Every day you read about American companies merging with foreign companies to form huge new operations. In the process of formulating these mergers they usually talk about it as being a "merger of equals." I'm not sure what that means, but it must make it more palatable to the stockholders. On paper, these mergers always seem to make a lot of sense. It might be that their product lines complement each others, or the new company can now participate in markets worldwide, or the new company can now reduce their overall costs, maybe, by buying supplies cheaper or consolidating duplicate operations.
Despite all the pluses, some wonder whether a merger of "equals" remains an American company or creates a foreign company or - as some people say - a global company? Some people don't care one way or the other.
I thought about this. If the company is now incorporated somewhere outside the U.S. it is probably no longer an American company. I think everybody realizes that merging two companies means changes. When an American company becomes a foreign company, however, there could be some changes that people might not have thought about:
n Foreign and domestic companies view charitable contributions differently. This is something that most people don't think about, but it could have a dramatic effect on the community. Domestic companies either directly, or through their foundations, donate generously to charities and public institutions, especially universities. The same thing is true for executives of these companies.
While it's true that public universities in this country are supported by tax dollars, many scholarships for needy individuals or massive capital drives for construction are funded by private donations. In most other countries the universities, as well as the museums, operas, and symphonies, are totally financed by the government.
This is why charitable contributions are not a big priority with foreign companies that have operations in this country or for the foreign executives that work here. Many of DaimlerChrysler Corp.'s top brass - like former manufacturing chief Dennis Pawley, who donated $1 million to his alma mater - have been big donors to universities and other various charities. FormerChairman Lee Iacocca also donated generous amounts to his alma mater, Lehigh University.
Lately a lot oftop executives have left, with some being replaced by German executives. It seems unlikely to me that DaimlerChrysler co-Chairman Juergen Schrempp will donate a sizable chunk of his fortune to any American university.
n There is a lot of business information made available to the public about American companies. The media, fund managers and financial experts scrutinize this information, and they can talk about executive pay, bonuses, options, sales and cost trends, or profits and losses.
In general, however, foreign companies are not obligated to make this kind of information public. Details of their operations are a mystery as far as the public is concerned. This could explain the misdirected high opinion the media have of foreign companies. For example, media praise of: declaring it the most efficient carmaker when the company was on the block and on the verge of going broke.
n American companies also can be sued for just about anything. They are not well protected by any statute of limitations and are often only remotely involved with the problem. This has not applied to the same degree to foreign companies because up to now they have only been sued for the portion of their operation that took place in this country. Other countries view the whole business of consumer protection differently than we do in the U.S.
I may get an argument, but I feel most American companies have a sense of responsibility to the communities where they have plants. Existing facilities or new facilities have been in upgraded or built in blighted inner cities when it would seem easier and less risky to start afresh in some greenfield site. GM moved its headquarters to the Renaissance Center in Detroit, Chrysler built a new engine plant in Detroit and GM refurbished a plant in Lansing.
Foreign companies typically build plants in Alabama or the Carolinas where they can get a non-union work force, tax breaks and training allowances. You don't read much about the burden domestic carmakers have to carry just to be good citizens. - Stephan Sharf is a former Chrysler Corp. executive vice president for manufacturing