(Jan. 12, 2004) — Consider this: In Fortune magazine's Feb. 7, 1994, issue, Rubbermaid Inc. was named America's most admired corporation. The company had finished in second place five of the previous six years. Back then, Wooster, Ohio, and Rubbermaid were inseparable, and Rubbermaid was the gold standard of U.S. manufacturing.
Now, just a decade later, that Wooster headquarters plant, one of the largest plastics processing plants in the United States, is closing.
How did Rubbermaid go downhill so quickly? It's a question we've pondered several times in recent years, including in 1995, when the company lost a showdown with Wal-Mart Stores Inc. over pricing and shelf space; and again in 1998 when Newell Co. announced a $6.3 billion deal to buy Rubbermaid.
In tiny Wooster, workers point fingers at former Rubbermaid executives, at Wal-Mart, at competitors around the world including in China, and at the leaders of current parent company Newell Rubbermaid Inc. Maybe they all deserve a share of the blame.
Rubbermaid has changed a lot in 10 years. The company's suppliers and customers certainly would tell you that today's Rubbermaid is nothing like the company that once enjoyed a rock-solid reputation among U.S. executives.
We certainly see the difference — for several years now, our efforts to cover Rubbermaid have met, at best, with a lack of cooperation.
Closing Wooster was the result of a variety of issues, including a Nov. 12 tornado that caused $20 million in damage, and high manufacturing costs at the big, unionized plant vs. other Rubbermaid operations. The company now promises big changes to its manufacturing strategy: dropping some products, shifting production of others overseas or to custom molders.
Still, it's hard to second-guess Rubbermaid's strategy since executives say so little of substance about their future plans. The company is looking for low-cost ways to churn out new products. It will continue to face competitors with built-in advantages. Unlike Rubbermaid, privately held companies like Sterilite Corp. don't need to focus on strong earnings results every quarter, and they have a more intense focus on plastics housewares.
Once, Rubbermaid was known for developing lots of new products that consumers would buy, often for a premium price. Is that the focus today? Will consumers, in the age of mega-discounting, pay a premium for anything anymore? Can housewares companies afford to spend millions of dollars developing new products, when a competitor will find a way to knock them off as soon as they hit store shelves?
It won't be easy.
This much is clear: After a four-year slump, business seems to be picking up again in the North American plastics industry. Anecdotally, we're seeing lots more stories about companies expanding and adding equipment, and even some firms that are building new manufacturing plants.
Rubbermaid's Wooster shutdown news was a big downer on the end of 2003, but perhaps it will serve as a final low-water mark for this recession — a blotch that immediately will be washed over by a newly rising tide.