CARL VOGEL'S peeling yellow clapboard house, just around the corner from the new Ponderosa Steak House in Herkimer, N.Y., doesn't seem like a flash point of a nascent movement that could affect the course of American history. With his orange plastered walls, bright blue carpets, china dog statues and massive TV elevated on a white pedestal, Carl Vogel seems the essence of the skilled factory craftsman who has hammered and sawed his way toward the American dream.
For 43 years, Vogel built components of library furniture in the Herkimer Library Bureau Inc, just as his father and grandfather did before him. He worked his overtime, paid his union dues, was twice elected president of the union local. Until recently his most radical thought was believing he might beat Willie Mosconi in a local pool exhibition (and regulars at the mohican restaurant will proudly tell you he almost did).
But then the bombshell hit one afternoon four years ago. In a seven-sentence press release that Vogel and his fellow workers will never forget, executives of the distant $4 billion Sperry Rand conglomerate announced they were shutting down the Library Bureau -- a profitable but minor subsidiary they had picked up in a merger. In a depressed valley where abandoned factories litter the landscape like crumpled beer cans the news condemned Vogel and the 277 other employes to a future on the unemployment and welfare rolls.
But unlike citizens of most communities hit by plant shutdowns, the factory workers and other citizens of Herikmer fought back. In an extraordinary campaign -- "the most single unified effort that this area has ever known since the American Revolution," one community leader declared -- the townspeople scraped together $6 million in cash and loans and bought the plant from Sperry.
And today, the rank and file build library checkout counters and card catalogues in their own newly named Mohawk Valley Community Corp. -- 100 percent employe- and community-owned.
The takeover story soared to four minutes of fame on the Evening News with Walter Cronkite -- a story of jubilant workers and townspeople triumphing over the evils of far-flung conglomerate power.
But now, as he sits in his living room on rainy evening four years later, union president Carl Vogel is talking angrily about how the dream of worker ownership has soured. "We saved our jobs, yes, but it could have been a lot better," Vogel says. "We thought things would be, well, different. We expected to be treated more like part-owners, with respect, not just as employes.
"the employes should have had a lot larger role than what they did have," Vogel says, clenching his fist for emphasis, "but they [management] just kind of pushed us to the side and said, 'We're the boss and we're going to run the show.'
"The people on the floor know a lot more than running machines," Vogel says, thumping the couch. "We know how to make this company run."
The factory takeover in Herkimer, and the anger stirring in workers like Carl Vogel, symbolize new visions being born in factories and communities across the nation. As the economy stumbles and conglomerates shut down aging plants, workers and worker-community coalitions have bought at least 60 threatened corporations in the past few years.
Worker groups have saved firms ranging from a small sewing company in a poor black region of North Carolina to the 500-worker South Bend Lathe Machine tool factory in Indiana. More than 1,000 employes in the graying mill town in Lewiston, Maine, recently bought and saved a textile plant scheduled for shutdown as the conglomerate parent pulled its money out of fabrics and invested in coal.
Unemployed printers in Clinton, Mass., recently launched a worker-owned co-op factory on the ashes of a printing plant, discarded by the Toledo-based Sheller Globe conglomerate. And, the perhaps the most dramatic worker takeover to date, almost 2,000 slaughterhouse workers are likely to purchase the Armour conglomerate's ailing Rath Packing Co., including five plants spread across Iowa and Texas.
There have been other fleeting moments in U.S. history when working people, desperate that the economy wasn't working for them, took matters into their own hands. The radical Knights of Labor, for instance, launched more than 100 worker-owned firms during the recession years of the late 19th century.
But the new wave of worker- and community-owned firms shatters the historical precedents. For it's not fringe radicals leading the takeovers, but local Chamber of Commerce presidents, clergy and union leaders. Officials at practically every level of government, from the Hartford City Council to the National Governors Association, have endorsed employe ownership to save jobs. Congress has passed bills in recent months that would provide federal loans to help employe and community takeovers, with support ranging from George McGovern to S.I. Hayakawa. Federal agencies have already aided a handful of employe takovers -- in fact if the Rath workers buy their company in the next two months as expected, it will be with the help of the Departments of Commerce and Housing and Urban Development.
Historically, of course, employe and community ownership of industry has been championed by radicals as a building block of socialist democracy. Karl Marx hailed worker-owned firms as "the first sprouts" of a revolutionary age. But most advocates of the current generation of takeovers don't envision them as a radical step toward worker and community control. Far from it: They view employe ownership merely as a pragmatic strategy, a "viable option," as HUD policy planner John Simmons calls it, to prevent more plant closings and fight unemployment.
But supporters of these Herkimer-style takeovers are unwittingly sowing the seeds of what could become an historic democratic movement. For as rank-and-filed factory employes like Carl Vogel awaken to new possibilities of influence -- the simple fact that they can join hands and save their own multi-million-dollar corporation -- they are opening their eyes to bolder visions. In firms from Herkimer's MVCC to South Bend Lathe, worker-owners like Carl Vogel have tasted new possibilitie of influence over the corporate policies that affect their lives -- and now a growing number of workers say they want more.
Random press clippings spread on a table, like pieces of a jigsaw puzzle, form a rough picture of the mounting plant-closing problem. Goodyear Tire and Rubber lays off almost 3,000 employes in Akron, and then buys the biggest tire manufacturer in Chile. U.S. Steel announces it will shut down 16 factories and put 13,000 employes out of work -- as it invests massive amounts of money, more than half a billion dollars in the past few years, into chemicals operations and hotel-condominium projects in the South.
Plant shutdowns are striking hardest at the aging industrial towns of the "graybelt," stretching from the Great Lakes to the Northeast. According to federal-funded studies, conglomerates have been casting off older plants, many of them swallowed during the merger wave of the Sixities, and shifting their investments to the boom towns of the South and Southwest, and overseas -- lands of weaker labor unions, cheaper labor, cheaper transportation and energy.
Conglomerates aren't necessarily discarding the plants because they are losing money -- as studies at Cornell University show, many shutdown plants were earning decent profits -- but often because by shifting their capital to other investments, executives figure they can earn even more. And under current federal tax laws, corporations can actually make more money by shutting down subsidiaries and writing off the losses than by selling them.
The small towns sprinkled through the Mohawk Valley in upper New York are like tombstones to the failure of federal policies to grapple with the problem.
The economy here has been so chronically ill in recent years -- General Electric, Carrier Corp., Sperry and others have all fled the area -- that news of a Mr. Steak restaurant coming to Herkimer rates a front-page headline. Townspeople aren't excited about cheap T-bones, but about the 35 new jobs the restaurant franchise may bring.
As their economy crumbled around them, local residents looked to the Library Bureau as their financial Rock of Gibralter. Founded in 1876 by Melvil Dewey, of Dewey Decimal System fame, the corporation had earned a decent profit in 19 out of 20 years. Townspeople still talk about how proud they they felt when their yellow and red brick factory first become part of the multinational Sperry conglomerate. It was proof, they thought, that they had earned world respect as they took birches from the Adirondacks and debarked, planed and hammered them into card catalogues and checkout counters for institutions from Princeton University to U.S. embassies around the world. i
And so the factory's workers and community residents were stunned when they picked up the Evening Telegram one frigid March afternoon and read that Sperry executives were going to close the plant and sell off the equipment. Sperry wasn't Closing the area's single largest employer because it was losing money, executives acknowledged, but because the factory's furniture products "do not fit the company's present product lines" -- including office electronics and guidance systems for warplanes.
Sperry executives added privately that while the Library Bureau's profits were good, they didn't consider them good enough -- below 22 percent return on investment, the hefty "target hurdle" that Sperry executives strive to achieve.
Karl Marx had envisioned that workers on the factory floor would spontaneously seize the means of production, but in Herkimer, the worker-community takeover was launched by a small group of local managers and businessmen. "They wanted to buy the factory from Sperry," says John Ladd, executive director of the Mohawk Valley Economic Development District Inc., a local conduit that funnels federal funds to local business. "But we knew the business groups weren't capable of raising the equity themselves to put the funding together. So," Ladd says, "we decided to go after the little guy on the street."
When the factory employes first heard the idea at a mass meeting in the Herkimer Community College auditorium, high on a hill overlooking the factory, they ran with it. "I had never even dreamed about worker-community ownership," Carl Vogel recalls. "But what was the choice? It was either go out and draw unemployment and then go on welfare, or go and purchase the plant."
Sawmill employes and school librarians and members of the Jaycees fanned out through the valley, knocking on every door and selling stock coupons as if they were raffle tickets. Local businesses chipped in, from the local funeral home to Utica Club breweries. Retired schoolteachers walked into Ladd's office carrying shoeboxes bulging with dolalr bills, smelling musty after years cached in their basements.
But it was the Library Bureau workers -- the rank and file whacking nails and sawing wood, 52 hours a week including overtime, for an average $10,000 a year and not a single day's paid sick leave -- who really rescued the town. In the middle of acrimonious negotations, Sperry executives suddenly demanded a $200,000 down payment, nonrefundable even if the takeover deal fell through. "I went right through the plant, floor by floor, man by man," Vogel says, "and I told them, "We got to come up with the money and we don't care where you get it. Draw it out of the bank or out of your mattresses.' Within a few days," Vogel says with obvious pride, "we come up with $193,000 in cash -- the employes alone."
Ironically, while Herkimer residents were fighting to save their factory by buying it, state and federal officials were trying to prevent another Sperry subsidiary from closing in nearby Utica. But they were using more conventional tactics -- enticing the conglomerate with generous land and tax incentives worth millions of dollars.
The offers weren't good enough. Sperry shut the Utica plant, putting 1,000 employes on the unemployment rolls, and shifted production to Tennessee. Three weeks later, the Herkimer strategy succeeded.
Herimer-style success stories have hit the front pages of the nation's newspapers. Something about the populist spirit of these employe ownership campaigns, linking small town managers and bank presidents to union leaders and machine tool operators, seems to capture the imagination of a nation that's becoming more aware of conglomerate power. Press stories often glow with reports of how the employe takeovers have boosted worker morale, productivity and profits.
In fact, to read about the employe-owned firms in the press -- headlines such as "Workers Take Over Plant," "workers Are Running the Show" -- you'd think the revolution has come to small towns like Herkimer and South Bend.
It hasn't. If you walk through the Herkimer furniture factory, you won't find worker councils shutting down the saws to vote on corporate policies. You won't find grease-stained machinists running the executive offices at South Bend Lathe. Virtually nothing has changed since the workers bought the factories -- except that now employes have some shares of stock in their dresser drawers.
At most of the firms saved recently by employe or employe-community ownership, in fact, the same local plant managers who ran the enterprise under conglomerate ownership still run the show. "I worked here before [under Sperry] and I worked here afterward," a vice president of the Herkimer factory said. "And I don't see any change. Things go on exactly as before."
In most of the firms saved recently by employes, worker ownershp of corporate stock has not bought workers' control.
In many new worker-owned firms, employes don't even have the power to cast their shareholder votes, as even the smallest stockholders of General Motors do.
When 800 employes in California and Oregon bought two factories from the Fibreboard Corp., for instance, they agreed to surrender to the plant managers the power to vote their stocks. And in cases where employes do cast shareholder votes, such as in Herkimer or at South Bend Lathe, their votes don't carry significant power. When the rank-and-file machinists at South Bend Lathe bought and saved the ailing factory, the local officers of United Steelworkers of America agreed to let plant manager J. Richard Boulis hand-pick the board of directors. The result is a self-perpetuating corporate board dominated by top managers and their allies.
Why didn't employes flex their ownership muscle to gain control? Most rank-and-file workers, raised on orders from the boss and the punching of time clocks, never even considered the possibility. "I never thought I was buying a piece of management. In fact, I never even gave it a thought," a young employe said as he strolled out of the Herkimer factory at the end of a shift. "I was just buying a piece of stock to stick in my drawer -- and saving my job."
But recent interviews with employe-owners at Herkimer, South Bend Lathe and other firms suggest that attitude is changing. As workers gain experience in their new roles as owners, a subtle fermentation is taking place -- changing the expectations workers have about their role in management and asserting decision-making power.
As you stroll through the shopfloor of the Herkimer furniture factory, through the screech of the band saws and through eyestinging clouds of varnish, employes talk angrily about their mounting frustrations and resentments: managers keep information secret, managers are arrogant, managers"spend money like water."
"Look, Sperry ran that plant the way they saw fit and they paid our wages and it was none of our business what they were doing," says Joseph LaBate, an 18-year Herkimer veteran who coats the wood with a noxious-smelling sap so the stains will hold. v"But we own the plant now."
LaBate, like most employes, is furious that management recently bought a costly subsidiary without even counsulting the employes-owners first. "That's our money they're spending," LaBate says. "If they wanted to buy that plant they should have gone to the people and said, 'Should we do this?' And they should have gone along with what we said. If I own my own home, I want to run it the way I see fit. I ain't going to have nobody else tell me how to run it."
Did LaBate feel the same way four years ago, before he and the other employes saved the plant? He shakes his head. "Never gave it a thought."
The same mood of discontent is gnawing at South Bend Lathe. The employe purchase in 1975 was hailed by the media as an industrial miracle. Front-page press reports described how Chicago-based Amsted Industries was going to liquidate the plant after five straight unprofitable years; how the local plant manager called the employes to a mass meeting one afternoon and proposed that they buy it; how an employe trust, called an Employe Stock Ownership Plan (or ESOP) bought the plant for $10 million in federal, municipal and private loans, creating what was then the biggest worker-owned plant in the nation.
A year and a half later, follow-up stories and surveys told how worker morale -- and company profits -- had surged. "For a while all the guys here were going around saying, "Yeah, it feels good to be an owner,'" remembers Robert Newton, a 32-year-old machinist who churns out gear blanks for lathes. "Now I can tell them [the managers] what I really feel."
But today, if you join Newton and fellow workers at their local union hall, next door to the Ace-High topless bar, they'll tell you how their visions have crumbled. They sound as if they're reading from the Herkimer script, reciting tales of management secrecy and arrogance, simmering with the anger of feeling forgotten and ignored.
"You wouldn't believe how management wastes money around here," Randy Reynolds, a quality control inspector, complains, "But when you come up with an idea how to make things better, they treat you like you're stupid -- it goes in one ear and comes out the other."
Employe-owners bristle as management tacks up wall posters exhorting them to work harder for "their" company -- only to hand out company profit bonuses according to salaries, so that managers walk off with the biggest chunks. "Second-class citizens," Reynolds calls the workers. "They're trying to make ESOP slaves out of us," says Newton, a member of the union bargaining committee. "They tell us, 'It's your company, you're the owners -- now do as we tell you.'"
Like the disgruntled American colonists who began demanding representation in King George's government, shopfloor employes at South Bend Lathe and the Herkimer furniture plant have begun to speak out. Vogel, LaBate and other union members have been pressing top managers of Herkimer's MVCC to consult with them on major issues. And at South Bend Lathe, over 180 rank-and-file workers, more than half the hourly work force, have signed a petition to plant president Boulis asking that worker represntative take control of half the seats on the board of directors. Some employes argue that demand should be just the beginning. "The whole board should be elected by the employes," says Gerald Vogel, vice president of the United Steelworkers local at South Bend Lathe. "After all, this company's employe-owned. We should elect the people who run it, just like we elect the people who run our union, and the people who run the country."
The top managers at South Bend Lathe and MVCC tend to shrug off workers' complaints. At Herkimer, one top official says, "We've put up a suggestion box. I hate to open it," he laughs, "because there are so many suggestions in there." And at South Bend Lathe, says president Boulis, the militant demands "are coming from a handful of union discontents who don't speak for a majority."
Still Boulis acknowledges he has "morale problems." "It's obvious our people want to participate more in the company we own," he says. "The problem is, in the first two or three years I've been so goddamn busy trying to get economic problems resolved that we just haven't had time to bring employes into some kind of decisions where they can make meaningful contributions."
Recently, Boulis called a series of meetings with representatives from the shopfloor, to chat informally about company business, shopfloor problems and other issues. He hasn't yet decided whether to make such meetings a regular affair.
But some employes question whether a monthly chat with the boss -- without building any format structure and training programs to increase employe participation -- will be enough to channel growing worker discontent. If the story of the demise of worker ownership at the Vermont Asbestos Group Inc, is any guide, the problems simmering at South Bend Lathe and Herkimer and other worker-owned firms could someday explode. The spirit of worker ownership soured at the Vermont asbestos mine as employe-owners found themselves locked out of any participation in decision-making by "their" managers and board of directors. When the board of directors rammed through a controversial decision to build a costly subsidiary -- despite widespread employe sentiment against it -- the discontent erupted. Enraged and disillusioned, employes sold their stocks to a local businessman and gave him effective control. "People was just fed up, what with the board ignoring them and all," one miner explained.
To some extent, the disillusioned workers at the asbestos mine, or Herkimer, or South Bend Lathe, have themselves to blame. When they purchased their factories they agreed to the small print that eventually locked them out of power, and by the time they started complaining after the fact, it was too late. But employes in these firms argue that they were venturing into unknown territory, and should have had help. "Man, I had never even heard about employe ownership before all this," one South Bend Lathe machinist says. "Next time around I wish someone was here to tell us what it's all about."
The tensions in the worker-owned firms are provoking a new kind of thinking among some of the shopfloor owners. "Me and another guy were just talking about this the other day," Robert Newton of South Bend Lathe mused one evening, as he relaxed at home after putting in his usual overtime. His house was quiet; his wife had just left to work the operator night shift at the local Bell Telephone subsidiary.
"We said, well, why couldn't we have this company set up like the Congress? We don't need foremen -- we could elect team leaders, or something like that. And we could have a man elected for each department to a committee, and then when things come up in the shop, why, the guys on the committee could take a vote on it -- just like congressmen do."
Newton paused for a moment, as if letting this far-reaching vision sink in. "Good idea, huh?" he laughed, in a self-mocking tone, as if to say, Where'd I get this crazy idea? "Before we bought the plant I guess I never really did think about anything like this," Newton said, "you know, employes making decisions and things like that."
As more communities turn to employe ownership to save viable companies from closing, the problems plaguing firms like South Bend Lathe and Herkimer -- and the growing worker demands for influence -- are not going unheeded. When the laid-off printers in Clinton, Mass., launched their new firm, they organized it as a worker "cooperative": every employe costs an equal vote in electing the board of directors and forging major corporate policies. And the mostly low-income, Puerto Rican worker-owners of a small poultry processing factory in Willimantic, Conn., called International Poultry Inc. have not only given themselves decision-making power -- they've set up weekly infactory training program to teach the rank and file how to run the plant in a businesslike but democratic way.
But more than any other recent takeover, the drama unfolding in the sprawling red brick slaughterhouse in Waterloo, Iowa, could chart the new course of employe ownership in the United States. The story began almost two years ago, when executives of Rath Packing co. told officials of the local meatcutters union (now Local P46 of the United Food and Commercial Workers International Union) that employes would have to accept a whopping $4-an-hour wage and benefit cut -- or, executives hinted, the Armour conglomerate might shut the ailing subsidiary.
"That's when we said we're not giving these dummies another dime," says Charles Mueller, union steward. "We've made other concessions in the past, and management just trhows the money away." So Mueller and local union president Lyle Taylor hatched another idea: "We said, 'Okay, we'll take the wage cuts,'" Mueller recalls, "if we can buy the plant."
Taylor and Mueller heard about problems brewing at South Bend Lathe and other firms, where workers bought the company without also buying control -- and they were determined not to make the same mistakes. And so, 2,000 slaughterhouse workers are on the verge of launching one of the most far-reaching experiments in recent U.S. labor history. Barring any last-minute snags -- HUD, Commerce and company managers had endorsed the plan, but a Labor Department official is raising objections -- the 1,500 employes in Waterloo, plus several hundred workers at four smaller plants, will acquire 60 percent of the Rath Packing Co. stock.
The rank-and-file workers "sticking hogs" on the kill line and transforming them into bacon, hams and hot dogs will vote their new stocks as a bloc -- which means, in effect, that union members will shape all the major corporate policies that shareholders normally control, by majority vote. Unlike the other employe-owned firms, where employes have at best token representation on the board, the Rath workers will select a majority of the board of directors, both blue-collars and professionals. In fact, union officers demanded a majority by two, so they'll sway corporate decisions even if one of their representatives is absent from a meeting.
The current, unpopular top executives of Rath Packing Co. are on the way out, because the union leaders will hand-pick the top professional managers, too. And, under the guidance of consultants from Cornell and Brigham Young universities, workers and managers are already forming joint committees throughout the aging plant so that employes can take part in key decisions that affect them. At a recent meeting of labor and management representatives, for instance, union members helped hammer out a strategy for launching a new line of products.
"We'd like to explore the concept of worker control on this new production line," said Mueller, who takes turns chairing the meetings with company vice president John Lambert, an enthusiastic advocate of the employ purchase. "We'd like to try letting the workers run the line on their own, without being managed by a foreman."
Today, Chuck Mueller beams as he sits in his drab union office across the street from the main plant. Through the open window you can hear the squeals of hogs lined up to be killed, in their "hog hotel." A south wind is blowing, making the air thick with the musty, sweet stench of dried pig's blood and manure. "When we get to thinking about the possibilities," Mueller says, "when we get to thinking about how we could start running this plant right, up to capacity, and making it a viable company; when we think how we might be able to bring our workers' pensions up to date; when we think how we might change policies so workers disabled on the job can keep decent jobs here, instead of being thrown out like old machines -- I mean, there are all kinds of things we could try to do here to make this the best place to work.
"Now the fun begins," Mueller says, with a half-laugh. But he's deadly serious about the tough job that lays ahead, working with management to make the company -- and the nation's biggest worker ownership experiment -- work. He pauses. "There's no point in owning a company," Mueller says softly, "unless you're going to run it."