The Midas Touch

Gold-painted Midas mufflers have long rejuvenated the aging exhaust systems of millions of American autos. Even so, there is something new: after 20 years of steady but unspectacular growth, the sales and profits of Midas-International Corp. have suddenly taken off on a heady flight. Last December Midas, which franchises independent muffler installers, opened in Phoenix its 900th muffler shop. The company has also been diversifying to become a force in the burgeoning market for recreational vehicles--campers, trailers and motor homes. Last year Midas reported $225 million in sales, a 39% increase, to its corporate parent, IC Industries, Inc., the company that owns the Illinois Central Gulf Railroad. Midas' earnings are not reported separately, but analysts guess they may be about $23 million annually, pretax. Midas President Ralph Weiger, 52, will not confirm that, but he does say dollar earnings in 1976 were five times as large as two years earlier.

Founded by Chicago Entrepreneur Nate Sherman, Midas long thrived as the number of its franchised dealers increased steadily over the years. But after Nate's son Gordon took over in 1967, a father-son conflict arose. Gordon was a University of Chicago intellectual and partial to Elizabethan English and the raising of orchids and hummingbirds. He favored a relaxed style of management that did not sit well with dad. Several dealers quit, and the internal strife began to show up in leaner profits. After a proxy fight, Sherman Sr. in 1972 sold his controlling interest to IC Industries. When IC bought Signal-Stat, a New Jersey auto-accessories maker, it assigned Signal-Stat's president Weiger to bolster Midas.

The new chief executive, a former Purdue University football star, began an aggressive program of international expansion. When he assumed command, Midas' only operation outside the U.S. consisted of a handful of muffler outlets in Canada. Now Midas has shops in eight foreign countries, and Weiger expects up to 25% of its muffler outlets to be overseas by 1985. In order to service the increasing number of foreign cars coming to the U.S., Weiger plunked down $2.5 million for a new, more efficient plant outside Chicago. There, original mufflers and tail pipes from American and foreign cars are redesigned by Midas engineers to find the fewest possible shapes necessary for a good replacement fit. Midas backs up such technical finickiness by requiring franchise holders to attend its own M.I.T. (Muffler Institute of Technology) at Palatine, Ill. The franchise holder also must maintain a large supply of parts. Each Midas shop stocks an inventory of mufflers that will fit all American-make cars of the past ten model years.

Weiger also enlivened Midas' sleepy travel-trailer business, which the company acquired in 1965. The fuel crisis that followed the 1973 Arab oil embargo dealt recreational-vehicle sales a heavy blow, but Weiger took advantage of the downturn to mass-purchase chassis and their components. When the shortage passed, Weiger opened a 130,000-sq.-ft. manufacturing and assembly operation in Elkhart, Ind. He promoted the star of Midas' 30-model trailer, camper and motor-home lineup: the Midas mini-motor home, known as a Chopped Van. Midas buys the cab and chassis of a GM, Ford or Dodge van, then builds on an insulated aluminum and wood body complete with tub, shower, refrigerator, stove, beds and other amenities. Selling price: $12,000. Midas' sales of recreational vehicles jumped from $60 million in 1975 to $106 million in 1976. That is more than half the figure for the giant of the motor-home business, Winnebago Industries.

Weiger now boasts that with its new product balance, Midas-International can hardly lose whether the economy goes up or down. If times are hard, he says, people fix up their old cars and replace the mufflers. If the economy booms, so do sales of Chopped Vans. Still, Weiger is not satisfied. "We see the ordinary customer only a couple of years after he buys his car," he laments. "That's not soon enough. We'd like to sell him shock absorbers and other things." The company is now also operating three self-service gas stations. The Midas touch, it seems, is still there. One station pumped 115,000 gal. in its first month, almost four times as much as the average brand station.

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