I've always found it interesting how some companies in the rubber industry can continue to operate for years—decades in some cases—and never make a dime.
If companies were people—and, sorry, I don't buy into the Supreme Court's ruling that they are—they'd starve. I know I would.
Amerityre's latest financial report brought this to mind. Not because the company is operating in the red, since it always has. It's up to 74 consecutive quarterly losses, totaling in excess of $63 million.
Actually, Amerityre has been doing better in recent quarters. It has been reducing the size of its net loss, and its sales have been growing significantly. Improvement always is welcome.
Like a number of other rubber companies we covered over the years, Amerityre plugs along without making a profit because of true believers. The executives I've met there, from its founder to people who left important jobs at major companies to join the firm, share a belief in the polyurethane process Amerityre owns and uses.
The Holy Grail, of course, would be if that process moved beyond prototypes and became the accepted method of producing passenger tires. Amerityre is one of many companies to try, none of which has come to full fruition. Maybe someday.
Investors, of course, have to exhibit a measure of faith to be willing to pump money into a development company, so you'd have to call them true believers, too. These are the people and businesses that would be comfortable at the tables in Vegas and aren't worried about losing some dough.
I'm glad we have them, or capitalism would fail. I'm glad I'm not one of them, too.
Another factor I've noticed among long-term money losers is that they still employ people. People who take home wages, pay taxes, contribute to society, all good things.
I recall one medium-size rubber product company—and to avoid a letter from a lawyer, I won't mention its name—that had losses year after year.
We editors would ponder how it managed to continue without turning a profit, and, for that matter, with almost no turnover in senior management.
Ah, but the company, while being publicly held, was majority owned by the family of the guy who founded the business long ago. A number of people with the same last name were directors and the largest shareholders, and effectively ran the business. Or ineffectively, it seemed.
Many got salaries, of course. The company continued its long, steady decline until everyone decided to cash out and the business was sold. I recall its sole plant was closed, and most people with the wrong last name lost their jobs.
No true believers with that type of rubber company, except in the belief that “I've got mine.” I prefer the Amerityre model.
Noga is a contributing editor to RPN and its former editor. He can be reached at [email protected]