* In September and October Ursprung phased in a salary-and-hours reduction plan. For the rest of the year top management would take a 10% pay cut. (When's the last time anyone outside Japan did that?) Middle managers and other salaried people would take cuts of 5% to 7%, and the plant would be closed one weekday a month.
* As part of both programs, Ursprung detailed other ways the company would cut both manufacturing costs and selling, general, and administrative expenses. Cleaning ser-vices would be cut back. A planned facility expansion and four new hires would be postponed. Travel would be restricted.
Needless to say, the reaction to all those moves was mixed. Pat Napolitano, in quality control, remembers her initial reaction as anxiety -- she couldn't remember a time in her 15-year tenure when the company had stumbled. "But then I thought, How like Cecil's philosophy. We're behind last year? Instead of saying that's not much, we'll catch up, we're aggressively doing something."
Napolitano, as it happened, volunteered for two months off, using the time to fix up her house. About 90 other employees chose to take a leave as well. She and others can tell you exactly what the company saved through the program (more than $200,000), and how much the salary cutbacks and other measures would be saving over the seven months (close to $1 million).
By late fall Reflexite managers were detecting signs of a recovery: orders were picking up, and the backlog was once again building. The cuts, however, will stay in effect until March 31, 1992, the end of the company's fiscal year. If business should come back strong, all will enjoy at least a token acknowledgment of their contribution: the formula for calculating the owner's bonus was doubled for the duration. Meanwhile, the company closed the first half of fiscal 1992 with profitability intact.
* * *
There are times, it is plain, when Cecil Ursprung feels a twinge of uncertainty about what he has constructed at Reflexite. A decisive, active man -- for relaxation he drives his Porsche 911 in track races -- he confesses to being an instinctive authoritarian. "This employee participation kind of goes against the grain with me. I'm more the kind to tell people how to do things, delegate it all out. I have to work at this stuff." Nor is the company without its problems. Yields still aren't what Ursprung would like them to be, for example, and a quality-assurance program is just getting off the ground. Before long Reflexite will have to spend money on expanding (or moving away from) its bursting New Britain plant. Down the road it will have to set aside funds to buy stock from employees (who must sell it back to the company when they leave).
Even so, consider the prospects. Reflexite's growth isn't limited by the size of its market, Ursprung likes to point out: worldwide demand for retroreflective material runs into the billions, and new applications such as those helicopter-pad pylons are turning up all the time. Nor is the company much constrained by money. Margins are high, and Reflexite has so far financed all its growth with internally generated cash. Even in the current slowdown it has been paying down debt. As for competition, though Ursprung (like everyone else at Reflexite) expresses healthy respect for "the people in St. Paul," he's quick to point out that he hasn't yet lost a customer to them.
"So what's the limiting factor?" asks Ursprung. "The answer, I realized some years ago, is people. We are the limiting factor on this company." And that, of course, is where the structure and culture of ownership pay off most directly. Employee ownership attracts people, like the 1,700 who recently responded to an ad for a sales-and-marketing general manager or the 2,100 who responded when the vice-president of finance job was open. It allows the company to retain people, including those on whom its complex technology depends. Turnover of employees who make it beyond the first year is virtually nil. And the culture of ownership helps people work together in what is frequently a pressure-cooker environment.
Employee ownership has side benefits, too. Even today, years after 3M's offer, Ursprung gets inquiries about Reflexite from would-be buyers -- a couple each month, he estimates, with two or three every year who press their suit avidly. He listens politely, then generally responds in much the same way. "It's interesting you should want to purchase Reflexite," he says, "because the company has already been sold." Sold, they ask -- to whom? "To its employees," he responds. "That pretty much turns them off," he adds with a laugh.
Turns them off. Pity. For the sake of Connecticut -- and for the resurrection of the rest of the American economy -- better it should turn them on.
* * *
FINANCIALS
($ in thousands)
Year ending 3/31/91 4/1/90 4/2/89
Employees 275 225 180
Net sales $31,301 $23,110 $16,595
Pretax income $4,735 $2,672 $2,105
Total assets $18,535 $15,229 $12,613
Net owners' equity $7,246 $5,359 $3,656
