Money, hoopla, financial information, voting power -- few ESOP companies take so many pains to make stock ownership more than just another benefit. Employees at those other companies return the favor and continue to regard themselves as wage earners with one more benefit. At Reflexite, by contrast, a feeling of proprietorship -- and of a long-term stake in the company -- crops up in conversation before anyone asks. "This was always a family-type company, a friendly place to work," says Pat Napolitano, a quality-control supervisor who joined Reflexite under the Rowlands. "But now! It took us a while to understand we actually owned part of the company ourselves. But that part gets more exciting every year, especially for longer-term employees."
The crux of employee ownership at Reflexite isn't the good feelings it generates; plenty of companies have a mellow atmosphere and a mediocre profit-and-loss statement. Rather, it's the way the structure and culture mesh with Ursprung's strategies and ambitions for the business. This is not, after all, just a sleepy little shop in Connecticut. Under Ursprung's guidance it has nurtured a technology that 3M, one of the premier product-development companies in the world, still has not replicated. It has expanded into vast new markets all over the world. In the last several months it has weathered a brutal sales downturn, keeping profitability intact and readying itself for still more new markets. Thanks to employee ownership, Ursprung has been able to undertake moves and maneuvers in all these areas that CEOs of conventional companies wouldn't dare try.
A technological edge. We Americans think of technological development in a linear fashion: you invent something, you patent it, you market it. The Japanese don't make that mistake. Americans may have invented the VCR and the memory chip, but it was Japanese companies that painstakingly accumulated the know-how necessary to manufacture them at ever-higher quality and ever-lower cost. Ursprung hasn't made that mistake, either. Rather than rely on his company's aging patents (which technology vice-president Jim Seely acknowledges are no longer "particularly strong"), he has created an in-house technical-development capability that effectively insulates Reflexite from direct competition.
The capability takes a variety of forms. Reflexite engineers and technicians themselves design and build the big multimillion-dollar machines that produce the prismatic material. Each new behemoth incorporates dozens of process improvements that will never appear in any patent. R&D specialists such as Dave Martin -- an inveterate tinkerer known for pulling up to the plant in a big red dump truck -- draw on years of hands-on experiments to transform the material into new products, some of them complex 8-layer or 10-layer chemical sandwiches. (Martin's latest: a reflective collar for highway traffic cones that shows up orange in the daytime, bright white at night.)
Getting the tooling, the machinery, and the chemicals to work together -- they don't always -- is a matter of high craftsmanship. "It's not a push-pull, click-click kind of operation," says U.S. manufacturing manager Chuck Woodard, frowning as he watches the second of two production interruptions in a 20-minute period. "Which means we've got to have the hearts of the employees in order to make this thing run. There are so many little things the individual has to pay attention to." Capturing employees' hearts (or managers', for that matter) is not among most U.S. companies' strengths. Reflexite, with its tangible and intangible reminders of joint ownership, has a built-in edge. "I take more interest in my work, knowing that if I screw up, money goes out the door," says recently hired mold technician Mike Ardito.
In Japan wages rise steeply with seniority. Reflexite's ESOP builds loyalty in a similar fashion: the longer you stay, the more shares you get and the more your nest egg grows. So experienced employees almost never leave, and the company almost never loses their know-how. "Dennis over there has been here almost 8 years, Joe here 13, Teresa 12, Lester at least 9," says Woodard, ticking off the names of the skilled operators busily fixing the foul-up. "The ESOP concept really appeals to the more senior employees."
Small companies competing with big ones typically maintain low profiles and are content to snap up crumbs of business the giants leave behind. Not Reflexite: its technological capabilities have turned it into a self-confident David looking to fling a few rocks at 3M's Goliath. "What we're trying to do over there is bring the brightness of our product up," says Woodard, pointing to yet another version of the reflective traffic-cone collars. "Then we'll build specifications with the states for our brighter collars -- and kick everybody else out of the marketplace."
Building markets. "If you're a technology-driven company like ours," muses Ursprung, "you must be very, very good at finding applications for your technology in the marketplace." In principle the chore doesn't seem so difficult. Reflexite -- the material -- can be used on everything from traffic markers and Coast Guard buoys to stick-on smiley faces. It's as useful in Germany as it is in Georgia. In practice, though, getting products into so many markets is both tricky and time-consuming. Each niche has its own technical problems, its own distributors and customers. Many involve the arcane and political process of government-specification writing. Confronting those issues domestically is difficult enough. But how on earth has Ursprung managed to take international sales from a little more than $1 million in 1986 to some $15 million last year?
