Workers get the business

Purchase: Faced with possibly losing their jobs, Baltimore employees of a container factory join to buy the company.

February 21, 2004|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

As a machine operator at Hedwin Corp. in Baltimore, Grace Heughan spent yesterday afternoon opening plastic cubes and hanging them on hooks at the factory.

Her factory.

Heughan, a five-year employee, is among about 300 workers at the maker of industrial plastic containers who have bought Hedwin in an effort to keep their jobs from moving out of Maryland.

About 100 Hedwin employees from outside the state also participated in the purchase.

"I was grateful that they did it because a lot of people would have been out of jobs - including me," said Heughan, 44, who works on the line assembling "cubitainers" used to store liquids, from medical chemicals to Japanese saki for restaurants.

Hedwin, which was founded in Baltimore in 1946, was up for sale last year by its parent company, Solvay S.A. of Belgium.

A potential buyer signaled that it might move jobs out of the state and cut employee benefits.

So the workers bought Hedwin, through an employee stock ownership plan, with the help of a state loan guarantee.

The Maryland Industrial Development Financing Authority, which offers incentives to encourage private economic development projects, agreed to insure $2.5 million of an $8.2 million loan to help keep the plant running, the state announced yesterday.

"Many, if not all, of the jobs here in Baltimore were in jeopardy over the short term and the long term," said company President David E. Rubley.

Political element

The move was considered such a success story, and political coup, that Gov. Robert L. Ehrlich Jr. and Lt. Gov. Michael S. Steele attended yesterday's ceremony at the plant, near Hampden.

With the shift of manufacturing work overseas emerging as an issue in presidential politics, the governor seemed pleased to have a more creative, favorable outcome to announce.

The number of manufacturing positions in the country has fallen by more than 2 million in the past decade, the result of lower-wage jobs overseas and technological advances, even as overall employment has increased by nearly 20 million during that period.

"At one time, we were part of the great manufacturing business in this country," Ehrlich told the Hedwin workers during a visit to the plant yesterday, adding that many of those jobs have gone.

Steele added, "What we're about ... is promoting a climate of change that facilitates rather than hinders the growth of business in this city."

Grateful employees

The announcement that the state was helping to save a plant in Baltimore City - the turf of a possible competitor in the 2006 gubernatorial election, Democratic Mayor Martin O'Malley - was a smart political move for the Republican governor, said Matthew Crenson, a Johns Hopkins University political science professor.

"I think the people who stood in danger of losing their jobs and seeing the plant move away are probably very grateful," Crenson said.

"And a lot of them are probably traditional Democratic voters."

Crenson pointed out that Ehrlich's visit to the plant came on the same day that U.S. Sen. John Edwards of North Carolina, a Democratic presidential candidate, briefly visited the state with his message of creating better jobs for the middle class.

Aris Melissaratos, secretary of the Maryland Department of Business and Economic Development - who worked at Hedwin briefly during the summer of 1963 - called the employee purchase "a new beginning for Maryland's manufacturing."

Company officials said that they couldn't have done the deal without the state backing.

Hedwin employees bought the plant with an $8.2 million machinery and equipment loan from LaSalle Business Credit, LLC.

But the purchase price of the company exceeded what the bank could give Hedwin, the company said.

Without the guarantee for an additional $2.5 million from the state, the sale wouldn't have gone through. The deal closed Jan. 30.

Government incentives

Employee purchases of their companies typically come with state and local incentives because it is less expensive for the government to help them save their company than to pay unemployment benefits, said Charles Craver, a labor law professor at George Washington University Law School.

Many of the factory workers at the Hedwin plant never believed they would own their own company.

Having a stake in their business, they said, would motivate them to work even harder.

Frank Sponheimer, a mechanic who has worked at Hedwin for more than 20 years, said:

"It's a big incentive for everybody to do the best they can."

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