Mirror on the future

Mirror on the future

JOHN FAUBER

The Journal staff

SHEBOYGAN, Wis. If you didn’t know Mike Muth, you might think he couldn’t stand success.

Muth has built two thriving businesses, each with hundreds of employees and tens of millions of dollars in sales, only to sell them both by age 48.

Now he is well into a third new venture, one he started from scratch employing a new technology. He expects it to be a $100 million global operation within 4 1/2 years.

A tall order, but don’t bet against him.

“The guy’s amazing,” said Dudley Godfrey, a partner in the Milwaukee law firm of Godfrey & Kahn and a longtime board member at Muth’s two former companies. “He’s guessed right every time.”

Muth’s latest guess actually it’s more like a multimillion-dollar gamble involves turning the mirrors on the doors of your car into flashing displays that warn drivers in your blind spot that you are are turning or changing lanes.

The mirrors use a technology that Muth knew virtually nothing about when it was first pitched to him in 1987 by a 25-year-old US Marine Corps helicopter pilot who happened to be visiting relatives in Sheboygan.

But in typical Muth fashion, he latched onto the idea, tirelessly promoted it with automakers and put more than $5 million of his money into the new company, Muth Advanced Technologies.

“We pounded this thing,” Muth said. “We probably made 200 presentations {at the Big Three automakers} in the last couple years.”

This summer, the first production vehicles equipped with the signal mirrors are expected to roll off assembly lines under an agreement with Ford to put the mirrors on a limited number of Broncos.

In addition, Muth’s company has just formed a joint venture with the large Canadian auto parts firm Magna International to produce the mirrors in North America and Europe. Within five years, Muth said, Muth Advanced Technologies and its partner should be making 2.5 million pairs of signal mirrors a year.

The mirrors are to be marketed as a safety feature much like air bags and anti-lock brakes, and sold as an option, costing a car buyer about $100. He said focus group research done by one automaker using hundreds of consumers indicated overwhelming acceptance of the idea.

But the bigger question may not be whether car companies and consumers like the idea, but why Muth felt compelled to sell them on it in the first place. After building two successful businesses over the last decade, wasn’t he tempted to rest on his laurels?

Muth got into business with K.W. Muth Co., the firm started in 1947 by his father, Ken. The company primarily made paper insulation products for cars and plastic floor mats for pickup trucks. But over the years it also seized a variety of short-lived money-making opportunities, including the production of rosebush covers, padded Bible covers and cardboard Barbie Doll houses.

Mike Muth became president of the family business in 1970 at age 27. In 1984, after admittedly mismanaging K.W. Muth into near bankruptcy, Muth convinced the Wisconsin Investment Board and Firstar Bank to lend him $13 million to invest in a new technology that made interior car trim products such as door panels and headliners out of a molded wood fiber and polypropylene.

In partnership with an Italian company, ASAA International, he started two new businesses, Muth Wood-Stock and American Wood- Stock. Within 4 1/2 years, the new businesses had grown to 800 employees and sales of $90 million a year.

Muth wanted to slow the growth of the firms, but his Italian partners were pressing for more growth. So in 1988 he agreed to sell his 60% stake in Muth Wood-Stock and 40% share of American Wood-Stock. GM’s Lopez

Muth took more than $2 million of the proceeds from the sale and invested it in K.W. Muth, spending the money on a new technology to produce plastic floor mats for light trucks. With the pickup truck industry beginning several years of strong growth, K.W. Muth’s employment grew by 50%, to 300 people. By 1992, its sales had reached $40 million.

But there was a cloud on the horizon. His name was Jose Ignacio Lopez de Arriortua, then purchasing czar for General Motors Corp., one of Muth’s biggest customers. K.W. Muth and a variety of other Wisconsin firms that supplied parts to GM were stung by the heavy-handed price cuts demanded by Lopez.

Muth recalls a phone call from Lopez in early 1992. The GM executive demanded that he cut his prices by 20%.

“I said, `We’ll go out of business,’ ” Muth said. “He said, `fine.’ I said, `We have written contracts.’ He said, `Sue me. We’ve got more lawyers than you’ve got employees.’ “

Muth considered fighting Lopez but ultimately decided that it would be best for his company and his employees for him to sell the business to a larger firm, one that was better equipped to deal with the tough pricing environment created by Lopez.

Later that year, automotive components maker Masland Industries of Carlisle, Pa., bought K.W. Muth. Though Masland ultimately lost some of its GM business, it has brought other business into the Sheboygan plant, and employment there has grown to 370, said Mike Long, president of Masland Wisconsin. Other projects in works

After the sale, Muth, 51, and his wife, Jan, could have taken the proceeds and spent their lives comfortably pursuing their hobbies: skiing, biking and traveling. Four years ago, the couple built an 8,000-square-foot home and a five-acre, spring-fed pond on a 60-acre wooded parcel in the Town of Sheboygan.

Muth said he couldn’t disclose how much he made from the sale of the company. Whatever the amount, he and his wife decided to take 25% of it and put it aside. “We called it `never-touch money,’ ” he said.

Everything else has been available for building the new signal mirror business and several related ventures. In addition to signal mirrors, Muth and his technology expert, John Roberts, are developing several other optical/electrical devices for cars. They now have 10 patents in the US, Canada and Europe, Roberts said.

They join an international field of innovators, many using adapted aerospace technology, in turning out new safety and convenience devices for cars.

The fact that Muth didn’t take his money and spend the rest of his life with his feet up didn’t surprise those who know him.

“He really has a burning desire to build things,” said Dave Rauwerdink, senior vice president with Firstar Corp. and former chairman of Firstar Sheboygan. “He is the ultimate in entrepreneurship.”

Dewey Holland, marketing manager for Ford’s full-sized pickup division, said he could not comment on Ford’s plans for the signal mirror other than to say he was “very impressed” with the product. There are other warning devices on the market, including a flashing light used on many European cars, Holland said, but Muth’s through-the-mirror technology is the most unobtrusive.

“We are seriously looking at it and evaluating its market potential,” he said. “I have a set of Muth mirrors on my own truck. I’m quite impressed with the pioneering spirit at the Muth company.”

Muth already has plans for other businesses. He has formed a joint venture with a European firm to start a glass-cutting plant in Sheboygan in order to get better quality mirror glass. He recently bought 4 1/2 acres of land and a 20,000-square-foot building to house the operation, and he plans to hire about 50 people this summer.

About 25 people now work in his signal mirror business. The total ultimately will grow to 200, he said.

Muth views his new company not as a signal mirror manufacturer but rather as a company that develops new ideas. It spawns new technologies, receives investment money from Muth and his wife, finds joint venture partners willing to invest their own money, and sets up companies to make and sell the new products.

Waiting in the wings are several other new ideas, including a sonar-assisted mirror device that helps drivers back their cars into a tight space, and a “smart mirror,” which works just the opposite of a signal mirror. The smart mirror uses a microwave radar signal to detect cars in a driver’s blind spot and warn the driver of their presence.

Muth also has an inexpensive “heads up” display system that projects various instrument readouts onto the windshield.

Copyright 1995

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