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Calling London: Can Stewart-Warner's new owners be persuaded to save this plant?



For the workers at Stewart-Warner, the signs of doom were evident long before the company made it official that cold winter day in 1985.

"We propose to transfer the remainder of the Alemite pump assembly to [our facility] in Johnson City, Tennessee," read the January 31 letter from the director of personnel at Stewart-Warner Corporation. (Alemite is a lubrication system for cars.)

The upshot was the loss of another 150 jobs at the Lake View factory, best known for producing dashboard gauges, like speedometers. In the last two decades, employment had already tumbled from 7,000 to less than 2,000.

"You could see it coming--no one was really that surprised," says Shirley Williams, a union steward and 20-year veteran of the plant. "They weren't fixing machines; they were laying people off. We kept saying, if you fix the plant up, if you modernize technology, we can increase sales, and nobody would have to lose their job. But no one seemed to be listening."

But Williams's worst fear--total plant shutdown--has not yet happened. And it may not. Last December, Stewart-Warner was purchased by BTR, plc., a British-based conglomerate that has the money and resources to revitalize operations here, should they choose to do so.

Pushing them in that direction is a remarkably resilient organization of workers, politicians, union activists, church leaders, and labor researchers called the Coalition to Keep Stewart-Warner Open. Having analyzed trends in the market of speedometers, tachometers, and fuel and pressure gauges, they are convinced that if the big company retools the factory, there's money to be made for BTR (and jobs to be saved).

To press their point, they plan to fly 12 members to BTR's annual stockholders' meeting in London later this month--an expensive proposition they hope will be largely financed by a May 14th "Las Vegas Night" fundraiser (for details call 477-2413).

"BTR is one of the largest companies in Great Britain," says Christine Boardman, international staff person for the United Electrical Radio & Machine Workers of America, the union that represents most of Stewart-Warner's employees. "They have 635 companies in 35 countries. They're worth more than $5 billion. They're known for taking over companies and turning them around or dumping them. We know that they have not yet made up their minds about Stewart-Warner. That's why our trip to England is so crucial."

If BTR agrees to modernize the plant, it will represent a remarkable turnaround. Employment at Stewart-Warner has been on the slide since the mid-70s. The transfer of the Alemite division was attributed to the high cost of union labor here. Many industry observers maintained that Stewart-Warner's employees--like workers in the steel industry--have priced themselves out of a market dominated more and more by companies in the south or overseas, where the labor is cheaper. (The average hourly wage at the factory is $8.60, according to Helen Horn, chief union steward.)

"Wage concessions don't save jobs," counters Horn, whose union did, however, accept what amounts to a two-tier wage structure after a protracted contract dispute with management settled in November 1986. "But we didn't want to make contract disputes the central part of the coalition. We knew we had to make this issue bigger than the factory. We had to bring in the outside community."

So in 1985, they organized the coalition, which was no easy task. For one thing, few elected officials seemed interested in the issue at first. Dan Rostenkowski, in whose eighth congressional district the factory is located, refused even to meet with the coalition in those early days. Their relationship with the powerful chairman of the House Ways and Means Committee (which helps shape tax laws) grew so strained that the coalition picketed Rostenkowski's Damen Avenue office on several occasions. Alas, the only response their early efforts won was a meeting or two with a befuddled aide.

"We wanted Rostenkowski to talk to us and use his influence to pressure Stewart-Warner to keep jobs in Chicago," says Michelle Couturier, staff person for the coalition. "OK, Rostenkowski can't force a company to stay in Chicago. But he can intercede on our behalf. He can talk to the company. They'll listen to him. He's one of the most powerful congressmen in Washington, and, it so happens, a golfing buddy of Archambault [Stewart Warner's former chairman]. But Rostenkowski's attitude in those days was that he had no business getting involved in a labor-management dispute."

That attitude began to soften when the union signed a two-year contract with the company in November 1986. Then the coalition, assisted by researchers from the University of Illinois at Chicago and the Midwest Center for Labor Research, a not-for-profit think tank, discovered that Stewart-Warner spent half as much on research between 1983 and 1985 as did two of its chief competitors. The discovery sharpened the focus of their campaign.

"To frame this picture, you have to remember what Stewart-Warner was doing with its dividend payments," says Greg LeRoy, research director for the Midwest Center. "Most industrial companies pay a dividend between one-third and one-half of net profit of their stock. Beginning in 1982, Stewart-Warner started paying dividends above its net profit. This means they were dipping into their reserves, and their retained profits diminished.

"It seems as though no one there is thinking about the future. Because if a company wants to grow, it doesn't pay dividends like that. It reverts these dividends into research and technology. Companies that want to develop new markets bite the bullet today in hopes for a better tomorrow."

According to LeRoy, dashboard technology is continually advancing. To stay competitive, Stewart-Warner had to keep up.

"When we're talking modernization, we're talking about moving to the next generation of automotive technology," says LeRoy. "There are two major types of technology that are emerging for the kind of products Stewart-Warner makes. One is called electroluminescent displays, and the other is vacuum fluorescent displays. Now, if you've seen a new car with a high-tech dashboard, you know I'm talking about illuminated digital monitors that tell you temperature, mileage, fuel, efficiency speed, everything. It lights up like a liquid quartz watch.

"That's the way information is going to be displayed in cars in the future--not the conventional, gauges you see in older cars. There are predictions that by 1996 these flat panel displays will be on about 55 percent of new cars. Right now they are only on about 15 percent. So it's clearly a growth segment.

"Currently, Stewart-Warner has a very limited ability to produce this. The kind of things Stewart-Warner makes are on the losing end of the market. They have dials that are driven by cables and other wire sensing devices. They are displayed with needles and dials, not the flat panel display digital technology.

"What we have argued is that because they only spent half as much as their competition on research and reinvestment, their problems are coming home to roost. That's why they have to modernize. It will require equipment and some training, though not much. Because there's a remarkably good match between the skills required to operate the equipment now in use at Stewart-Warner--and the skills needed for the new technology."

Some coalition members put the cost for this retooling in the millions of dollars--an amount they doubt the previous management would have spent. Indeed, the sagging state of some equipment is sort of a bitter joke among workers, best symbolized by an old clunker that, according to a recent Chicago Tribune article, consumed 19 quarts of oil every eight hours.

"First it was five quarts. Then it was nine quarts. Today was the limit. Now I think the machine is broken," one plant operator told the Tribune. Another worker compared production there to "running the Indianapolis 500 with a 1959 Chevy. You may get around the track, but that's it."

Hoping to convince the old regime to buy new equipment, the coalition sent several members to the company's annual stockholders' meeting last May. Most of the delegation were denied admittance on technicalities, but Helen Horn and Elaine Charpentier got in. It was a grand mission--their first face-to-face encounter with Bennett Archambault, chairman of the board and president of Stewart-Warner for 33 years.

"You have to understand--Archambault never met with the union," says Horn. "He had people whose job it was to meet with the union. And there we were. It was rather remarkable.

"These meetings take place in the Richmond, Virginia, office of Stewart-Warner's corporate lawyer," says Horn. "Apparently, hardly any stockholders go to these meetings. It's all routine. I asked the company's comptroller when the meetings usually start, and he said: 'Nine.' I asked: 'When do they end?' He said: 'I have to tell you, I never miss my 9:30 plane home.'

"Well, this meeting went on for an hour and a half. I was in there with Elaine, the company's comptroller, Archambault, and their lawyer. We asked Archambault what the company was going to do to enhance the value of my stock through reinvestment, and what was the corporate strategy to regain market shares. The conversation was fairly cordial. Obviously, he wasn't giving too many details.

"He kept saying that this is a family discussion, and that we're all part of the Stewart-Warner family. When it was over, he told us that his daughter worked for President Reagan, arranging tours in the White House. He said that she was on vacation in Florida, but that he would call her up, and have her arrange a White House tour for us long distance. We were going to visit Dan Rostenkowski next, so we gave him our regrets."

At that meeting, the coalition made peace with the congressman.

"We assured him that we had settled our contract talks with the company, and that we were talking about keeping jobs in the city," says Boardman. "After that, he has been cooperative. But it's strange. We had to go to Virginia to meet with Archambault, and to Washington to meet with Rostenkowski. And they both have offices right here in Chicago.

Now the coalition is heading for London. They wrote a letter to Sir Owen Green, chairman of BTR, asking him to meet with them, but so far there has been no response.

"Why BTR bought Stewart-Warner is not apparent to me," says LeRoy. "From BTR's point of view they got a bargain because of the falling dollar. BTR's money is in pounds, so every time the dollar declines, Stewart-Warner gets cheaper for them."

Some coalition members wonder whether BTR is mainly interested in the property. The factory--a spectacular castlelike building--sits on a huge chunk of prime real estate at 1826 W. Diversey. There's speculation that BTR intends to convert the building to condominiums, although, when asked, company officials say they plan to keep the facility operating.

"[Stewart-Warner] would provide a jumping off point for electrical instrumentation in transportation vehicles," Green told a London newspaper last year. The chairman added that the "company's difficulties lay in management--a tiredness had developed over the years."

If Green is sincere, the coalition say, they are willing to help. "I don't really know what to expect at their stockholder meeting," says Couturier. "I know the history of stockholder meetings at Stewart-Warner. Nothing happens unless we were there to make a stink. But BTR is a much more aggressive company, and my guess is that it is a lot different. So far, we've been very cordial, we have not adopted a confrontational style. We want to work with them. I think we have a strong case; I hope they're ready to listen."

Art accompanying story in printed newspaper (not available in this archive): photo/Bruce Powell.

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