Behind the desk of Morton Lapides stands a prominent plaque stating a simple golden rule of corporate bureaucracy: "Whoever Has the Gold Makes the Rules."
At Allegheny Beverage Corp., Lapides says, "I make the rules." And the rules are simple: "Move quickly and work hard."
That's how Lapides built a small Pennsylvania soft-drink franchise into a $450 million bottling and vending conglomerate.
Branching away from its original business, the company is now selling office furniture, providing janitorial services, running laundromat facilities for apartment buildings and college dormitories, operating hundreds of cafeterias across the country and offering junk-food addicts a wide variety of pleasure through its ubiquitous Macke vending machines.
"I now consider Allegheny to be a national company," Lapides states proudly.
And not just any national company. According to his friends and colleagues, Allegheny is just the beginning of Lapides' dream to build a major mid-Altantic empire.
"Morton hasn't reached his entire business goal yet," says Nicholas Karavedas, president of the smaller New Gold Bottling Co. "He has much higher sights. He wants to become one of Fortune's top 500 firms," says Karavedas, who has known the 54-year-old entrepreneur for more than 30 years.
Lapides' desire to become a corporate giant has earned him the reputation of a fighter--one who is willing and eager to tackle companies much larger than his, deploying substantial personal and legal resources along the way.
In 1980, for instance, Lapides decided after long and careful study to buy The Macke Co., the Washington-based food and vending company that had revenues nearly twice that of Allegheny's.
Lapides quietly began purchasing Macke shares and then surprised the company's management by making an unexpected takeover bid. Disturbed in part by the fact that a much smaller company was trying to take it over, Macke quickly rebuffed Lapides. It then unsuccessfully tried to get a court order barring Lapides from acquiring more Macke shares. However, Lapides persisted and continued to buy more Macke shares until he gained control of more than 30 percent of the company. Macke finally gave in and reluctantly approved the merger almost a year later.
In 1982, Lapides made another unexpected move when he tried to bail out the ailing $4 billion California conglomerate, Wickes Corp.--a company 10 times the size of Allegheny and Macke together.
Similar to the Macke bid, Lapides' bid came after Allegheny had spent $5.1 million to buy 4.2 percent of Wickes stock. In exchange for bailing out the company with new credit lines, Lapides wanted complete control of Wickes. But Wickes' management refused to give in, and shortly thereafter filed for bankruptcy. Although Lapides has refused to buy more shares--and in fact has indicated that he will sell his current holdings when the price is right--he is still trying to gain some control over the corporation during its bankruptcy reorganization.
"He thinks he can run the company better than present management," says Edmund M. Kaufman, the outside general counsel for Wickes. "However, the present management doesn't believe he can. We have extremely good management that is running the company for all shareholders," Kaufman said, noting that Allegheny, although the largest stockholder next to the employe's benefit plan, owns only 4 percent of the company stock.
Allegheny, the nation's fourth-largest Pepsi-Cola bottler, also went after its competitor, Mid-Atlantic Coca-Cola Bottling Co. and Coca-Cola Co., filing an antitrust suit against the companies and charging them with using illegal anticompetitive tactics to capture a bigger share of the Washington-area soft-drink market.
After a federal jury ruled against Allegheny, Lapides appealed the verdict. But a federal court of appeals rejected Lapides' appeal, saying Allegheny "was entirely unable to show any injury" resulting from the alleged improper activities.
Now, Lapides is attacking the very company that feeds him: PepsiCo, which supplies him with millions of dollars of Pepsi concentrate for his own bottling operations.
In this latest battle with the corporate giants, Lapides has sharply criticized Pepsi and its chairman, Donald Kendall, for not establishing a Pepsi franchise in Israel.
In public, Lapides implies--but does not specifically state--that Pepsi is adhering to the Arab boycott of Israel, fearful that doing business in Israel would adversely affect its lucrative business in other Middle East companies.
"Pepsi-Cola is manufactured and distributed in many Arab countries and . . . is being aggressively expanded in Russia. However, Pepsi is conspicuous by its absence in the state of Israel. If PepsiCo can permit franchises to exist in small areas in the U.S., then certainly Israel, with more than 4 million people, deserves a Pepsi franchise," Lapides notes in material he is distributing to his customers.
In private, Lapides has gone even further, taking his allegations to the Department of Commerce's Office of Anti-Boycott Compliance. The office is charged with enforcing a 1978 law forbidding American companies from refusing to do business in Israel in order to trade with Arab countries.
"He has made us aware of his concerns," notes Bill Skidmore, the office's director. However, Skidmore says Commerce Department policy forbids him from saying whether an investigation is under way unless formal charges have been filed. So far, none have.
In the meantime, Lapides has launched a postcard campaign, encouraging his customers to write to Pepsico chairman Kendall, urging him to set up a Pepsi franchise in Israel.
PepsiCo denies Lapides' charge, saying the only reason they are staying out of Israel is economics. Company spokesman Jim Griffiths says that after several extensive studies, the company has concluded that it would be very difficult to make a profit in Israel, where Coca-Cola has a 75 percent share of the market.
"There is no substance to Lapides' charges," Griffiths says.
Lapides, however, argues there is a profit to be made. "I am willing to back that statement by taking the necessary financial risks which are involved in establishing a franchise there," he adds.
"I suppose I am a fighter," Lapides acknowledged in a recent interview. But, he later added, "my fighting is simply determination, determination that grew out of the depression, when I was just a kid in knee pants. We lived in a house with no modern toilet facilities, and there were times when my parents went without food so their children could have enough to eat. I decided then that I never wanted to be poor again. I just decided to build a big successful company."
So, in 1960, Lapides left the family bottling business and began running his own soft-drink franchise in central Pennsylvania. As it became successful, he expanded his territory, acquiring more franchises and eventually buying out the family business in 1965.
Today, the company's bottling operations cover four states. However, with its purchases of Macke, the company now has operations in more than 26 states.
Lapides, who receives an annual $675,000 salary, owns 26 percent of his company's common stock and 100 percent of the series-A preferred stock. The latter gives him virtual control over the company because it allows him to select five of the company's nine directors. Additionally, under a change approved in the company's bylaws at last week's annual meeting, Lapides has the absolute power to defeat any action requiring stockholder approval because a majority of stockholders in both classes of stock must approve any major action.
Lapides said that every move he makes is motivated by a desire to make money. That is one reason why he is fighting PepsiCo, he says.
"My father taught me that you can make a lot of money doing what your customers want. You can lose a lot of money by trying to shove down their throats what they don't want. What a lot of our customers want is a franchise in Israel," he adds.
Even so, Lapides' campaign closely follows his philanthropic activities. A large donor--he says he donates about 20 percent of his total annual income to charities--Lapides has been a strong supporter of Jewish causes, especially those that support Israel. He has also given money to many Baltimore causes, including Catholic schools in Baltimore, and significant sums to Johns Hopkins University for cancer research for children.
"I get a wonderful thrill out of doing things like that," he says.
Yet, he readily admits, his biggest thrills come from wheeling and dealing.
"I have a simple desire to build a big company, just like some people want to become a big tennis player," Lapides says, quickly adding, "Building business is more fun to me than playing tennis or sailing a boat at the bay. Business is my game. Each additional increase in earnings and volume is like an athletic trophy to me."
By all accounts, Lapides works very hard to collect his business trophies, frequently staying up all night to catch up on work. His tireless dedication may be one reason he is on his third marriage, colleagues point out.
They quickly add that he demands the same dedication from his employes.
As Harry J. Conn, Allegheny's senior vice president and Lapides' right-hand man, says, "It is expected that we will be on duty for 24-hours a day--literally."
Lapides is determined to get things accomplished quickly, Conn says. "He's a highly competitive man. In his view anything can be done immediately. Whether something can be done or not, it's done."
What's more, Lapides' associates note that things must be done his way, noting that he is unwilling to take "no" for an answer unless there are good, solid reasons.
For instance, a few years ago, the company ran a Pepsi promotional campaign that Lapides wasn't enamored with. The campaign produced poor results, notes Joseph Townsley, who, as president of the Teamsters Union in Maryland, works closely with Allegheny.
So, for the next promotional campaign, Lapides posted large pictures of himself around the plant, accompanied with the statement, "You'll do it my way," Townsley says.
Lapides acknowledges he may sometimes be difficult to work with, saying, "I am very bottom-line oriented. If someone has a way to make more money, I listen; if someone has a way to hold off a decision, I don't listen."
Making more money--and gaining more recognition--is what he hopes, in part, to accomplish by moving the company's corporate address from Baltimore to Cheverly--a move he announced last week at the company's annual meeting.
He also hopes to achieve these goals through more acquisitions. For $8 million, he acquired a Detroit-based laundry services firm earlier this year.
And he hopes to announce other acquisitions in the coming months.
What's more, he is now exploring new areas, including commercial child care.
Fifteen years from now, he says, "I hope to still be here running the company." But by then, if Lapides has his wish, Allegheny will be much larger.