The Budd Co., and old American firm that pioneered the steel automobile body, built railroad passenger cars of great fame in the 1930s, and more recently grew into a major car and truck component supplier with annual sales topping $1 billion, six months ago became a wholly-owned subsidiary of the German firm, Thyssen AG.
The $295 million purchase was the biggest single ever by a German firm in the U.S. Now a legitimate question is "How are things working out at Budd?
According to Gilbert F. Richards, chairman and chief executive officer of Budd, things haven't changed - and they've gotten a little better. Things are going "beautifully," he said.
In an interview, Richards explained Budd operates autonomously as one of six Thyssen AG groups Richards said Thyssen had reearched Budd 2 1/2 year before a suprise long distance telephone approach to him was made through a Budd director."I'm not sure if I had a glass of vodka in my hand when I got the call or not, but I sure had one later," he said.
At a meeting two weeks later in New York, Richards, two other Budd officers, Dieter Spethmann, chairman of Thyssen's executive board, plus one other top Thyssen executive discussed the possibilities and principle of the purchase.
"They said they wanted to acquire Budd as a base for expansion into the western hemisphere, both North and South America," Richards said. "They said they wanted a friendly takeover, and most importantly they wanted Budd management to stay in place.
"They offered employment contracts to our key management and four of the guys took 'em I was the only one who didn't", said Richards, who has a well-earned reputation for outspokeness in this automotive city. Why? "I haven't had a contract in 43 years" of working and further, at age 63, he's inclined to do some other things in life and likes the option of either staying on the board or stepping out often a year or two.
For example, Richards says he relishes the opportunities of making "Speeches against the goddammed bureaucrats."
Richards said he asked Spethmann "for the best damn man he had" to join Budd as a senior vice president of staff, live in the U.S. and serve as the mainline of communication with Thyssen headquarters in Germany.
Richards then joined the Thyssen AG board; now a wholly-owned subsidiary no longer reporting its profits and sales publicly here, was reconstituted. It now meets six times a year and consists of five Germans, four American outside directors, one Canadian who had been on Budd's board before the takeover, and five inside Americans who are officers of the company.
Final negotiations on the price for the stock took place in Paris roughly two weeks earlier than planned because Budd stock which had been lagging in the neighborhood of $22 for some time began to rise back to $24, $25 and $26. The Budd officers negotiated the Thyssen people up to book value - $34 - and then agreed to a joint statement.
One interesting point is steel. Thyssen is in the U.S. in steel warehousing and has been and will remain a Budd supplier, Richards said. But the American company years ago made a decision to limit its overseas steel purchases to les than 15 percent and in fact had not bought more than 12 percent overeas, he said. When the gap between foreign and domestic steel got to be $60 a ton, Budd had to do something to protect its shareholders, Richards said.
Steel was talked about early, an agreement reached that Budd, not Thyssen, will decide who supplies the Detroit company's steel.
Thyssen began as a steelmaker 25 years ago and is now widely diversified, manufacturing refineries, passenger cars and engine locomotives. It is also a large producer of forging and castings in Europe.
About those "expansions" and presumably acquisitions in North and South America, Richards is guarded.
Plastics is an obvious interest The company also has talked about developing new technologies in graphite fibers. A small grey iron foundry acquired a few years ago is booming. And the truck wheel and truck [WORD ILLEGIBLE] business are mentioned vaguely.
A final point of some small irony one elderly woman wrote Budd president James H. McNeal Jr. that surely he had known about the coming deal and that she was miffed that she had sold her Budd stock at $26 a share.
McNeal, like four of Budd's other top officers didn't do that well. They had exercised their options, and sold their stock in August 197 when it was below $22.