ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, July 21, 1996 TAG: 9607220082
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
DATELINE: BEDFORD
TYPE: PROFILE
SOURCE: JEFF STURGEON STAFF WRITER note: above
For a few days early this month, Frank H. Roland was perhaps the least popular man in Bedford.
From his office in Roanoke County, he authorized a massive layoff at Rubatex, Bedford's largest employer with 800 workers.
And while news of routine factory occurrences - such as fires and accidents - make their way along the local grapevine gradually, word of the major layoff traveled swiftly and hit hard.
But the Rubatex president made no public comment until Friday.
He said then that the company plans this week to address some of the problems that turned the Bedford factory into a center of labor-management turmoil and a candidate for partial shutdown.
Surrounded by sporting goods and other products the company makes from rubber and special foams - Thighmasters, Teva Sport Sandals and mouse pads included - Roland met with reporters Friday at corporate headquarters.
He said he expects to approve investing $1 million to $1.5 million in the rubber production room, the part of the troubled plant with the greatest needs. Within three years, he said, up to $6 million could be available to buy better equipment for the facility.
Rubatex calls itself the nation's largest producer of closed cell foam rubber - a soft, pliable material that resists water, dust and air. It will be laid as padding beneath the artificial grass at a new Dallas stadium. It is the stuff from which diving suits are made for the Navy Seals diving and rescue unit. The government used it in Desert Storm. Wrestlers slam each other onto it. Automakers, air-conditioner makers and doctors depend on it.
But problems at the Bedford plant became serious last summer and have cost the company business. Sales and profits of not only Rubatex but the company that owns it, RBX Corp., which runs five other rubber and plastics companies in the Southeast and Midwest, have dropped, according to notices to bondholders that the company has filed with the Securities and Exchange Commission.
"The performance of the Bedford facility is unacceptable," Roland said. But, he added, because of a generally favorable competitive environment, the company, which operates two other plants, could have a bright future. As sales and profits rise, so could employment. Rubatex pays its workers an average of about $11.50 per hour.
In late June, the company made its 600 production employees an offer: If they relinquished some control over their work schedules, including accepting mandatory overtime and changes in worker seniority, the company would invest $6 million to create a more productive, worker-friendly plant. If they didn't, workers learned, 287 people would be fired.
The union at first rejected the offer. Employees were afraid that senior workers would become vulnerable to layoffs and that, taken to its extreme, the mandatory overtime could force employees to work two 76-hour weeks a month.
But after the company posted a layoff notice, the union agreed to the new scheduling system. The layoff notice came down. That's about where things have stood since the second vote, July8.
As company officials explained Friday, in their first full account of that strategy, the Bedford facility required aggressive measures. Though they expressed concern about the impact of a layoff on employees and on Bedford, officials said they thought they had no alternative.
RBX - with about one-tenth the sales of industry giant Rubbermaid - earned $2.7 million profit on sales of $272 million last year, but it lost $2 million on sales of $68 million in the first three months of this year.
Senior executives said in the SEC filings that the company will need time to bounce back and may lose more money.
To be sure, Rubatex isn't completely responsible for these losses. Rubber orders are down to some extent industrywide, and interest expenses at the company are up.
But the Rubatex problem is getting a good deal of RBX executives' attention.
Roland said the problems begin with the age and design of the Bedford plant, built in 1924 and now spread over 14 buildings. He said it ships fewer than seven of 10 orders on time and that the amount of poor quality rubber returned by customers has increased - almost 2 percent of all sales last year were returned because of defective rubber. Training has been inadequate, and the general manager's job has turned over too many times, in Roland's view.
Furthermore, strict worker-scheduling rules - which were relaxed by the union vote - sometimes prevented supervisors from matching workers' skills to jobs.
American Industrial Partners, an investment group with offices in San Francisco and New York, bought Rubatex and its five sister companies for $214 million nine months ago. So far, it has earned only $1 for every $100 invested in the purchase of the Bedford plant, Roland said.
"AIP could have taken its money and put it into a CD or Treasury bond with no risk whatsoever and realized more than they're getting with their investment" in the Bedford plant, Roland said. "Anyone in the financial community would tell you that a 1 percent return on investment or equity is unacceptable."
Employees said they have sensed something was wrong. They said the plant is hot and dirty and crumbling and that they work harder to produce poorer quality rubber.
But they said the fault is not theirs. Management efforts to raise output and cut costs have hurt quality, they said, and managers have mishandled spending for new equipment and failed to tap the experience of senior employees.
"The responsibility needs to be taken by the company for the actions in the past," employee Charles Mallory said. "We'll take some responsibility. We're not perfect. But we're nowhere near the reason for this plant being in the shape it's in right now. It's not our fault. The fault's 3-to-1 on them."
Roland acknowledged that past managers tried but failed to correct production problems. "Some of the things we have tried have not worked," he said. "We were not blaming the hourly work force for our problems there - it's a whole [combination] of things."
His goal is to break down a climate of distrust between workers and the company, built up over the years, he said.
The new strategy is clear, he said - to invest in the plant, train the workers and do a better job of placing them in jobs that fit their skills. He vowed to establish consistency in management and to improve work procedures.
He set a goal for the plant to sell $100 million worth of goods in one year, a 30 percent improvement from current figures.
Achieving that might make Rubatex, once again, the talk of Bedford.
LENGTH: Long : 129 lines ILLUSTRATION: PHOTO: PHILIP HOLMAN Staff 1. The sprawling Rubatex plant inby CNBBedford is housed in 14 buildings. color.
WAYNE DEEL Staff 2. The plant runs along Railroad Avenue and Monroe
Street in the city of Bedford. color.
STEPHANIE KLEIN-DAVIS Staff 3. Members of United Steelworkers Local
240 await results of the second Rubatex vote July 8.
PHILIP HOLMAN Staff 4. Materials are stacked up outside the Bedford
plant.|
(headshots) 5. Roland, 6. Sines, color. 7. Mallory, 8. Arrington.