Even with his union and the governor on his side, turning around a troubled company in a troubled industry has proved tricky business for Jim Lambert.
WAITING. SMOKING CIGARETTES IN a hallway of the John McCormack State Office Building, down the hill from the state capitol in Boston. Leaning against the wall. James F. Lambert, owner and chief executive officer of Morse Tool, in New Bedford, Mass., has just finished a presentation to the board of the state's Economic Stabilization Trust. He has asked the board, as a lender of last resort, to lend his company $1.5 million to keep it alive. Lambert is nervous, depressed. He thinks his meeting was a flop. "How long can this go on?" he asks himself.
Like a number of companies in similar circumstances, Morse is seeking help from state government. And like a growing number of states, Massachusetts has made the fate of its older manufacturing industries a matter of official concern. Turning concern into workable strategies, however, has proved elusive. In a few instances, such procedures have produced the desired resurrections that, although miraculous, have not been entirely graceful. In other instances, state assistance has simply not worked. For even under the best conditions -- where the company is uncommonly flexible, where a labor union is desperately cooperative, and where the economic policies of an otherwise prosperous state are unusually generous -- even then, the process can be extremely difficult. Just ask Jim Lambert.
"On a scale of 1 to 10, I'd say the meeting was a 2," Lambert says, shaking his head and dragging hard on his smoke. What if he doesn't get the loan? What then? "I don't know," he says. "Maybe we could ask our suppliers to extend our credit. Or maybe we have to shut the plant down."
Standing nearby is Ron Carver, a representative of the United Electrical, Radio and Machine Workers of America (UE), which represents 300 of Morse's 400 employees. His face sets hard and somber. And Rod Poineau, the president of one of the union's New Bedford locals and a Morse employee for the past 20 years, who now falls gravely silent and pensive. The two union men are also thinking, "How long can this go on?" It is a scene borrowed in several essential aspects from a waiting room outside the intensive-care unit of a major hospital.
Unfortunately, there have been other such moments off and on for the past five years. Especially for Carver and Poineau, those years have strung themselves together in a long, fitful vigil as Morse Tool, attached to various life-support systems, struggled to survive. In the process, the company became something more than an isolated industrial casualty, a metaphor for a phenomenon that came to be called "deindustrialization." As corporations withdrew their assets from mature industries to reinvest them elsewhere in more attractive opportunities, plants were boarded up and left behind, workers wandered off to find other jobs, and communities were left to repair the wreckage as best they could. For a time, Morse became the focal point of a nationally recognized campaign against the trend. It became a symbol, a statement about corporate responsibility to the communities that once sustained them, about the painful human costs of impersonal economic decisions.
"If it were just Morse and just 400 jobs," says John K. Bullard, New Bedford's may-or, "that's reason enough to fight very hard. But it isn't just Morse. It also gives a signal to a lot of other industries and a lot of other families in this city about whether or not we care about their careers, whether we're prepared to do anything about it." After 122 years, with New Bedford's whaling boats long since gone and her textile mills now breathing their last, Morse Tool is still hanging on.
Stephen A. Morse founded the company about the time Ishmael met Queequeg. Morse had invented a spiral shaft of fluted metal known today as the twist drill bit, which was far superior to the flat, pointed instrument it replaced, and the strength of that idea spawned a new industry. Today, Morse manufactures more than 7,000 individual items, including drills, taps, end mills, cutters, and reamers for such heavy-manufacturing-industry groups as aerospace, automotive, and farm equipment. Its sales of $26.5 million represent about 4% of a $650-million market segment that now includes some 60 competitors, many of which are struggling and none of which has more than a 12% market share.
Although ownership has changed hands several times over the years, Morse Tool has remained a permanent fixture of the New Bedford landscape, one so familiar to the people who live here that it is simply called "The Drill." It was not until 1968, when Gulf & Western Industries Inc. bought the company, that Morse finally passed into the hands of a multinational conglomerate. Looking back, most observers see in that transaction the seeds of the troubles -- troubles that began to sprout in the spring of 1982 and have continued, in one form or another, to this day.
Gulf & Western first announced there were problems at The Drill during contract negotiations in 1982, as it unveiled a long list of concessions it was demanding from Morse workers. Management cited labor costs that were as much as $4 an hour above those at nonunion competitors and a 10% drop in productivity since 1976 -- both of which had contributed declining profits and market share. If the company were to continue operations in New Bedford, Gulf & Western said, the union must agree to reductions in wages and fringe benefits, vacation time, sick and personal days, paid holidays, and insurance for laid-off workers. The ultimatum was not unlike others that would be put on negotiating tables in mature industries across the nation.
The union's response would also become something of a model. UE Local 277 rejected Gulf & Western's basic premise and countered that the company's weakened competitive position was actually caused by the parent company's premeditated program of industrial disinvestment. A study commissioned by the union found that between 1977 and 1982, Gulf & Western had invested less than $800,000 for new equipment at the New Bedford facility, while during the same period, nearby competitors of roughly the same size had invested $1.5 million and $5 million. It was also pointed out that in 1981, the company had "invested only $6 million for cost-saving improvements in its entire manufacturing division, which had revenues of $1.3 billion that year and earnings of $107 million." In addition, the study judged that Gulf & Western had effectively eliminated departments that any serious management would consider crucial to a continuing profitable relationship between a tool company and its customers.
