The Case of Marland Mold

Marland Mold was started by former GE moldmakers Severino Marchetto and Paul Ferland in 1946 in a Pittsfield, Massachusetts, garage. The small company, at first composed of a handful of talented moldmakers, designed and built stainless steel molds for plastic products such as beverage caps and pharmaceutical containers. The well-paid and well-respected moldmaking team at Marland quickly developed and sustained a reputation for quality and innovation throughout the 1950’s and 60’s.

In 1969, the founders sold the company to Valve Corporation of America (VCA). In 1974, VCA was bought by The Ethyl Corporation. The changes in ownership brought an era of adversarial relations. Marland plant employees voted to join the International Union of Electrical Workers (IUE) in a dispute over health insurance the year the Ethyl Corporation took over.

As moldmaking technology grew more and more complex, so did the corporate environment. In 1989, the 90+ employee Marland plant was spun off with some other Ethyl units into a separate corporate entity, Tredegar Industries, based in Virginia.

The plant’s manager was headquartered in Florida where he managed another (non-union) moldmaking plant. Because his bonuses depended on the profitability of the Florida plant alone, profits at Pittsfield dried up.

It didn’t take long for the leadership at Tredegar to conclude that the Marland plant was not worth keeping. In December, 1991, Tredegar Industries put the plant up for sale. Shortly thereafter, the company sent employees the “WARN” notice of the plant’s permanent closing scheduled for May 1st, 1992.

The story usually ends there: No buyer is found. The doors close. The jobs are gone.

This would have been the ending for Marland Mold, if it hadn’t been for the employee buyout. The buyout began a business adventure undertaken by more and more companies in the United States these days. Employee ownership, “one of the best kept secrets around,” is not well-understood or appreciated by the average American in spite of its promise.

As luck would have it, just before Tredegar announced its intention to sell the plant, Marland employees and union representatives Mike Suriowiec and Ray Janas attended a presentation by employee buyout expert John Barmack. When the announcement came, they raised the possibility of a joint union/management employee buyout. In spite of a history of adversarial relations, Marland’s managers and hourly employees, desperate to save their jobs, were intrigued. Union employees of the plant voted to work with local plant managers to attempt a buyout.

Most of Marland’s union and non-union employees rallied behind the leadership of plant manager Don Madison and buyout expert Barmack as the buyout rollercoaster ride began. Local community officials and organizations rallied, as well, providing strategic and financial support for the buyout feasibility study.

The uncertainty finally lifted on Oct 2nd 1992 when the former Tredegar industries plant once again officially became Marland Mold, Inc. The burst of productivity that immediately followed surprised even the most cynical of the plant’s employees. Molds that, before the buyout, took 3000 hours to build were completed in 2200.

Marland’s employees weren’t fans of employee ownership or workplace democracy at the outset. They were just trying to save their jobs. It wasn’t long before old habits and traditional ways of thinking about work and business returned.

All the same, employees and even management didn’t fully understand what they had gotten themselves into. They understood that as employee owners they now had a financial stake in their company. But very few had any practical experience with business ownership and no one had experience with workplace democracy.

Research has shown that substantial financial equity is only one of three essential components to effective employee ownership. In order for this model to succeed, employee-owned firms must also a) educate all employees about the company’s business and how each can contribute to the firm’s success and b) build an ownership culture which taps employee talent, intelligence and capacity for self-management.

Marland’s leadership realized the importance of educating all its employees to understand their new roles. They held extensive training sessions in company finance and the Employee Stock Ownership Plan (ESOP).

Marland’s approach to process improvement went beyond open-book management and basic business education to tap the ingenuity of its employees.

Employee involvement in decisionmaking won over skeptical middle managers. As the changes and improvements took hold, profits and employee equity grew. In 1995, ahead of schedule, Marland re-purchased all the stock from the buyout lenders and the company became 100% employee owned.

Employee attitudes changed as well. People learned to see things from a broader perspective. Union leaders began to sound like managers while managers seemed to better appreciate the value of the union.

For some employees, the transformation went even deeper.

Seven years after the employees bought the company, the growing Marland Mold moved into a new state-of-the art facility. Over the years, the company has won numerous industry awards, weathered an economic downturn and pioneered in the development of exceptionally high-speed molds. As CEO John Barmack put it, “The story of Marland started with some brave and creative mold makers from GE who thought they could do better on their own and they did. The last 14 years of Marland has been the story of a larger number of brave and creative mold makers who thought they could do better on their own and they have.” In October 2007, Marland Mold will celebrate its fifteenth anniversary as an employee-owned firm.

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