Archive for Sunday, November 5, 1989

CORN COB PIPE PLANT NEARLY RUNS ITSELF, OWNERS SAY

November 5, 1989

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Garth Terlizzi, a local financial investments adviser, has a gleam in his eye when he talks about it.

And Mike Lechtenberg, owner of Electric Supply Co., 724 Conn., seems to slip into a laid back, Huck Finn-type mood when he brings it up.

"People think you're pulling their leg when you tell them you own the world's oldest corn cob pipe factory," Terlizzi said during an interview in the Lawrence office of Private Ledger Financial Services, which he manages.

The latest stock prices blip on a computer as Terlizzi explained how he and Lechtenberg came to own Missouri Meerschaum Co., a low-tech company located along the Mississippi River. Missouri Meerschaum has been churning out corn cob pipes in much the same way since 1869.

TERLIZZI SAID that a little more than a year ago, he was shopping around for a company to buy as an investment. One day he was playing golf with a Missouri accountant friend and asked him to tell him if he ran across a company that didn't require a lot of close supervision.

"So a few days later, he called me back and said, Garth, I've got a client that wants to sell a business and it's just perfect for you," Terlizzi said. "And I said, `Well, what is it?' And he said `It's a corn cob pipe factory.' And I said, `Oh sure. I've always wanted to invest in a corn cob pipe business.'"

But the accountant friend told Terlizzi the business was doing well and that the previous owner, who had a Midas touch with his investments, wanted to retire.

Terlizzi decided that the numbers looked right. But first he wanted to run the deal by his client and friend, Lechtenberg, an avid pipe smoker.

LECHTENBERG not only thought it was a good idea, he wanted in on it.

After working with the seller and visiting the property, the two men bought the company.

"This was a good deal for us. It was an opportunity we could get into," Terlizzi said.

"I liked the pipe so well, I bought the company," Lechtenberg said, grinning as he mimicked Victor Kiam's electric razor commercial.

Although their main businesses are in Lawrence, at least once a week one of them travels to Washington, Mo., to check up on the company, which is located about 45 miles southwest of St. Louis.

"We have a three-story brick, 50,000 square-foot building," Terlizzi said.

Lechtenberg said they have more than 40 employees.

"The way this thing's really been operating is that we have an excellent plant manager and foreman and they're able to keep this thing running smoothly," Lechtenberg said. "If they have any problems, they call us."

THE TWO OWNERS say their partnership works well.

"Garth basically oversees the total operation and all of the sales and I basically operate the plant in general," Lechtenberg said. "Between the two of us, we've pretty well got all the bases covered."

Terlizzi explained further.

"I'm more the financing and marketing end of it and Mike's a lot more mechanical than I am," Terlizzi said. "We have a lot of equipment and it's all specially made equipment. You don't go out and buy corn cob pipe manufacturing equipment. You make it."

Lechtenberg said when the machinery breaks down, they must make their own parts. They also grow about 100 to 150 acres of their own corn at the production site.

"We take the cob and have it genetically designed for our use," Lechtenberg said. The University of Missouri has developed a hybrid corn for the company that produces white kernels, which they sell off, and oak-like hard cobs.

"We need the diameter and the strength," Lechtenberg said. "We have to keep improving it at all times and we have to re-establish this particular hybrid every four years."

IN THE PRODUCTION end, the company uses pre-1930 corn shellers, which it must maintain.

"The reason is the newer corn shellers strips the corn from the cob and breaks the cobs up," Lechtenberg said.

Terlizzi said for that reason, the production end of the business has remained the same for quite a while.

"It's a low-tech manufacturing business," Terlizzi said, laughing. "We don't have any laser technology in there yet."

The company has many employees in their 70s and the average age of those who work in the plant is about 55, they said.

"They've been long-time, loyal, hard working people," he said.

ON THE MARKETING end, Terlizzi said the company emphasizes that its pipes need no breaking in period and are low-priced.

"We're in the market for the people who like to go fishing and be outdoors, for farmers, and people who enjoy smoking a pipe who don't have the income to go out and buy a $25 briar pipe," he said.

Their best-selling pipe sells for under $2, he said.

Terlizzi said he thought the company's real future was in European countries, such as Poland or Yugoslavia, where the standard of living is fairly low.

The two owners recently went to some pipe trade shows in Europe to scout the market.

"The tobacco business in the U.S. is on the decline," Terlizzi said. "It's dropped about two percent in the last year. The European community has more than offset the decline in the U.S."

They currently ship their pipes to all of the western European countries, Australia, Africa and other places around the world from Washington, Mo.

TERLIZZI SAID they have sold 4 million pipes in the last year, which represented about $1.5 million to $1.8 million a year.

"It's not a small business," Terlizzi said. "We've produced a lot of profits."

In the U.S., the biggest buyers are distributors and large-scale retail chains, he said.

Over the years, their company has boasted making corn cob pipes for celebrities, Terlizzi said.

"Our company made Gen. MacArthur his corn cob pipes," Terlizzi said. "And in the movie, `Popeye,' our company provided the corn cob pipes."

Terlizzi said he enjoys going up to people who are smoking a corn cob pipe and telling them he owns the business.

"The business has just more or less run itself," he said. "Since we've owned it, our sales have increased 15 percent."

Terlizzi said he thought the company's business would continue to prosper, even though the market for tobacco products in this country is on the decline because of the health risks involved.

"A lot of people who are smoking cigarettes have tried a pipe to wean themselves away from cigarette smoking because they don't inhale a pipe," Terlizzi said. "And also a lot of people enjoy the sweet, aromatic smells of a pipe. So a lot of people who are trying to quit smoking will spend $2 to $3 on an inexpensive pipe before they go out and spend $20 on an expensive pipe."

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