would buy a Fostoria Spark Plug Company subscription right for each of their employees.

The first person to buy a subscription right from Art Meyers, Chairman of the Board of Jaycees and Vice-President of the Fostoria Spark Plug Company, was Mayor Dale Mills of the city. Robert E. Hunter, Chairman of the Board of Wetherhead Company of Cleveland flew into Fostoria, and expressed interest in joining the community investors to acquire the local plant from Ford.

The subscription units of the Fostoria Spark Plug Company well, and intrest was evident by Ford Motor Company, in announcing that the newly formed company would be the first of more than 100 interested buyers to be given a hearing before the "parent" Ford Company. Robert Fast, President of Tri-Coungy National Bank and Secretary-Treasurer of the Fostoria Spark Plug Company, said that the hearing of this newly formed local company probably would be in early August, 1972.

On January 16, 1973, this article appeared in the Fostoria Review-Times:
Bids for the purchase of the Ford Motor Spark Plug Plant here are now being considered, Ford officials said thes morning. The cut-off date for bids was originally January 4, but istwas extented to January 15. In a statement released this morning, Paul Prill, Executive Director of Supply Staff, Ford Motor Company, Dearborn Michigan, said "In our continuing exploration of the various divestiture alternatives, we have received proposals from several companies. These proposals will be reviewed and evaluated as part of our study of this matter. No dicision has been made at this time, however, nor do we expect to announce a decision for several months".

Six companies are reported as front-runners for the quest for the local spark plug plant. They are North American Rockwell Company, headquarters in Pittsburg; Eaton corporation, Cleveland, Ohio; Allied Chemical, a New York Based firm; Bendix Corporation, headquarters in Southfield, Michigan; Essex International;and Scovill Manufacturing Company, of Connecticut.

Richard Carter, President of Fostoria Corporation,said this morning:`Fostoria Spark Plug Company also may have a role to play in the final disposition of the local spark plug plant. We are not dead by any means," Carter said--" if we didn't feel this way, we'd have terminated the Fostoria Spark Plug company and refunded the subscribers money which is now being held in escrow".

From January 1973 through June 1973, delegations of each of the potential buyers for Ford's Fostoria Plant came to Fostoria to look at the facilities and meet the local management team that was to remain and operate the plant after the sale. These delegations consisted of the top executive officers of each corporation. with out exception, every possible purchaser highly complimented the Plant Manager and staff for having an exceptionally well-functioning, orderly, and clean factory.

When the bids were received by Ford, they were evaluated, The corporation that seemed to fit more closely the conditions that the seller needed, to continue Fostoria as a prime supplier, was the Bendix Corporation of Southfield, Michigan.

There was great speculation and many rumors from the press and national union UAW-CIO that bendix was to be the new owner of the Spark Plug Plant. However, on June 10, 1973, Duane Richardson, the Plant Manager, noted: "I have no comment on the UAW's information because to my knowledge no agreement has been signed yet between Ford and any party. The most recent rumors claim the field of potential buyers has been narrowed to Bendix and North American Rockwell."

Continual comments of the pending sale and possible new owner kept Fostoria's population and factory employees in a constant state of concern. An offical declaration was made on August 28, 1973, by Ford Motor Company and Bendix Corporation, that the latter would buy Autolite. This culminated several weeks of negotiations, The "intent to purchase" agreement had to be submitted to the United States Justice Department for approval. Part of the Bendix conditions was that a new three year contract in total would be assumed by Bendix. Ford and Bendix agreed on a ten year contract, under which the new holder would supply all of Ford's spark plugs for the United States original equipment and "after-market" needs, as well as Canadian original equipment spark plug requirements. Spark Plugs sold to Ford wouldbear the Autolite trademark for at least five years, This agreement originally set forth the date of October 14,1973, as the "take-over" date by Bendix, but the time was postponed and rescheduled, due to technicalities, until the final date of December 1, 1973 when the sale was finalized.

With thepurchase announcement by Ford and Bendix, Richard Cargter stated that the mneyreceived in thesale of subvscription rights for the Fostoria Spark Pllug Company would be returned to the purchasers in two or three weeks, andhereto disolved the company. This was accomplished in October, 1973.

Consequences of the turmoil and the feelings of insecurity created by the length of time for thedisposal and transfer of the Ford Spark Plug Plant in Fostoria were that certain persons, who were nearing retirement, felt they would be more secure if they could transfer to Ford in Sandusky, Ohio. When Ford moved the prodution line for the manufacture of temperature switches and emission control valves to Sandusky, these people exercised seniority and all other rights under the Ford contract. More than 50 persons took advantage of this situation and commuted daily to work in Sandusky.


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