CENTERVILLE, OHIO - ``Worker involvement'' becomes more than a buzzword when employees own the business. Workers had better stay involved at Dimco-Gray Co., which compression and injection molds knobs and handles, and makes timers and metal fasteners.
Facing a possible breakup of the company in 1986, employees put their own money on the line to form a fully leveraged, 100 percent employee stock ownership plan, or ESOP.
The transition was hard. Profit fell. The union was combative. The leveraged company had little spare cash to modernize. All its assets were used as collateral. All union employees shared personal liability for the borrowed money.
Today, every one of Dimco-Gray's 140 employees is sharing the rewards.
``We just had the two best years in the history of the company. Everybody got profit-sharing checks in '93 and '94. Substantial profit-sharing checks,'' said Norman Brennan, president, chairman and chief executive officer.
Sales increased by more than 25 percent to $11.4 million between 1989 and 1994.
A plant tour at the company's Centerville headquarters passes bins full of knobs, most of them black, made by injection and compression molding. Dimco-Gray makes more than 20 million knobs a year for everything from lawn mowers and snow blowers to exercise equipment.
That's a lot of knobs.
Still, media attention rarely focuses on the Dimco-Grays of the world, preferring instead to profile United Airlines and Weirton Steel - big companies with thousands of employee-owners. However, ESOPs are most common at smaller, closely held firms such as Dimco-Gray, usually to buy out shares of a departing owner or one who wants to sell partial interest and remain with the firm, according to the National Center for Employee Ownership in Oakland, Calif. Often, substantial tax breaks drive the decision.
Retirement sparked the buyout of Dimco-Gray, which was created in 1948 when Dayton Insulating Molding Co. merged with Gray Laboratory & Manufacturing. Dan Gray, son of founder Floyd Gray, who developed a timer for photographic darkrooms, prepared to retire in 1986. But as Gray's retirement neared, it looked like Dimco-Gray's businesses would have to be split up and sold.
The resulting ESOP kept Dimco-Gray intact. Expectations were sky-high at first, recalls Dolly Mabe, human resources manager.
``When we first bought the company, everybody thought they were CEOs. You know, `We're employee-owners, now we can make all the decisions,' '' she said.
Euphoria quickly wore off. The ESOP was hardly a magic solution; instead, it added stress. To buy the company, salaried employees gave up their retirement; hourly people their cost-of-living increases. The com-pany, already leveraged, acquired a second plastic molding plant, in Troy, Ohio.
Then, three years into employee ownership, longtime President Jim Rush died, landing an emotional blow that could have devastated Dimco-Gray. Rush had been with the firm since the early 1970s. Mabe credits him with starting the slow transition to worker involvement.
``He was just another person in here trying to make the company work,'' she said. ``Before that, it was management and then the workers. He started breaking that barrier.''
When Rush died, the ESOP ``wasn't very structured. ... People were still confused about what the ESOP was,'' Mabe said.
Morale sank. By 1989, when Brennan was brought in, he found a ``self-destructive corporate culture'' driven by conflict, power struggles and lack of trust between management and labor.
``The company was losing money,'' he said.
Brennan was recruited from former Illinois housewares molder Sevko Inc., where he was executive vice president of manufacturing. His resume reflects nearly 40 years in management at some of the biggest names in plastics: Foster Grant Co., Detroit Plastic Molding Co., Ford Motor Co. and Baxter Travenol Laboratories Inc.
Dimco-Gray presented unique challenges.
``Here's a company that's been around a long, long time,'' Brennan said, his soft accent reflecting his hometown of Leominster, Mass. ``Then it became unionized. The people that ran this company in the beginning were entrepreneurs. Very focused. Very well-directed. When you go over to the second generation and you bring in outside people to run the company, things change a little bit. So there were some difficulties. And then it became an ESOP.''
Brennan knew plastics, not employee ownership, but he learned fast. He joined employees at Wright State University in courses in problem solving, communications and quality. After a change in leadership, the International Union of Electrical, Salaried, Machine and Furniture Workers Local 768 took a new, less-confrontational stance.
Management opened the financial books for the first time. Both sides agreed to profit-sharing. Union negotiators learned how to read financial documents. The posturing ended.
The role of a union simply changes when workers own the plant, according to Jim Daulton of Local 768. When he became chief union steward at Centerville in 1992, the union had about 120 pending grievances, a number that has been reduced to only a handful today.
``We no longer wanted to be the old adversaries,'' said Daul-ton, a 17-year veteran.
Employees help make decisions on buying new equipment. They learn about molding, computers, drafting and blueprint reading. Brennan himself has taught plastics courses at Centerville and Troy. Monthly financial statements are posted for all employees.
The turnaround has worked. Absenteeism, late shipments and customer returns all are down. In 1992, Dimco-Gray was one of only four Ohio companies to win a small-business award, the Blue Chip Enterprise Initiative, from the U.S. Chamber of Commerce. The firm also received $10,000 through the Ohio Governor's Excellence Award for training.
Shares in the firm are allocated every year, based on an individual's income. Employees are fully vested after five years, but if they leave before then, they get nothing for their shares. That practice has helped keep turnover down, but then Dimco-Gray never really had a turnover problem, employees said.
``When they come here, they don't leave,'' said Hubert Lakes, second-shift group leader and a 17-year employee. ``It's a good place to work.''
The average employee has been at Dimco-Gray more than 20 years. Union workers earn an average of $12-$13 an hour, Daulton said.
An ESOP requires a ``whole different mind-set'' based on cooperation and long-term thinking, Brennan said.
``You're asking people, who for years have been told what to do, when to do and how to do it, to take responsibility and be accountable. That doesn't come easy. It's difficult. People don't make that paradigm shift just like that,'' he said, snapping his fingers. ``You've got to build trust and respect and each person's self esteem to make this thing work. But it takes time.''
Time has paid off. Dimco-Gray's original debt will be retired in December, right on schedule.