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Employees Buy, Save, Webster, S.D., Foundry

Posted on: Thursday, 21 July 2005, 18:00 CDT

Jul. 21--WEBSTER -- Never in his life had Terry Sampson gazed upon a sadder bunch of faces than on Oct. 15 of last year, when he first met the dozen-plus Webster foundry workers slated to lose their jobs after Christmas 2004.

"It was the most down group of people I had ever seen," Sampson said.

Today the same guys are smiling, and still working at the same foundry -- simply because they bought it. The previous owner, Minneapolis-based Mereen-Johnson Machine Co., announced in October it was closing the foundry on Dec. 30.

Under new ownership, Dakota Foundry Inc. in Webster's industrial park has doubled its business, doubled its employment and almost doubled production, said Webster native Sampson, now of Watertown, president of the new company. Thirty work there now, including several who had been laid off over the years. Peak employment since the foundry began in the late 1970s was about 40, said Josh Bartos of Webster, vice president/production manager at the foundry where he has worked for 20 years.

"It's a good deal," said Jim Marko, who has worked there for almost 30 years, ever since he was 18. "These guys mean a lot to me, and they are really doing well. The numbers have proven that."

Marko recalled the gloom of October, and the sympathy he felt for his colleagues. Unlike himself, "They still had kids at home," he said.

"And they were going to be out of a job."

Mereen-Johnson, which continues to operate its machine manufacturing company in Webster, started the foundry in the late 1970s to make items out of iron for use in its manufacturing plant.

In the beginning, Mereen-Johnson used 90 percent of the foundry's output. Today, 90 percent of the foundry's business is outside Mereen-Johnson, Sampson said. He is a management consultant who was not involved in the foundry until the change of ownership.

Its two largest customers are Hub City Inc., a major Aberdeen company that makes gear drives and other items, and Gehl, a nationally known maker of farm and other equipment.

The relationship with Hub City is a prime example of how area towns are not economic islands unto themselves, said Doug Valsvig, the foundry's vice president and controller. "What's good for Aberdeen is good for us, and what's good for us is good for Aberdeen," he said.

About 50 percent of U.S. foundries have closed down in the past five years due to stiff competition from China and Indonesia, Sampson said.

The Webster foundry went into a downhill slide partly because of overseas competition, leading to Mereen-Johnson's closure announcement last year, Bartos said.

Bartos, Sampson and Valsvig put their heads together shortly after that announcement and came up with a plan for the employees to buy the foundry.

Mereen-Johnson was extremely helpful in making the plan work, Bartos said. So were Dacotah Bank, the city of Webster and the Northeast South Dakota Economic Corp. These three provided loans and/or other types of help. No grants or state money are involved in the new business.

Employees were able to transfer their Mereen-Johnson 401(k) plans to Dakota Foundry, and to use these plans to buy stocks in the new company.

Fourteen of the 16 employees working there at the time of the purchase bought stock.

The men who sweat in the foundry are the real heroes, the management team agreed. Bartos said his job of managing production is really handled by the rank-and-file who now, as owners, have a vested interest in production. "They police themselves," he said.

"They earn every dime they make," Sampson said. "It's tough work."

Wages range from $10 an hour for new hires to $19 an hour. The average is $16.

"These guys are special, and talented," Valsvig said. "Local ownership is a great thing," and the employee/owners have tremendous ideas for improving the company, he said.

"Maybe this should happen more often," said longtime worker Marko.

"If employees jumped in and bought their companies, maybe we could get the Made-in-America name back."

When foundry workers are asked out on the street what they do there, Bartos said they get a charge out of answering, "I own the place."

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Copyright (c) 2005, American News, Aberdeen, S.D.

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GEHL,

Source: American News (Aberdeen, S.D.)

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