Fighting for the American Dream
By Jim McKay
United Steelworkers Communications Dept.
Elliott Group, a 103-year-old maker of advanced centrifugal compressors and steam turbines, is expanding its United Steelworkers (USW) workforce and investing $110 million into a US factory that was once a candidate for closure.
That’s the result of a remarkable turnaround in labor-management relations at Elliott’s main US manufacturing plant that was sparked by a local union that did not want to die.
“The American dream is still alive here and we fought hard for it,” USW Local 1145 Unit President Alan Rudick said after welcoming a group of new workers to Elliott’s sprawling plant in Jeannette, a small Western Pennsylvania city with an industrial heritage.
“Every one of those guys had a smile on his face,” Rudick said of the 10 new employees he had just met. “Their whole world is going to change now because they have decent jobs with vacations and benefits and they’ll learn valuable skills they can take anywhere in the world.”
Just a few years ago, the plant was so run down that tarps and umbrellas were employed in the factory to keep rain from falling through holes in the roofs onto machinery. Machine tools and other equipment were for sale.
Worker morale was low. Contentious labor-management relations had left a poor impression on Elliott’s Japanese owner, Ebara Corp., which had directed local management to change the business model and shrink the Jeannette operation. Ebara had purchased Elliott in 2000.
“It was going to close, really, at least the manufacturing side. We were losing money and the owners were just in despair,” said Anthony Casillo, the recently retired chief operating officer.
Today, there is renewed life. Elliott has attracted foreign investment, is adding to its manufacturing workforce and has increased sales abroad. Some 60% of its sales from designing, manufacturing and servicing compressors and turbines for the oil, gas and other industries are exports to India, China, Russia, the United Arab Emirates and other countries.
“We saved hundreds of jobs,” Casillo said.
Elliott operates manufacturing plants in Jeannette and Sodegaura, Japan. Sodegaura was built in 1975 when Ebara was an Elliott licensee. The two cooperate in manufacturing, research and development and other areas, including cross-training. American workers have gone to Japan to learn how to operate new equipment.
Elliott employs about 1200 in Western Pennsylvania at Jeannette and two other nearby facilities. It has added 200 employees over the last two years and was on track to add another 100 workers by the end of 2012. Jeannette alone employs 900, including roughly 400 USW-represented workers as well as engineers, draftsmen, programmers and administrative employees.
Chris Malik, 22, joined the company in November 2011, lured by the promise of full-time work with benefits. He had previously been a part-time steam generation technician for Westinghouse.
“This is definitely a big career move for me, a good opportunity,’’ Malik said while building a rotor assembly. “It is someplace where, hopefully, I can stay for the next 40 years.”
Investment Inside and Out
The turnaround at Elliott has been extensive. Factory roofs were rebuilt at a cost of $3 million, and a multimillion-dollar high-voltage power substation was installed. A new $16 million office building was erected on the 100-acre campus that Elliott has occupied since 1914. The new facility was dedicated in August 2012.
Inside the factory walls, there is new equipment and machine tools including expensive computer-controlled milling machines that produce impellers, the rotating components of centrifugal pumps. Some 340 tractor-trailer loads of unused materials were removed from the site. Once dingy shop space now is clean and productive.
The turnaround can be traced to a new group of local union leaders who were first elected in 2009. They took a fresh view of labor relations with help from the Federal Mediation and Conciliation Service and the encouragement of District 10 Director John DeFazio and staff representative Richard Pastore, now retired.
“The old way of business clearly wasn’t working,” said Timothy Wilkinson, Local 1145 unit griever. “The company wasn’t investing. Our membership was declining and we had very combative labor-management relations. We all thought there had to be a better way.”
Management and union officers each admitted being caught up in a relentless cycle of stubborn resistance and blaming each other for problems rather than finding and fixing the causes. It was not unusual for voices to be raised.
“We had some oppositional people of the old school and I was one of them,” said William (Woody) Held, president of the local’s office and clerical unit. “You dig in your heels. They dig in their heels. And like two rams on a hill, you rear up and you butt heads.”
That way of doing business led to a long stalemate that left union members without a new contract for four years until a settlement was reached in 2008 with the assistance of federal mediators. Over those four years, there were no changes in wages or benefits. Morale was poor and grievances and arbitration cases piled up.
“It was a very long, difficult and contentious process,’’ said Brian Lapp, vice president of human resources. “I don’t think either party was happy with the process in any shape or form.”
When the new union leadership took office the year following the contract settlement, they began to talk about doing things differently. They even crashed a company sales event, introduced themselves and promised labor’s help in delivering quality products.
“We talked to the customers and the customers loved it,’’ Held recalled. “Then we followed up with a letter, saying how much we enjoyed their visit. The company took notice.”
Both sides started taking “little risks” based on the idea that they should cooperate to better serve customers, said Lapp, who slowly began to trust the union’s intentions. “I’ve got to credit the union for getting us back on track,” he said. “Those guys came in with no preconceived ideas of what would work.”
Having used the federal mediation service to help settle the contract dispute, the union and company turned to the agency again for assistance. FMCS Commissioners Jacques Wood and Jack Yoedt provided training on problem-solving techniques and cultivating collaborative approaches to bargaining. They also explored mediation as an alternative to more expensive grievance arbitration.
The training included a Relationship by Objective (RBO) program that began with the mediators separating the two sides in different rooms and asking each the same questions about their relationship. The answers were similar and the participants realized they had more in common than they had in contention.
Conducted offsite, the RBO training helped identify problems, conflicts and concerns; find solutions; and develop action plans to address the problems. A separate training on mediation helped to clear the decks of the grievance backlog.
The work environment has become less adversarial as a result. Management, with the support of Ebara, opened their doors to the union, asking for advice, sharing business plans and consulting on supervisor hiring decisions. Management gained some flexibility from the union to move workers around the plant depending on skills and workload.
To be fair, not everyone on either side—management or union—is entirely happy with the new cooperative approach. But working together has clearly given hope for the future that was not there before.
“We’re in the middle of a culture change. Some people are on board and some are not. But it is a lot less tense than it used to be,’’ said Wilkinson, the unit griever. “Some people won’t let go of the past, but the fact is, the past was killing us.”
Team-building exercises designed to bring all factions of the plant together from purchasing to shipping and everything in between are underway. The idea is for union shop stewards and foremen to work together to head off problems before they become grievances.
The cooperative process continues under Art Titus, who replaced Casillo as chief operating officer in 2012. Titus said the process was at times difficult and remains a work in progress.
“The one thing to take away is you just don’t wave a magic wand and say you are going to have great relationships. The last three years have been pretty rocky. There were flareups. There were blowups. There were times when people threw their hands up in the air and walked away,’’ he said. “Choosing to do this isn’t for the faint of heart. It’s tough. You’ve got to put your old power position aside and that’s hard.”
Future Expansion Plans
Elliott is now looking toward future expansion with the hope that the boom in drilling for natural gas in North American shale formations will translate into more domestic business for its equipment.
CEO Yasuyuki Uruma said Ebara has aggressive plans to double Elliott’s revenue by 2015. That can only happen, he said, if safety remains a key concern and everyone cooperates toward building quality, reliable machines delivered on time at reasonable costs.
“We went out on a limb,” Wilkinson, the griever, said of the union’s actions. “But the very thing that makes us capable of doing this is our strength as a union. We never lose who we are, what gives us the strength to step beyond our boundaries. We’re union and we’re proud of it, but we’re also proud to be Elliott union people.”
This article first appeared in the Spring 2012 issue of USW@Work, the official publication of the United Steelworkers. Photographs are by Steve Dietz. Manufacturing Engineering Media thanks the USW for making this article available.
Published Date : 1/10/2014