Sealing a plant’s demise
Equipment, product led to Wolverine’s doom, employees say
By Eric Fleischauer
It should be no surprise that Wolverine Tube employees have complaints, but those complaints are consistent.
Two things killed the Wolverine plant, they say: the company’s failure to invest in new equipment, and its determination to move production of Decatur’s most profitable tube to other locations.
Wolverine, which manufactures copper plumbing tube and smooth industrial tube, announced Tuesday that it would close the plant Jan. 6. It offered no employment opportunities for its 500 employees. New employees at Wolverine made about $13 an hour. Most employees were paid $16 to $19 an hour.
Froze pension plan
Wolverine froze its pension plan in January, so officials said the closure would not impact the amount of pension the laid-off employees will receive upon retirement.
The date of closure was not arbitrary. Federal law requires employers to provide 60 days notice of a layoff, and that is all Wolverine provided.
Many employers satisfy the 60 day requirement by terminating employees immediately, but giving 60-days pay as severance. This benefits employees by giving them time to search for a job. It also avoids the problems that come with trying to continue production with an unmotivated work force.
Wolverine is endeavoring to maintain production levels for two months with perfect-attendance bonuses of $50 per week and $500 for the two months. The company also is offering bonuses to employees if the plant meets specified production goals.
“The heck with that,” said one employee. “All I’m worried about now is trying to find another job.”
Wolverine officials did not return calls for this article. All current Wolverine employees declined to be identified for fear of retaliation. They expressed concern of retaliation in the form of lost bonuses or early termination.
By 2006, Wolverine was deep in debt. It began talking about the possibility of bankruptcy. Share prices plummeted to the point that, in January 2007, it was delisted from the New York Stock Exchange.
It avoided bankruptcy when, in February, Alpine Group Inc., along with Plainfield Asset Management LLC, agreed to invest between $75 million and $135 million.
They took control of the company and recently completed a sale of newly issued shares that raised $28 million, which they said they will use to reduce debt.
In the years Wolverine accumulated that debt, employees say, it was letting the Decatur plant deteriorate.
Michael Landers, a machinist who left the plant two years ago, said equipment problems made it impossible for employees to produce tube efficiently.
“It was just dilapidated,” he said.
The new owners told employees as much in a memo distributed Tuesday.
Options other than closure were ruled out, they said, in part because of “the investment it would require to bring the Decatur plant up to a global competitive position.”
A 29-year employee said antiquated equipment doomed the plant.
“You’ve got to have a tube with a consistent wall thickness. The machines couldn’t do it, so it would end up as scrap,” he said. “We were sending more back to the casting shop to get re-melted than we were putting into a box for shipment.”
“The inability to make a good tube on the first try was our downfall,” another employee said. “We’d keep running it through the mill and running it through the mill. Of course we couldn’t be profitable that way.”
Employees, they said, did not cause the problem.
“There were people on those machines that have been there as long as I have,” said the 29-year employee, “and they still couldn’t get a straight tube. It wasn’t their inability to do it; it was that the machinery was worn out.”
In a meeting with employees Tuesday, according to an employee in attendance, Wolverine officials said “our machinery was so old we were making smooth industrial tubing at a cost that was about 50 percent more than some of our competitors.”
The lack of investment did not apply just to equipment, another employee said. For a long time the roof leaked, and the company would not spend the money to repair it.
“Every time it rained, we were walking through puddles,” he said.
The lack of investment, said a 25-year employee, translated into poor morale.
“People were teed off because they thought their machines were junk. I swear the machines had minds of their own,” he said.
The 29-year employee said poor morale led to high turnover, a disaster because new employees could not finesse the old machines into producing consistent product.
“It was a hot, loud and dirty place to work. As machinery broke down, they wanted you to do more with less,” he said. “They couldn’t keep people.”
All of the employees who spoke to The Daily expressed frustration that the company would not let product lines with high profit margins remain at the plant.
Fin tube was one example. From the outside, fin tube looks like a screw. Inside, it has grooves. These features increase its heat-transfer qualities, making it valuable for refrigeration. The skill involved in making it gave Wolverine an edge over foreign competitors, an edge it did not have on plumbing tube.
“When they took fin tube out three or four years ago,” the 29-year employee said, “we got worried. It was our biggest moneymaker. It used to be we would only make water tube when there was nothing else to do. There wasn’t any profit in water tubing.”
The fin tube production was shifted to plants in Oklahoma and Mexico.
Wolverine also used to make tube from a copper-nickel alloy, valued for its hardness. The product, which had a high profit margin, was moved from Decatur to Montreal 10 years ago. Wolverine closed the Montreal plant last year.
The new owners did not address why their predecessors moved the products from Decatur.
“The decision to take finning out of Decatur was made several years ago and these operations are established and fully operational,” they said, in the memo to employees.
Fixture since 1948
Wolverine, located on the riverfront, is a fixture in Decatur. It opened in 1948, the first industrial recruit to the area after World War II. In 1973, boasting more than 1,000 employees in Decatur, it moved its headquarters here from Detroit. In 1994, a year after going public, it moved its headquarters to Huntsville.
The plant’s closure was not a complete surprise to the Decatur employees given Wolverine’s precarious financial condition. Most long-time employees thought the plant would remain operational until they could retire, they said, because management told them the plant remained profitable.
In January, the plant’s converting manager, Ashley Stout, expressed her confidence.
“We expect the Decatur plant to be here for the long haul,” she said. “It’s been challenging, but we have excellent employees and strong product demand. We’re not going anywhere.”
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