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.
In 1983, Nyloncraft built a new plant in Mishawaka -- including a quarter-million-dollar, 6,600-square-foot learning center 10 feet down the hall from Wyllie's office. It enrolls preschoolers mostly, but is set up for after-school use as well, and is open to the community. The company pays about half of the $50-a-week tuition for its employees, gives free care to those who work overtime, and runs a van to shuttle the children back and forth between plants and to pick children up from school and bring them to the center. Enrollment is now at 160, with employees' children making up about a third of the 2-to-13-year-olds who attend. Wyllie estimates that 75% of the Nyloncraft parents who could use the facility do. When asked about the difference between his world of annual reports and humming machinery and the roomful of finger paintings and 2-year-olds singing "Itsy-Bitsy Spider" down the hall, Wyllie smiles and shakes his head. No, he says, it's not so different -- "just another good business decision."
The center is run by a 27-member staff, including six certified teachers. And, as is often the case, teachers' wages are low -- starting at $4.25 an hour -- and turnover is high. That puts NLC director Colley in a bit of a bind: She is determined to maintain a high-quality learning environment but, at the same time, is committed to making the center break even within the next few years. As for any immediate jeopardy posed by the $20,000 annual operating loss, however, Wyllie says without hesitation, "I'd never consider shutting it down."
The same direct, sometimes patenalistic, approach is a Wyllie hallmark in his relationships with employees. "I negotiate our union contracts," he says with pride. "My attitude is that if I don't have the guts or show them the respect to sit down with them and talk to them, then I shouldn't be where I am." There are about 6,000 thermo-plastic injection molding companies in the country, he says, 30 of which are in the South Bend/Mishawaka area. And he is the first to admit that "the only difference between us and every other injection-molding firm is the people."
Every Mother's Day, Wyllie dons a white tuxedo, top hat, and cane, and presents corsages to all the women in the plant. He throws a company picnic that could rival any county fair; a recent one was a three-day-long event that included a bluegrass music festival, elephant and helicopter rides, and seemingly endless kegs of beer. A couple of years ago, at a general meeting where Christmas bonuses were distributed, employees surprised him with a "strip-o-gram." "To me, that's a sign of respect -- for them to know that I can take a joke that well," says Wyllie. The people, he says, were his father's priority when he started Nyloncraft 28 years ago.
Wyllie worked for his father during the summers, and says he never had any intention of succeeding him as president of Nyloncraft. But after a business failure of his own and a disappointing career at the accounting firm of Ernst & Ernst, he joined Nyloncraft in 1966, three years after his father's death. His uncle, Robert Wyllie, a retired Army lieutenant-colonel, was president of the company at the time.
"I spent the first year and a half out in the shop working in every department doing every job," he says. "There are a couple of press operator records out there that I still hold." Two years later, Wyllie became sales manager, and sales increased from $1.5 million in 1968 to $7 million in 1977. Even so, the company was in bad shape financially. "It was just not making money, and it had a lot of problems," says Wyllie. "My uncle and I didn't philosophically see eye to eye." So Wyllie and his two sisters, each of whom owned 25% of the company, bought out Robert Wyllie, and Jim Wyllie became president of Nyloncraft.
Wyllie knew he would need help to implement his reorganization plan, a plan his uncle had told him was "garbage," so he brought in Harkleroad, a vendor for Eastman Chemical Products Inc., who frequently called on Nyloncraft, and Tennyson, Wyllie's former student at Indiana University at South Bend, where he once taught business at night school. "There were five years of 12- and 15-hour days," says Harkleroad, "but we brought a level of sophistication to the company that really positioned us for growth."
Those long hours were spent reducing the number of presses, changing the layout of the plant, and carefully placing employees in the jobs for which they were best suited. Today, 50% of Nyloncraft's salaried staff has come from the ranks of hourly employees. "We had some good people but they were in the wrong jobs doing the wrong things, so I changed them all around," Wyllie says.
The one exception is Bettie La Salle, a tall, slender woman with a midwestern drawl, who has been with the company for 25 years. Wyllie's father asked her to become Nyloncraft's first personnel manager after observing her rapport with fellow plant workers, and she has held that job ever since. It is a position that Nyloncraft holds in high esteem. Before Wyllie began building the new plant, he encouraged all employees to think about -- and then pass on to him -- any design ideas they had that would make Nyloncraft a better place to work. One suggestion came up time and time again: the wish to be able to meet with La Salle without other managers knowing about it. And Wyllie acted on that wish. He not only built La Salle's office with a separate entrance that opens directly onto the plant, he also gave her an adjoining conference room and more space than anyone else in the company.
As the link between plant workers and management, La Salle is Nyloncraft's "Dear Abby." "I have listened to everything from incest to child abuse to money problems." But, she says, the frequency with which employees come to her with child-care problems has been reduced drastically since Nyloncraft opened the learning center. La Salle adds that the center is also a great hiring tool. "People know this is a progressive company because the president feels so strongly about the center. They enjoy working for a company that really cares about its people.That, in effect, has made my job easier."
That was what NLC was supposed to do -- reduce absenteeism and turnover, improve morale, and serve as a recruiting tool. But on occasion, NLC's benefits have surprised even its founders. "When the learning center opened, it changed our way of operating," says Tennyson, recalling NLC's part in making the new plant a reality. Wyllie had bought the property for a song at public auction. The hitch was that it was adjacent to a shopping center and was not zoned for manufacturing. Another prospective buyer, who had been outbid by Wyllie, urged the city council to keep the zoning commercial. Six months of hearings followed. The clincher was a visit made to the plant and learning center by some members of the council and zoning commission. In the end, says Wyllie, "we never had a dissenting vote, and the first thing that virtually every one of those bodies talked about was the child-care facility."
NLC also has influenced Nyloncraft's customers. "We use it as a sales tool," says Wyllie. "It wasn't intented, but you bring somebody to the learning center and their whole attitude toward us is, if this company is this progressive, then they must be somebody I want to do business with." Tom Murphy, vice-president of manufacturing at Fellowes Manufacturing Co., in Itasca, Ill., confirms that impression. He says he probably would have given Nyloncraft his business in any case, but that "the day-care center is an added kicker to the opinion you would form anyway. I think I was probably more impressed with the day-care center than I was with the plant -- and it's a great plant." Milt Bukes purchasing agent at Ford Motor Co.'s Transmission and Chassis Component Purchasing division, in Dearborn, Mich., agrees. "The bottom line is that any company that cares about their people like that has got to be one hell of a company," he says, adding that Nyloncraft's low employee turnover has to result in more consistent production quality -- a factor important to Ford when it evaluates its suppliers. That was underscored last October, when Ford presented Nyloncraft with its Q-1 Preferred Quality Award for outstanding performance.
While the learning center is only one of many innovations at Nyloncraft responsible for the company's success -- revenues in 1984 were about $25 million -- its part in the process makes its operating in the red a bit easier to take. Still, Wyllie hasn't given up on making NLC profitable. He has been pitching the learning center to other local businesses, trying to convince them to subsidize day care for their employees at Nyloncraft. His efforts, he said in frustration at a recent monthly meeting of the steering committee that oversees NLC, have been unsuccessful -- other employers are too bottom-line oriented to understand that day care can make good business sense. The committee, including Wyllie, Colley, La Salle, and manager of manufacturing services David Martinez, meets over lunch at The Blue Lantern, a local restaurant. Seated at a large round table in the back, they joke with one another good-naturedly. But when the meeting starts, the note pads come out, minutes are taken, and motions are made. The conversation rambles from who will fix the school van to how much money the center is losing. But the focus of this meeting is to come up with plans that will help Colley fulfill one of her original commitments to Nyloncraft -- to have the center breaking even in three to five years. Although the $20,000 to $25,000 operating loss and the $25,000 to $30,000 typically spent on employee subsidies each year are tax deductible, the company's best-case scenario is to eliminate the loss altogether.
Colley asks Wyllie for an update on another project -- a plan to cut costs internally by expanding the use of the center's kitchen, which serves three hot meals and six snacks a day to the children. "Generally, food service is a loser, but in this case, maybe we can make a buck," says Wyllie of the idea to begin preparing food to sell to employees." We'll shoot for trying to get it started in the fall." One idea that has come up earlier is discussed again: What about doing another television commercial, this time honing in on the center's nighttime care? (Commercials already appear on two cable television stations, CNN and ESPN.) "We can have 92 kids every eight hours," says Wyllie. "We're full on days, but we've got to fill up the night shift. The problem is revenues, but if we get the volume up, that'll take care of itself."
Colley suggests that they make presentations on the center to realtors as one more way to let area newcomers know about NLC. The realtors, in fact, might want to suggest to potential clients that they drop their children off before they begin their house-hunting treks. "If we start small with that select group, then maybe we could see how a drop-in center would do and build up from there," she says. Martinez doubts that this will be a money-maker, but, he muses, the exposure to new families might make it a worthwhile effort. The meeting concludes with a look at NLC's balance sheet. "I love it," Colley says with a giggle." My year-to-date favorable is $5. I'm ready to go out and spend it!" "Don't spend it all in one place," La Salle advises.
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DONNA FENN is the author of Upstarts! How Gen Y Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009), about ways Gen Y is changing the entrepreneurial landscape.