Labor and management have unique relationship at Grand River Rubber and Plastics Company
by Warren Dillaway
The Star Beacon
ASHTABULA TOWNSHIP — Many union and management relationships are in tatters as politicians take aim at public unions and many major corporations seek huge concessions.
Leaders at Grand River Rubber and Plastics Company are taking a different path in hopes of helping employees and owners.
So far so good after a January 2011 agreement made employees company owners.
“We (management) work for 205 of the nicest people in the world,” Grand River Rubber and Plastics Company President Richard Selip said of the arrangement.
Selip and Joe Misinec, co-owners of Grand River Rubber and Plastics Company, received offers for their company in 1998 and 2007. “We had been approached about selling the company. In both cases we got to a point in the due diligence process that it wasn’t going to be in the best interests of us or our employees,” said Richard Selip, president of Grand River Rubber and Plastics.
After the potential sales fell through, the owners were still at a loss of what the next stage in the company might be when they retired.
“In 2008 we struck on the possibility of doing an employee stock ownership plan,” Selip said. The economic collapse of 2008 put the deal on hold even though the union had given approval for talks to begin.
“The bank told us they would not support us doing an ESOP,” Selip said. He said the bank was probably right because of the economic situation.
After a six month period of layoffs and recovery, the company was hiring again by May 2009.
“By 2010 Joe and I started talking (about an ESOP),” he said.
Selip said the government is now encouraging these kind of relationships because many medium size companies are purchased by foreign firms.
In 2010 the company began working with small groups of employees to explain how the arrangement would work. The final vote was 104-4 out of 165 employees at the time.
“It was overwhelmingly approved by the employees and we went through the logistics of the transition,” Selip said.
Selip said he always thought he would get to be 55 years old and sell the company, but his relationship with his employees made that a difficult path to take.
“When it came down to it there was no better group to sell (to),” Selip said.
He said ESOP involves a cash payment on retirement which is then rolled into an IRA.
The owners will receive payments over a six year period and retain control of company decisions, with senior vice president Donald Chaplin, but with significant input from employees.
William Engstrom, president of United Steelworkers Local 1020L, said the union has had a good relationship with the company prior to the agreement and people are buying in to ownership — slowly.
“I would say it has been a mixed bag (of people buying in to being owners),” Engstrom said.
“I have no issue with people taking a wait and see attitude,” Selip said.
Chaplin said a spring announcement of the value of employee shares in the company helped employees get excited about being owners.
“If you expect (employees) to act like owners you have to treat them like owners,” Selip said.
The company’s board of directors makes the final decisions on company policy, but an ESOP committee provides another layer of communication to employees. Four members of the committee are chosen by the union and four by the board of directors, Selip said.
“We’ve always had an honest and open process,” Engstrom said.
Chaplin said the increased communications reduces surprises for employees if there are down times and layoffs are needed they will know early in the process.
Engstrom said employees feel more a part of the process under the new arrangement.
There are many advantages for both sides, but both also took on some risk in the process.
Selip said the former owners don’t have to fly to corporate headquarters every six month to explain company policy. He also said employees have the advantage of ownership that can be more financially forgiving in down times than a bank.
“Joe and I can be pretty understanding. The bank can’t,” he said.
That understanding has also allowed $1 million to be set aside to create new product lines, Chaplin said. He said his focus is the 205 present employees and their future which will require finding new ways to improve productivity.
Engstrom said his union is putting together a presentation for other unions to consider employee ownership. He said unions, management and government must find ways to work together to bring manufacturing back to the United States.
Chaplin said management and unions must both be open to change if American industry is to survive.