Toward A More Perfect Union
It is 6 p.m., the end of a long September day, and J. B. Robinson is heading home. There is a gentle bounce in his step as he approaches the parking lot outside his plant in New Albany, Ind. He passes some young production workers relaxing on the nearby grass during their second-shift break, and he greets them in a folksy, southern Indiana twang. The tone itself seems to suggest that, for the 49-year-old executive, things are on a roll.
Indeed things are on a roll at Robinson Nugent Inc., an electronic-parts maker that J.B. Robinson founded with his father and brother back in 1943, and for which he now serves as executive vice-president At the moment, the company is in the midst of a record surge in sales and earnings. The rebound began last March, and continued at a breakneck pace throughout the summer. Large volume orders from such customers as Hewlett-Packard, Apple Computer, and the Delco Electronics Division of General Motors have kept the New Albany facility humming day and night. Fully 40% of the company's production, moreover, is being sold overseas, nearly half of that in Japan Most impressive of all, Robinson Nugent has made some of its recent gains at the expense of much larger competitors.
So J. B. Robinson has reason to feel jaunty on this particular evening. But life hasn't always seemed so sweet.
When Robinson used to pass this way 13 years ago, he had to run a gauntlet of taunts and obscenities from striking workers. Every night, he would have to check the tires on his car for nails. He was 36 at the time, and the symbol of a management determined to break the back of organized labor. He hated the newly formed union with a deep and fervent passion. The union returned the sentiment. The strike dragged on for over seven bitter months before winding down to an inconclusive settlement. By all indications, Robinson Nugent faced a stormy future.
But something happened over the next 13 years. Little by little, attitudes on both sides underwent a profound and far-reaching change. As a result, Robinson Nugent is now a model of union-management cooperation, producing electronic sockets and connectors that can compete on cost and reliability with anything on the market. Perhaps nowhere is the change more evident than in J.B. Robinson himself. These days, he says, "there are times when I hear union members talking about things like quality and productivity, and I almost feel embarrassed to be part of management."
By way of example, he recounts an incident that occurred one day last spring, when he was taking a Wall Street analyst on a tour of the plant. In the metal-plating room, they came upon Julie Courtney, an hourly worker in her late 30s, who was operating a new electronic measuring device that Robinson did not recognize. Was the machine being leased? he asked.
Oh no, said Courtney. It belonged to the company.
But how was that possible? he wondered. The machine had not been authorized in the budget.
Well, that was not her department, she said, but she pointed out that the machine would pay for itself in about 10 months, and anything that gives you a full return on your investment in less than a year had to be considered a good buy.
"I was amazed," says Robinson. "I stood there with my jaw wide open." He quickly moved on, fearing that the analyst might think the incident had been staged.
Much has been written lately about the changing roles of management and labor, but the Robinson Nugent story is different. It is not a story about concessions and give-backs, about compromises made under threat of bankruptcy, about troubled industries and struggling companies and frightened workers. Elsewhere, after all, the issue has generally been survival. Faced with a catastrophic loss of jobs, unions have agreed to cuts in wages and benefits, often winning a larger management voice in return. But whatever they have given up, their aim has been to get it all back once the crisis has passed.
In contrast, the changes at Robinson Nugent have occurred during a period of exceptional growth. Indeed, the company's sales have increased more than twelvefold over the past decade, from $3.2 million in 1973 to $41 million in the year ended June 30, 1983. This growth is especially remarkable coming, as it has, in the face of vigorous competition and declining prices -- a fact that serves to underline the crucial role played by the union, Local 1708 of the United Auto Workers. During this period, union members have consistently outstripped other producers, increasing their output as fast as, or even faster, than their counterparts at Robinson Nugent's own nonunion plants in Dallas and in Delemont, Switzerland. Management, meanwhile, has responded by making its 235 New Albany hourly employees among the highest-paid workers in the industry. And in mid-1982, when other unions were agreeing to give-backs, and other electronics companies were laying off workers, Robinson Nugent and Local 1708 signed a new contract that included a three-year annual wage increase of 9%, along with other improved benefits.
That same settlement had an unusual by-product that vividly illustrated just how far the company had come since the bitter strike of 1970. At management's request, union president John M. Delgado, a 33-year-old journeyman toolmaker, wrote a letter to the 250 members of Local 1708 The letter talked about the company's need to earn a profit and to provide "an adequate return to shareholders." Robinson Nugent could remain competitive, he wrote, "not . . . by raising prices on products, but by increasing our productivity. Increasing productivity doesn't mean that we have to work harder, but it does mean that we have to be a little smarter about how we get the work done. The net result must be more billable product per hour paid for. . . .
"We have seen too many places go out of business," Delgado went on. "The fault doesn't just lie with bad management labor, or the law of the land, but all these combined and more. I want all of us to prosper by working and to continue to work at Robinson Nugent. Let's all help each other and help keep Robinson Nugent better than the rest of the industry."
J. B. Robinson couldn't have said it better himself.
In a way, what has happened at Robinson Nugent is a case of the wheel coming full circle. There was an earlier time, after all, when the company enjoyed a similar sense of togetherness, when, in fact, "employee relations" was a family affair. Back then, in the 1940s, the company was known as Robinson Machine Works, and operated out of a small machine shop in the garage of the Robinsons' New Albany home. There, J. D. Robinson, J. B.'s father, worked to support his family, fixing valves and trailer hitches and building custom machine parts from pieces of metal. After school and on weekends, J.B. and his older brother Sam would lend a hand. "It was a tough business," J. B. recalls. "When things were slow, we'd scout around for some work, or the three of us would go fishing. We did a lot of fishing."
In time, the company built a reputation as a quality maintenance shop, hired some outside employees, and moved to larger' quarters. Then, in the mid-1950s, opportunity knocked. A customer named Byron Nugent approached the Robinsons with a proposal for a new line of electrical components -- sockets and connectors that could be used to plug transistors into navigational devices for aircraft. The Robinson Machine Works would design and build the products Nugent would market and distribute them.
The Robinsons went for the idea and eventually took over the operation of the distribution company when Nugent died in 1957. But the market was slow to develop. "It was cheaper to solder transistors," notes Sam Robinson, now the company's chairman, who was then in charge of building the electronics business. "The sockets we were trying to sell added about 25 cents to a manufacturer's cost, and nobody worried back then what would happen when a product needed to be repaired, since nobody thought transistors would ever fail."
In the early 1960s, however, electronics companies realized that transistors would indeed fail, and started to listen more closely to the Robinsons' arguments about the benefits of transistor sockets. Soon, major orders began to come in from the likes of Bendix Aviation, Honeywell, and Sperry. By 1965, when Robinson Machine Works and Nugent's distribution company were combined into Robinson Nugent Inc., company sales of sockets and connectors had climbed from virtually nothing to more than $500,000 per year, accounting for half of the company's annual revenues and demanding most of management's attention and time.
As for the Robinsons, they had their hands full trying to manage what had been, until recently, a modest local enterprise. Now they found themselves supplying companies all over the country while, at the same time, they had to orchestrate Robinson Nugent's own internal expansion and come up with the money to support it. In the process, they lost touch with what was happening under their noses.
They did not, in fact, appreciate how the company's dramatic growth had drastically altered its fabric. It was no longer a closely knit, family operation. By 1969, there were 120 hourly employees, many of them recent high school graduates from New Albany and other nearby towns, and they were not as content as the Robinsons often assumed. They did not live in a vacuum, after all. They knew people who worked in the Ford Motor Co. and International Harvester Co. plants located directly across the Ohio River in Louisville. There, the UAW was winning handsome pay increases and such state-of-the-art benefits as compensation for prescription drugs and early retirement. To be sure, Robinson Nugent was a much smaller company, but the fact remained that its employees earned a lot less and had yet to receive any pension benefits at all.
Within the company, more and more employees were grumbling about arbitrary and unfair compensation. A case in point was Bill Wolfe. A quiet and lanky New Albany native, he had taken a job with Robinson Nugent in 1965, just a few days after graduating from high school. With the company's blessing, Wolfe spent four years in an evening vocational program, studying to become a journeyman tool-and-die maker. The reward, he assumed, would be a substantial wage increase. What he got was a raise of 5 cents per hour. He was furious. Elsewhere in the plant, hourly employees without Wolfe's skills were earning as much as 50 cents an hour more.
Eventually, some of the younger employees approached UAW organizers based in Louisville, who in turn held a series of secret meetings with workers at Robinson Nugent. During the spring of 1970, management was formally notified that employees wanted a union election. The vote was scheduled for June.
June 3, 1970, is a day J. B. Robinson will never forget. On that date, Robinson Nugent's hourly employees voted, 60 to 56, to be represented by the UAW. The vote dealt a sudden blow to the Robinson family's confidence in the future of their business, but it was J. B. Robinson who felt the disappointment most keenly. "I felt personally betrayed by the workers."
J.B. Robinson was also the one designated to negotiate the first labor contract. During the summer and fall, he sparred with a hard-nosed union bargaining team determined to establish new work rules and win substantial increases in both wages and benefits. By the time the November 2 deadline arrived, the two sides remained miles apart.
The strike that followed dragged on for seven and a half months. During that time, the company did its best to meet customer demands by hiring new employees to replace striking union members. The latter responded angrily. In the normally quiet town of New Albany (population: 37,100), there were almost daily incidents of vandalism -- slashed tires and broken windshields. J. B. Robinson soon emerged as a principal target of the strikers, the personification of management intransigence. "I'd drive into the parking lot in the morning and get called a son of a bitch six times on my way to the building," he recalls.
Among those doing the name-calling was Bill Wolfe, a tireless figure on the picket line. During the strike, he handled the local union's finances, distributing the weekly benefits to all of the strikers, but he is perhaps better remembered for other activities. According to management, he would stand outside the plant with a hypodermic needle filled with paint thinner hidden beneath his coat; as cars drove through the picket line, he would squirt them with thinner, damaging their paint. Wolfe has never admitted the charge, but he was the only employee formally dismissed during the strike -- at the insistence of J. B. Robinson himself.
The strike ended somewhat ambiguously. Although the two sides settled many grievances, including the reinstatement of Bill Wolfe, the union got very few of its wage and benefit demands. And while it did achieve its primary goal, formal recognition by management, the mutual feelings of mistrust lingered long afterwards.
Those feelings were constantly fueled by skirmishes over different interpretations of the contract. These generally concerned work rules and overtime assignments, which, under the new agreement, had to be based on worker qualifications and seniority, rather than management preference. Each little incident, however, became part of a broader struggle between management and the union.
Under the terms of the contract, for instance, union leaders couldn't pursue grievances on company time. This rule made it difficult to resolve even the most simple matters. During the early 1970s, J. B. Robinson says, "my feelings about the union stayed so negative that I couldn't cope with settling grievances." Eventually, he asked to be relieved of his labor-relations duties. He wanted to spend more time attending to Robinson Nugent's financial needs and planned to play a more active role in local Republican politics. Most of all, he wanted to get away from the day-to-day stress of confronting the union.
Almost immediately, the climate began to improve. Dave Carlton, J. B.'s brother-in-law, was the new labor-relations man, and a cool-headed one at that. He quickly showed union leaders that he could be open-minded when discussing worker grievances -- even making speedy settlements at times just to clear the air. Within the union, there were also some changes, notably the election of Bill Wolfe as the new president of the local. His earlier activities notwithstanding, Wolfe took a constructive approach to his new job. In 1973, he and Carlton hammered out a three-year contract that provided modest pay and benefit increases. It was accepted by the rank and file without any fireworks. "We didn't approach the bargaining table looking for the moon," Wolfe recalls. "We just tried to get a fair day's pay for each skill level."
Meanwhile, there was mounting optimism about the company itself. From 1974 to 1977 Robinson Nugent's sales increased from $4.2 million to $9.1 million, while profits shot from $130,000 to more than $1.7 million. Despite stiff competition from the likes of Texas Instruments Inc. (on certain product lines), the company had managed to win such customers as Western Electric Co and IBM Corp. The products could even be found inside the Apollo space ships. "We knew the business was heading up," says John Delgado, who succeeded Wolfe as local union president. "We also felt we were playing our part in the company's success."
Indeed they were. As if to emphasize the point, management began recruiting from among the skilled union members. One of those promoted into a white-collar, salaried position was Bill Wolfe.
As for J. B. Robinson, he kept his distance from the hourly employees. Still bruised by the memories of the early '70s, he concentrated on his administrative duties. Late in 1976, however, he had an experience that challenged some of his anti-union attitudes. The company had decided to close down the long-neglected machine-shop side of the business, which had been losing money in recent years. An apprehensive J. B. Robinson was given the responsibility for producing the final $90,000 of orders, which involved supervising about 10 machine operators.
The first day, Robinson recalls, "I called everybody together and told them I had never supervised a union shop, but that if anybody had any gripes they could bring them to me. I said I wanted to hear about problems before they sent them to a grievance committee. I admitted that the job of closing things down wasn't pleasant for anyone, but if we worked at it, we could make it easy and maybe even fun "
Lo and behold, it turned out to be just that. When the books on the defunct cooperation were closed, J. B. Robinson discovered it had actually made money during its final months -- the first black ink in years There was another, more startling, revelation as well. "I found it was possible to lead employees, whether they were organized by a union or not."
During the next couple of years, Robinson had only sporadic dealings with the hourly work force, but his views about unions in general -- and Local 1708 in particular -- continued to change. In early 1979, for example, Robinson participated in a panel discussion at Indiana University's local campus. Appearing with him was a UAW representative from Ford's Louisville assembly plant. To Robinson's surprise, the UAW official did not use the forum to blame the troubles of the auto industry on either the Japanese or management ineptitude in Detroit. He did not offer glib solutions, either. Instead, Robinson recalls, "he sounded almost like a CEO. He spoke about the importance of being competitive, about the need to produce quality products and said the union had to get tougher on absenteeism."
And J. B. Robinson was similarly impressed a few months later, when, for the first time in years, he joined the management team negotiating a new contract with Local 1708. Eager to improve the productivity of the work force following the company's recent stock offering, management asked the union for the right to set work standards for production jobs. Although many unions had strongly resisted such requests, Local 1708 did not object
The truth was that, the boom times at Robinson Nugent notwithstanding, Delgado and the other officials of local 1708 could not be oblivious to what was happening elsewhere in the U.S economy. Indeed, they had recently attended some rather gloomy UAW conferences with delegates from other parts of the country. They had also witnessed relatives and neighbors coming home with pink slips. "We could see what was happening to the people who worked for the auto companies and their suppliers," Delgado says. "We felt we needed to go ahead and push for productivity, or we might end up in the same position." Instead of viewing standards as a threat, the local union saw reasonable standards as a way to help Robinson Nugent workers become more productive. As competitors lowered their prices, Delgado says, "we knew we would have to produce more to justify higher wages." Job standards, he told his members, would enable workers and managers to monitor improvements. Improved productivity, he argued, would lead to greater profits -- and make employment at New Albany more secure.
Work standards aside, the union got an impressive 12% annual increase for three years in the new contract, along with major improvements in company-supported training programs. Then, soon after the agreement was signed, management called workers together with an unusual request for help. There had been a surge of new orders, they were told. As a result, the New Albany plant would have to raise its level of production as much as 20% over the next three months or run the risk of losing the new business to other suppliers. To generate support for the effort, members of the accounting department handed each of the plant's 220 hourly workers a $100 bill, while J. B. Robinson and other officers looked on.
The workers responded enthusiastically. "Everybody wanted to show that they could produce," says Delgado. "We liked the idea that here was management coming to us and saying, 'We can't do it without you." In the end, they actually surpassed management's goals. "It was quite an accomplishment, and it provided a nice boost for our earnings," says Robinson. "Everybody worked together."
While management and labor had both come a long way since the early '70s, there were still some lingering, and occasionally intense, feelings of mistrust. During 1979, for example, Robinson Nugent opened a new, nonunion assembly plant in Dallas, and, says Delgado, "a lot of people felt we'd be losing jobs to Texas once business slowed down We saw it as a real challenge, because they were going into a right-to-work state and paying the new workers less -- maybe a dollar an hour less -- than what we were making."
Management paid little attention to the union's concerns. There had been, as yet, no layoffs in New Albany, and the hope was that the stir over the Dallas plant would soon be forgotten. "In those days," J. B. Robinson says, "we didn't say much to the hourly workers unless we were talking about something like the weather. . . . Sure, we told them we needed a new source of production, but we didn't go into detail about why." In fact, jobs at the Indiana plant were not shipped off to Texas. The new Dallas facility, which had about 40 workers after its first year of operation, was used mainly to assemble high-volume components once the more demanding product-development and tool-building work was completed in New Albany.
In the summer of 1981, however, the union's earlier suspicions were revived when Robinson Nugent announced that it would be opening yet another plant -- this one in Delemont, Switzerland. The workers read about it in the local newspaper, and they were alarmed. The recession had recently forced the company to lay off about 10% of New Albany's 220 hourly employees. The union feared that management's ultimate objective was to desert the New Albany union altogether.
The workers' response brought back memories of 1970. "There were all sorts of nasty little signs and caricatures on the bulletin boards," says J. B. Robinson. "Nobody was telling the workers what our real reasons were, so they were drawing their own conclusions." The matter, he felt, had gotten out of hand.
So he sat down with Delgado and proceeded to have a discussion unlike any the union leader had ever had with a representative of management. "J. B. explained the problem with the dollar," Delgado recalls. "He told me that we were having a hard time exporting the products we were making in New Albany because the dollar was so strong compared to the yen and the Swiss franc. He said that was one of the reasons for the layoffs. . . . He also told me that if the company did some of its assembly work in Europe, it could sell those products to foreign customers for less. And that might even create more jobs in New Albany. We wouldn't be doing the assembly work, but we'd be the ones designing the products the other plants would make."
After clearing the air with Delgado, Robinson called together all of the company's 320-odd New Albany employees in groups of about 20. "I told everybody we had a choice. We could either write off the European market, or we could try to do something about it. And I made a pledge that day that I'd tell them in the future about what was going on here before they saw it in the newspapers."
The meetings were so effective that management decided to continue them after the crisis over the Swiss plant passed. Since August 1981, J.B. Robinson has held monthly briefings with New Albany production workers and managers. Each session is attended by 15 to 20 people, lasts about 20 minutes, and includes a videotape. Topics range from Robinson Nugent's financial performance, to product plans, to organizational issues. Over the past year, for instance, workers have been briefed about the reasons for downward price movements in the market, the status of orders from Japan and other major customers, and the ways that the company's less-than-glamorous components are being used in such popular products as computer disk drives and Apple computers.
In the old days, Delgado comments "workers made parts and got paid. Now we're learning about the marketing department and how the company works." In addition, workers have been encouraged to offer suggestions and criticisms about everything from plant maintenance to quality control.
Among union members, the information sessions have generated surprising levels of confidence in management decisions -- even those with negative consequences for New Albany union workers. In late 1982, for example, the company announced that it was laying off more than 40 workers, because of a major industry slump. About 10% of the white-collar workers were also placed on furlough. The union took the news in stride. "The Dallas plant was hit even worse than us," Delgado notes. "And other manufacturers felt things even worse." J. B. Robinson used the monthly sessions to explain the market developments. Finally, last spring, the last of the workers was called back.
Meanwhile, management has looked for other ways to nurture the new company spirit. It began by publishing the names of every employee in the back of the annual report, and, last May, it commemorated the company's unprecedented booking of $5 million of orders by handing out baseball caps and T-shirts emblazoned with the slogan "Connect with Quality." In June, it invited manufacturing employees to a catered lunch marking the first time the New Albany plant had ever shipped $3 million worth of product in a single month. J. B. Robinson and other officers showed up at 3:30 a.m. to serve iced tea and pie to the night shift. " It was a way for us to tell each worker, 'Thanks for doing your part," Robinson says. Then there was the Patoka Lake fishing contest, a companywide event at which hourly workers and managers alike cast their lines for cash prizes. After the competition, the entire group adjourned to a picnic at the home of Sam Robinson's father-in-law.
Looking back, J. B. Robinson marvels at the change since 1970. Back then, he admits, he could not have imagined that he would one day regard his unionized employees as the best and most productive in their industry. "But at some point, we decided to turn the corner and begin running the business the way it was."
The feeling, moreover, is mutual. "We tried to show management that we could help them get where they wanted to go," Delgado says. "And we told them that we wanted this company to do everything it needed to do to make profits, so it could pay better wages and benefits. We didn't want to put the company out of business any more than they did, because we intended to be here for a while. We were planning to make a life of this."