Mack Molding makes it in Vermont

Diversity, responsiveness to employees, community involvement and the strong leadership of CEO Don Kendall keep Mack Molding Co in an expansion mode despite the struggling economy.

While many industries -- particularly in the Northeast -- falter, the Arlington-based molded plastic firm reigns as the nation's largest producer of plastic computer housings and as the top non-food-related manufacturer in Vermont, with 1992-93 sales of $92 million and projected sales of $300 million this year. In March, Mack-North -- the Arlington, Pownal and Cavendish plants -- achieved a monthly sales record of $6.7 million. The tremendous growth results in part from Mack's acquisition last year of a Sun Microsystems manufacturing operation in Chelmsford, MA.

June 1 saw the ground-breaking in Arlington of Mack's first brand new plant, a $30 million expansion that could create 450 new jobs. Phase one, including a production facility, corporate headquarters and health-fitness center, is scheduled to open in February 1995 and to employ an additional 100-150 people; the present work force in the company's five plants is 925.

"It's gratifying to see the expansion become a reality after two years' work and planning," Steve Mellin, vice president for research and development, said during a tour of the construction site recently.

According to Mellin, who is project manager, the new plant is designed to accommodate business generated by products now being designed.

Mack Molding opted to expand locally after the state, town of Arlington and Central Vermont Public Service created an incentive package that Kendall said he couldn't resist. The economic carrot was comprised of tax credits under the state Economic Progress Act, discounted electricity rates through the year 2002, expansion of a local industrial zone and elimination of the town's machinery and inventory taxes.

Because of Mack's favorable reputation as an employer and as a clean industry, local and state officials pulled out all the stops to ensure that the expansion took place in Bennington County rather than across the border in Washington County, NY, where Kendall was also considering a site. Although the New York State Economic Development Power Allocation Board granted Mack reduced electricity rates, passage in Vermont in ]993 of legislation known to insiders as "the Mack Molding bill" tipped the scales in Vermont's favor.

Under the Economic Progress Act, manufacturer's tax credits apply to 100 percent of the investment for up to 10 years when at least $4 million is invested in expansion; the result is a tax shelter of up to 80 percent of the increased corporate tax. The income tax credit portion of the act allows a credit of up to $4,000 per employee to businesses that add at least 15 new jobs paying $20,000 or more a year.

At Mack, entry level pay for production workers ranges from $6.77 per hour for finishers and plant maintenance people to $12.30 for a press electrician, with an average of about $8. The high end of the wage scale is from $8.96 to $14.47 per hour. Second and third shift workers earn an extra 90 cents per hour.

William Cooley, vice president of manufacturing, accounted for the positive public perception of Mack as an employer this way: "We try to be very employee-oriented. Employees are involved in work teams and take part in making decisions on their product lines. Our grievance procedure, the "employee issue resolution process," seems to work."

Cooley said Mack avoids the "boom/bust--hire/layoff" production cycle by hiring temporary workers as needed and then hiring the best temps permanently as jobs become available. Temporary workers, however, are paid $6 per hour, less than any permanent employees.

About 60 percent of the work force is female, and women have positions in management and on the board of directors. Employee benefits include a 401K plan that is being upgraded to offer four different investment options.

A unique housekeeping program is a point of pride with employees at all levels. Kendall himself inspects each plant quarterly, rating on cleanliness and attractiveness. But towards the end of the fiscal year June 24, a contest takes place in which the five plants vie to win first place in spit 'n' polish; employees at the winning plant earn an extra vacation day, and at the runner-up plant, a half day. Employees company-wide receive a Mack Molding T-shirt for their efforts.

"We're in a frenzy now," Cooley said on June 15. "Painting, planting flowers...every employee is involved...it does slow production."

But the benefits go beyond T-shirts and vacation days. A cleaner plant is a safer plant, customers are impressed, and the contest lifts worker morale, Cooley said.

Mack did not always have such an attractive work environment. In 1974 when Cooley joined Mack as personnel manager, about 65 percent of the employees were members of the International Association of Machinists labor union, which, Cooley said, was a "divisive influence ... counter productive. But I felt there was a good reason the union was here -- management at that time was not too enlightened. In the next eight years we became more employee-responsive we did away with time clocks -- management did win over the trust of the work force."

In 1986, Cooley said, workers petitioned for a vote and decertified the IAM. A year later, attempts by the United Electrical Workers to organize the Arlington and Cavendish plants failed.

Mack practices a good neighbor policy. Founded in 1920 by Kendall's grandfather, the company traditionally participates in community activities. "Our plants are all in small, rural towns -- we want them to be happy we are there," Cooley said.

In Arlington, participation means sponsoring the annual "Duck Derby," in which entrants pay a fee to float a plastic duck down the Battenkill River. The winning duck-holder this year received $1,000, contributed by Mack, and the derby raised $8,000 for Arlington Child Care. And in each community where Mack has a plant, the company makes annual donations to local fire departments, rescue squads, libraries and parks. "We don't contribute to large national organizations -- we prefer to have more input locally," Cooley said.

Being neighborly includes a care for the environment. Mack recently switched from solvent-based to water-based paints, reducing the volume of hazardous waste and of solvent fumes exhausted into the air. Molded thermo-plastic products, if rejected, are reground and reprocessed, eliminating plastic waste.

Landowners adjacent to the expansion site off Warm Brook Road have been assured Mack will take responsibility for any interference with their on-site water systems, even to the extent of providing new wells. Designers reduced the intensity of outside light 25 percent from the original plan to minimize glare and left a buffer of trees to screen the site from homes and travelers on Warm Brook Road. These steps mitigated landowners initial opposition to the town's expansion of the industrial zone so close to their properties.

But the two biggest factors in Mack's success in the face of the-recession-that-won't-quit are the company strategy of diversification and Kendall's leadership, Cooley said. The company's largest customer is Sun Microsystems, and others include Reebok, Digital, Gardenway and Xerox, which recently gave Mack a large order for subassemblies for a new high speed copier.

"We serve a lot of different kinds of customers and industries -- medical, sports, computer, lawn and garden -- so if one industry is soft, we can hope not all are soft... Don's leadership in moving toward the business equipment field our largest market sector, and his ability to do acquisitions successfully have been instrumental," he said.

Kendall took over as president and CEO at the age of 26 after his father died in 1973. He plunged the firm into the computer age, driving sales continuously upward and rapidly multiplying Mack's holdings. Mack Molding facilities include: in Vermont, the original plant and headquarters in Arlington and plants in Cavendish and Pownal; plants in Inman, SC, and Tatesville, NC; and a subsidiary, Mack Technologies in Westford, MA. The Cavendish and Pownal facilities were expansions into vacant mills; the other three were acquisitions of operating businesses. Mack's acquisition of a Sun Microsystems manufacturing operation in 1993 tripled the company's annual sales. At the time, Kendall said the purchase enabled the company to design and custom mold parts and do mechanical and electrical assembly as a complete contract manufacturer.

Also last year, Mack became the first company in Bennington County, and the fifth in Vermont, to become ISO 9000 certified. The International Organization for Standards registration is a quality control program that has become a perquisite for businesses involved in global marketing. With certification came a mission statement, "total customer satisfaction," and a new focus on employee cross-training to broaden job skills.

If there is a down-side to Mack Molding, it's a well-kept secret. In a state where industry has declined and plant closings -- Bennington County's most recent were Hale Co, an Arlington furniture-maker, and Johnson Controls Battery Division in Bennington -- have left production workers unemployed or forced to take lesser-paying service jobs, a manufacturer willing to invest $30 million locally is bound to be viewed as a savior.

Mary Day Bell of Pownal is a staff writer and photographer for the Advocate in Williamstown, MA, and a freelance journalist.

Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Jul 1994
Provided by ProQuest Information and Learning Company. All rights Reserved