NEWARK, AUG. 25 -- When Hyatt-Clark Industries closed its roller-bearing plant last Saturday, it concluded a high-profile experiment in employe ownership that its president said was marked at the end by employe sabotage.
"It's a bitter pill to swallow," George Eckles, a United Auto Workers shop chairman at the plant, said as a few workers cleaned up machinery and finished paperwork.
Kurt said today that instances of sabotage prompted an early closing to protect the "health and safety" of the workers. He said some equipment was damaged or tampered with and some products about to be shipped were damaged.
Eckles said workers felt like prisoners during the company's final days, when they were required to remain in groups under supervision because of management's fear of sabotage. He conceded that some machinery was slightly damaged by angry employes.
President Howard Kurt told employes last Saturday that the plant was shutting down immediately. The company, which was in bankruptcy proceedings, had been scheduled to close Aug. 28.
Hyatt-Clark Industries was purchased by its employes in 1981 from General Motors Corp., which wanted to close it. Although it showed a profit in some years since then, it was hurt by foreign competition and outdated equipment.
General Motors owned HCI for four decades and accounted for 90 percent of its business after the sale. Workers took a 25 percent pay cut and borrowed $53 million in a bid to save the company and their jobs.
Employes bought the plant under an employe stock ownership plan, in which workers receive stock in the company as part of their compensation.
Kurt said the company, which had $46 million in revenues in its last fiscal year, was one of the largest industrial companies to be bought by its workers. It was also one of the first times a troubled company was saved by an ESOP, Kurt said.
At first, employe ownership seemed to work, raising morale and restoring profitability in 1983. "Everybody was putting everything they had into it," Eckles said.
But trouble began again two years later, and hourly employes staged a work slowdown after a bid for a pay increase was turned down.
Financial problems led the company to file for bankruptcy protection in January 1986, and last fall GM said it would not renew its bearing contract with HCI.
The company, which once employed 1,600 people, was down to 300 by last week.
Compounding the problems was the recent discovery of industrial waste at the plant. The discovery complicates efforts to repay nearly $50 million in debts and $21 million claimed by workers, officials said.
"Employe ownership is not a way to circumvent fundamental problems," said David H. Blake, dean of Rutgers University's Graduate School of Management. "They had an awful lot of serious competition and strategic issues."
Machinery was outdated, foreign competition was damaging the roller-bearing industry and management and workers suffered from ingrained hostility and antagonism, he said. "That's not something they resolved," he added.
Eckles blamed insensitive management and bank lenders for alienating the workers.
"I think an ESOP can work, but management has to listen to the people," he said.
In Kurt's view, the failure resulted because the union wanted early profits to be paid out immediately rather than being reinvested in the company.
"You've got to have a common idea of what you're in the business for," he said. "It wasn't as if we weren't making money. We were going to be a real success story."
Eckles said workers are looking for new jobs. He and his wife opened a delicatessen in Roselle a month ago. Some employes are going into computer and paralegal work, several others went into real estate and some are in retraining programs.
Meanwhile, the company is being liquidated. HCI sold its equipment for $5.7 million last month. A $17 million bid for the land and the plant was rejected because it did not even cover a $24 million bank mortgage.
The discovery of industrial waste is hindering purchase of the 85-acre site because of a state law requiring cleanups of polluted industrial areas before they are sold. A cleanup could cost as much as $30 million and take as long as a year.
GM has denied liability for the pollution, but has said it is willing to negotiate to help pay for the cleanup.