The Kids Are All Right

An Indiana plastics company opened a day-care center -- and solved more than its personnel problems.

No company in Indiana had ever tried it, state regulations nearly prevented it from seeing the light of day, and it was a guaranteed money-loser. But Nyloncraft Inc., in Mishawaka, Ind., had surveyed its employees and found that child-care problems were at the root of the high absenteeism and turnover rates plaguing the company in the late 1970s. So in June 1981, the plastics-molding company opened Indiana's first 24-hour day-care facility.

That was not an easy accomplishment, but it is one of many steps that Nyloncraft has taken in recent years to put the company among the industry's top performers. A few years earlier, Nyloncraft's president, Jim Wyllie, had brought in two managers, Bob Tennyson and Ken Harkleroad, to help him turn around his family-owned business. The last thing the three wanted was to have absenteeism and turnover among plant workers undermine what they had worked so hard to build up. "I'm not for taking care of people from birth to the grave," says Tennyson, the tall, ruddy-faced, 37-year-old vice-president of finance. "I like people to take care of themselves. This, though, was important for our business. It was really an effort we made to take care of Nyloncraft.

"We were an employer of about 250 people, and at the end of 1978 we wrote 900-plus W2s, which means we turned every job in the plant over three times," Tennyson continues. "The real, significant cost is in the loss of productivity that takes place in the plant. You're probably talking $1,500 to $2,000 [in training costs per employee]. . . . The potential costs are astronomical." Last year, Nyloncraft wrote only 26 more W2s than there were jobs; and absenteeism had dropped to less than 3%.

Today, Tennyson is quick to sing the day-care center's praises, but that wasn't always the case. "Initially, I was not a proponent of the learning center. I though it was too early in this corporation's life cycle to begin to look at things like that. Just trying to get myself converted from machine-hour rates to kid-hour rates was a chore in itself. Now I am probably the learning center's biggest fan, and I'm the person who is most critical of anything that costs money around here."

If Tennyson was the skeptic, 45-year-old Harkleroad, executive vice-president and self-described "in-house liberal," was the advocate. "I felt sorry for a lot of the women," Harkleroad says, adding that 85% of Nyloncraft's 450 employees are women, many of them single parents with young children. "I spent a lot of time out on the floor talking to them about their problems, and there was a constant worry about children." Between the employee survey and Harkleroad's lobbying, Tennyson and Wyllie were persuaded that some sort of day-care arrangement might make good business sense.

First, Nyloncraft considered subsidizing outside child care, either through a voucher system or by contract with a local day-care chain.But, says Suzanne Colley, the 37-year-old consultant for the project and current director of the center, the company decided against these possibilities because "it wasn't that employees didn't have the money to pay for day care -- it was that they couldn't find reliable care." She adds that Wyllie "wanted the day care to be something [the company] could really monitor and control. They didn't want any excuses from employees about why they weren't using it."

Once the three top managers had made a commitment to an on-site center, Ken Harkleroad went on the road to look at other companies with successful day-care centers. "In our ignorance," he recalls wryly, "we thought there was nothing more to this than padding a room and putting kids in it." But after his trip, he knew that Nyloncraft had underestimated not only the work to be done, but the benefits that a day-care center could bring to the company. If they went about it in the right way, the center could do more than just alleviate child-care worries: It could make Nyloncraft workers much more committed to the company.

While the advantages of an on-site day-care center were becoming pretty clear by then, the headaches were not so immediately visible. Nyloncraft's management team soon learned, however, that there are good reasons why so few companies choose to open their own centers. As Jim Wyllie, 44, says in retrospect, "I don't understand how anybody can make money in [the child-care] industry, but I suspect it's because a lot of people don't go by the rules."

Nyloncraft was faced with a special problem. The company's three Indiana molding plants, two in Mishawaka and one in nearby South Bend, run 24 hours a day, and many of the younger women, who don't have seniority, work the night shifts. If the day-care center was going to help eliminate high turnover and absenteeism among workers with young children, it, too, would have to run 24 hours a day. But state regulations applied only to centers open the usual 8 hours, and included such rules as the one that fobids cleaning while children are on the premises -- not an easy requirement to meet for a center that is open night and day.

Leaning across his desk, his face reddening with exasperation, Wyllie describes his first contact with the Indiana State Department of Public Welfare -- the licensing body for day-care centers in Indiana. "Their response was to send some little guy with an earring up here on a motorcycle who started telling me I can't do this because his regulations don't allow it." Finally, Wyllie says, "I told him, 'You are a bureaucrat. You don't make law, you enforce. it. And since there are no 24-hour child-care facilities in this state, there is no law to cover it. We're going to put the center up, we're going to run it the best we see fit, and if you have a problem with what we're doing, sue us." Wyllie took his battle with the Welfare Department to then-Governor Otis Bowen. "All our problems went away," he says -- with the Welfare Department, at least. Still to come were fire, health, and sanitation regulations, as well as certification requirements from the state's Department of Public Instruction for the preschool and kindergarten programs. Persistence paid off, though, and by June 1981, the Nyloncraft Learning Center (NLC), a wholly owned subsidiary of Nyloncraft, opened its doors.

Donna Fenn

Inc. contributing editor Donna Fenn is the author of Upstarts! How GenY Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009). Both this blog and the book examine the ways in which GenY is changing the entrepreneurial landscape with new approaches to starting, growing, and managing their companies. Learn more at http://www.upstartsrock.com/.