Dean of Springs

Leadership and Trust Matter

By Dan Sebastian

In the early days of MW Industries (MWI), we were at best financially unstable. Our balance sheet was upside-down, our lenders were uncooperative, and our customers were very concerned. To add to this instability, the managers (Jim Callaghan and I) were new to the company and were not locals. The union leadership did not know how to react, as they saw their lifelong employer was about to fail them.

The only way to get out of this conundrum was to get everyone to trust each other, which was not the way the union and local management had ever behaved. After numerous meetings, it was clear that we had to do something different. The union needed a way to get confirmation that they were indeed facing a crisis and not being misled by unscrupulous managers who only wanted to improve the bottom line (there really was nothing there).

In order to break the logjam, unprecedented action was required.

The only way out was to change the paradigm. We approached the union with the idea that we should restructure the company in an employee stock ownership plan (ESOP). The union leadership in Pittsburgh had a lot of experience in this area.

The first step was to share all of our financial information with their team in Pittsburgh. After several weeks of investigations, they reported back to the local union that the company was insolvent and it was time to give up. The problem was that, at the time, all of central Indiana was in a slump.

Nothing builds trust when there is no way out.

With the help of the local union we modified the wage structure, which led

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the banks and investors to modify their agreements.

MWI was now positioned to rejoin our community as a prosperous company. The trust established by adversity had worked. Buried within the agreement was a clause that if the company was sold, the employees could recoup their sacrifice. A few years later when the company was sold, all of the employees got significant bonuses, which strengthened the trust. n The only way to get out of this conundrum was to get everyone to trust each other, which was not the way the union and local management had ever behaved. After numerous meetings, it was clear that we had to do something different.

Dan Sebastian is a former SMI president and currently serves as a technical consultant to the association. He holds a degree in metallurgical engineering from Lehigh University and his industry career spans more than four decades in various technical and management roles. He may be reached by contacting SMI at 630-495-8588.

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