Sole Survivors

THERE WERE AROUND 350 OF THEM, and only one of him. But Tommy Hewitt was ready for battle.

He didn't have to wait for long. By the time he started speaking, there were plenty of angry faces among the employees of Servus Rubber Co. Most of the workers were older than the 35-year-old Hewitt, and some had been making boots since before he was born. Yet here he was, an outsider dressed in khaki pants and leather moccasins, asking them to make concessions so that he and a partner could buy the company.

Drowned out at times by boos and hisses, Hewitt got only halfway through his presentation. "You're just trying to take things away from us," yelled one worker, challenging Hewitt's claim that Servus's parent company had plans to shut it down. Then came a long volley of questions. Why should we give up a week's vacation? What are you going to do with the salary you want to defer? "We can't support our families now," shouted one man. "How can we give all this up?"

Hewitt didn't get a change to answer. "Do you want to work?" yelled the union vice-president. "We have to help them. We don't have a choice. Do you want to be out on the street?"

It was 1982, and the streets of Rock Island, Ill., were just starting to get crowded with people out of work. At International Harvester, Deere, and J. I. Case, production was shrinking. And the smaller manufacturers were losing business as subcontracting work winged overseas. Now, it was Servus's turn.

That night at the Rock Island Moose Club, a local fraternal lodge, the workers approved Hewitt's plans by a decisive vote. "It was the only future we had," says one worker, shrugging. Nobody could have predicted what the new owners had in mind. Maybe Hewitt and Michael Cappy would continue trying to compete at the low end of the market against cheap Korean boots. Or maybe they would even padlock the factory and become a marketing group. In any case, Servus would never be an industry leader again.

Or would it?

A Presidential candidate might well come to Rock Island, a living symbol of America's industrial decline, to highlight his commitment to competitiveness. On a quick tour of Servus Rubber, he might promise to fight for American jobs.

There is no kind of government intervention, though, that could have rescued a company like Servus. A tariff on Korean boots wouldn't have helped. Nor would a more favorable foreign-exchange rate. Servus fell into dire straits because it was poorly managed. Challenged by foreign competitors, the company decided to compete on the Koreans' terms. It lost touch with its market and, worse still, with its own strengths.

Servus first began drifting off course about 10 years ago. Swamped by cheaper imports, the company got winded trying to match the numbers on the Koreans' price tags. It suffered steep losses. "The only question was 'When would we go?" recalls Leon Goold, a Servus employee for 35 years.

Servus had seen much better days. From its 1921 beginnings, Servus had been distinguished by the quality of its boots and the splendor of its annual picnics. The all-day outings were glorious family affairs -- especially packed during the 1940s, when the company employed 1,100 workers -- complete with popcorn and ice cream. From Rock Island, which is about midway between Des Moines and Chicago, people had to take three buses to get to the state park in Moline, Ill. One family owned the business back then, and many families worked there: fathers brought their sons into the company to work side by side on the assembly line.

Foreign competition became a factor in the late '60s, when cheap sneakers from the Far East overran the market. Servus, which at one time was producing 25,000 tennis sneakers a day, closed its sneaker operations and successfully crept into smaller niches. It produced, for instance, a plastic galosh called the Hustler, which was popular among farmers, construction workers, and electricians. And it made special overshoes for military and industrial workers.

In 1972, the $25-million business was sold to a division of Chromalloy American Corp. Chromalloy installed new chiefs at Servus and left the strategizing to them. As the Koreans challenged more of its markets, Servus panicked. The new executives forgot what Servus did best -- produce quality boots -- and instead initiated a decadelong process of competing with the Koreans on price. "I don't think they even understood the reasons for Servus's success," says one observer.

To keep prices low, the company began stripping down its products. It bought rubber, zippers, buckles, and cloth from the cheapest suppliers it could find. What were once quality boots were fast becoming low-quality "me too" products. For example, the lining in one of its most popular farming boots, the Northerner, was changed to a more loosely netted fabric. That saved about $60,000 a year. At the same time, companywide returns rose to about 10%, undoubtedly because of such problems as the netting, which tore easily. Those returns were adding substantially to shipping and labor costs; never mind the disgusted customers who left for good.

Servus stopped investing in its business. "We didn't deal with them, unless they took things away from us," says Jack Miller, the industrial-relations manager who in 1971 started as a night "cracker man" in the mill room, grinding up used rubber. Even though employees were fainting on the job, management refused to install an adequate number of fans. A minor disagreement over health insurance turned into a seven-week union strike and a one-week wildcat strike in 1978.

Equipment was also neglected. One example was the Banbury mixer, a giant machine that stirs rubber like an electric eggbeater. Servus decided not to spend $60,000 to keep an extra reconditioned body at hand. When one broke down, so did the factory.

By 1981, Servus was losing more than $1 million on $14 million in sales -- and this after starting a decade earlier with a profitable company twice as big. No wonder; customers were fed up. "I would have bet you $1,000 that I would never buy another Servus boot," says Mary Grilliot, vice-president of Morning Pride Manufacturing Inc., which makes and distributes protective clothing for fire fighters. Customers in Servus's other markets -- industrial, farming, and sporting boots -- felt the same way.