The Stanley Works
Several years ago, Donald W. Davis stopped making visits back to New
Britain, Connecticut. He felt shame for what had happened to the
Stanley Works, the city’s largest employer, which he had led from
1966 to 1988-from its best days to the beginning of the layoffs and
plant closings that, after he was gone, finally reduced Stanley’s
presence in New Britain to a collection of mostly empty factory
buildings and reproachful former workers.
Davis by then no longer lived in New Britain. He had sold his Dutch
Colonial home, which he had painted a bright and optimistic yellow,
and had moved with his wife to Martha’s Vineyard, where their summer
house on seven acres of rolling lawn became their main residence. It
was an entirely different setting, but the trip back to New Britain
for visits was easy enough-less than four hours by ferry and car-and
Davis at first made it often. Like many chief executives of his era,
he had been deeply involved in the life of the city that, in his
day, had supplied thousands of Stanley’s workers. He had served on
the board of education for many years and was its president for a
while. The six Davis children attended the public elementary
schools.
But in the late 1990s, the visits home stopped. Meeting former
Stanley employees on the streets, in restaurants, at the YMCA, where
Davis still went to exercise, became too painful. “They just moaned
about what was happening to this great company,” Davis told me. He
had tried to share their sadness, to distinguish his stewardship
from the accelerated pace of layoffs and the disregard for New
Britain that had become so striking after he was gone-as if he were
a victim too. But he wasn’t really. The people he encountered had
lost their jobs against their wishes, while he had retired on
schedule, a wealthy man. And he had, after all, initiated the
layoffs. No one blamed him, Davis maintained. But the encounters
with former Stanley workers became, as Davis put it, “much too
personal.” So he stayed away.
When we renewed our acquaintance a few years into his self-exile, I
found a restless, often passionate man, unable to put behind him his
final years as chief executive. At eighty-one, still stocky and
agile, he was grateful for good health so late in life. Age showed
only in his hair, which was pure white, and in his eyes, which
became tired and bloodshot in the late afternoon, although when I
suggested that we take a break in our conversation, which had
started in the morning and had continued through lunch at a noisy
seafood restaurant, he waved me off, intent on his recollections. He
no longer bothered with the suits and sports jackets of his CEO
days, but he did have on a white button-down shirt. He was running a
leadership seminar twice a week during the fall semester at the
Massachusetts Institute of Technology, where he shared a small,
cluttered office with two other instructors.
Davis rarely canceled a class; the seminar he led became a last
connection to his former business world, a final public platform.
Sitting in on a class in the late afternoon, listening to him draw
on his experiences from his Stanley days, I imagined that beyond the
nineteen young people seated in the room, he was speaking to all
those he knew back home, explaining that he had done as well as any
executive could, in a very changed world, to preserve Stanley as it
was. And that could not be done.
The Stanley Works illustrates, as well as any Fortune 1000 company,
the accelerating deterioration of job security in America over three
generations of chief executives, a deterioration that Davis and his
counterparts in the first generation resisted for a while, reluctant
to let go of the expiring norms. So did their workers. For almost
ninety years, from the 1890s until the late 1970s, the thrust of
American labor practices had been toward lasting attachments of
employers to workers and vice versa. There were lapses and
backsliding in those decades. Descriptions of labor practices during
the 1921-22 recession, for example, are remarkably similar to labor
practices today. But the direction was toward job security, not away
from it. Efficiency seemed to require it. So did union power,
government policies, community expectations, and social norms. Even
the Depression, with its mass unemployment, produced in reaction
labor laws that in the post-World War II years strengthened job
security. We had decided as a people-managers, politicians, and
workers-that job security had value, and in pursuit of that value,
we lifted ourselves out of insecurity. And then, starting about
1977, midway through Davis’s twenty-one-year term as chief
executive, there was a U-turn.
Over the next twenty years, the achieved job security disintegrated
in the United States. Layoffs were the medium. Each step in the
disintegration was a novelty and a shock. But the layoffs continued,
and in 1984 the Bureau of Labor Statistics began to count “worker
displacement.” By 2004, the bureau had counted at least 30 million
full-time workers who had been permanently separated from their jobs
and their paychecks against their wishes. Huge as that number was,
it did not include the millions more who had been forced into early
retirement or had suffered some other form of disguised layoff,
masking the magnitude of the problem. A more comprehensive survey
would very probably have found that 7 or 8 percent of the nation’s
full-time workers had been laid off annually on average-nearly
double the recognized layoff rate. And the percentages crept higher
as the years passed.
Davis remembers vividly the circumstances that brought on the
U-turn. The experience was, in his word, “traumatic.” He awoke in
1979 to find that customers for Stanley’s hand tools were defecting
in alarming numbers. The lure was Asian tools. Once-shoddy socket
wrenches, screwdrivers, claw hammers, saws, levels, chisels, pliers,
and measuring tapes imported from Asia had gradually become
indistinguishable in quality from Stanley’s offerings, and at 60
percent of the price-a feat Davis and his counterparts in many other
industries had not anticipated.
Scrambling to respond, they cut prices and, hoping to preserve
profits, they began to cut labor costs, at first through attrition
and then through layoffs. Hundreds of other companies were caught in
a similar experience. From then on, job security unwound in America.
Layoffs became the measure of our national retreat from the dignity
that had been gradually bestowed on American workers over the
previous ninety years. What started as a necessary response to the
intrusion of foreign manufacturers into the American marketplace got
out of hand. By the late 1990s, getting rid of workers had become
normal practice, ingrained behavior, just as job security had been
twenty-five years earlier.
That did not happen without resistance, particularly in the 1980s
and early 1990s. Community groups, for example, tried to purchase
and reopen shut factories, the goal being to reemploy the working
people who gave the community its existence. The Roman Catholic
Church joined in this endeavor, and issued two pastoral letters in
the 1980s opposing job destruction. But then the church fell silent,
as did the communities, which disintegrated without the steady jobs
that had sustained them. Government regulation had protected the
jobs of nearly 13 percent of the workforce, those employed in
airlines, trucking, public utilities, telephones, banking, and
railroads. And then deregulation, starting with President Jimmy
Carter, precipitated endless reorganizations in those industries,
and endless layoffs to accommodate the reorganizations, until
reorganization and layoff finally became the norm. Organized labor
also protested, but union membership and power were already in
decline, and after 1981, when President Ronald Reagan fired and then
replaced the nation’s striking air traffic controllers, strike
activity in support of job security-or in support of any other
demand, for that matter-declined precipitously. The old assumption
that a worker out on strike had his job waiting once the strike
ended was gone.
Just as layoffs began to be a source of national anxiety, mainstream
economic theory completed an about-face that in effect endorsed
layoffs and diminished the pressure on the nation’s presidents and
on Congress to preserve job security. The dethroned way of
thinking had recognized a central role for government in protecting
workers in a free market economy. Entrepreneurial, hard-driving
managers were essential to keep the economy vibrant and growing. But
they ran roughshod over workers unless they were restrained by
government rules and regulations, including rules that strengthened
labor’s bargaining power. The marketplace would not provide job
security without pressure from government. That way of thinking,
born in the New Deal in the 1930s and greatly expanded over the next
three decades, died in the 1970s.
The new intellectual framework took the opposite view, and in so
doing validated what was already beginning to happen. Companies were
freeing themselves from the many obligations to their employees that
had accumulated over the years, and now mainstream economics blessed
that endeavor. In the process, government was depicted as an
obstacle to prosperity. Unfettered enterprises, the argument now
went, would expand more rapidly and, over the long run, share their
rising profits with their workers, doing so voluntarily through job
creation and raises. If that did not happen-and it did not happen
for tens of millions of people who lost their jobs-well, that was
the fault of the job losers themselves. They had failed to acquire
the necessary skills and education to qualify for the increasingly
sophisticated jobs that were available. They lacked value as
workers. And the argument took hold. Sanford M. Jacoby, the economic
historian, citing a study typical of this period, noted that
“workers with at least some college education were more likely than
less educated workers to view fairness as ‘recognition of individual
abilities’ instead of ‘equal treatment for all.'”
The new economic theory, making each worker responsible for his or
her own job security, interacted fatally with the actual layoff
experience. Layoffs, we are told, do not happen to people who are
valued by their employers. The layoff says that you have failed in
your endeavors to improve your skills and to be flexible,
innovative, congenial, and hardworking. The damage to self-esteem
from this message is enduring. It shows up frequently in people who
have been laid off, whether or not they work again, and yet it is
ignored in the political debate. Job creation and full employment
are held up by Democrats and Republicans, and nearly all the experts
who advise them on policy, as sufficient antidote. Putting the
laid-off back to work in new jobs solves the problem. There is
income again and even prosperity, or the potential for it. But
mental health is not easily restored.
Psychologists and psychiatrists are just beginning to recognize that
layoffs chip away at human capital by eating at self-esteem on a
mass scale. It is like acid rain eroding the environment, according
to Dr. Theodore J. Jacobs, a professor of psychiatry at Albert
Einstein College of Medicine and New York University School of
Medicine in New York. He says: “Even if a person is accurate in
saying, ‘I did a really good job, and I can see that the company is
in a bad way and they have to lay off a lot of people and it is
really not about me,’ there is seldom an escape from the inner sense
of ‘Why me?’ In other words, one has some sense that one has failed
and the outside world has made that judgment. And that
self-perception dovetails with existing inadequacies that many
people feel about themselves.”
The Great Depression was less damaging. Millions of people lost
their jobs then, but the majority blamed flaws in the market system,
not in themselves. They demanded that government fix the flaws. That
collective response, which helped to produce the New Deal, is
missing today. Implicit in self-blame is acquiescence to layoffs,
now the American condition.
All this was still well in the future when Don Davis became chief
executive of the Stanley Works in 1968. Job insecurity in those
days-at the Stanley Works and most other manufacturers-went no
further than the temporary furloughing of blue-collar workers when
sales weakened. The white-collar staff-clerks, secretaries,
salespeople-were not touched. “We thought of them as part of
management,” Davis said. But at the factory level, some workers
would be told to stay home until production picked up again, which
it always did in those truly prosperous years. Seniority dictated
who was furloughed first, and in what order they would be recalled,
which they always were. “That was a very important thing, that
recall; it made people feel they still had this connection with
Stanley,” Davis said. Seniority rights continued to accrue during
the stay-at-home period, and health insurance remained in effect.
These were Stanley’s ways, and the ways of many American companies.
The onslaught of imports starting in the late 1970s changed those
ways. As customers defected, sales plummeted and failed to bounce
back. Nowhere was that more on display than in the auto industry’s
struggle with Japanese imports. But nearly every manufacturer was
hit, and the steep recession in 1981 and 1982 compounded the damage.
The old world has never returned. Visit the tools department at Home
Depot, which is Stanley’s biggest single customer, purchasing 12
percent of its annual output in 2004, and the array of products
shows Stanley painfully struggling to stand out. The company’s
yellow and black colors still dominate the shelves where measuring
tapes are stacked, the clip-to-the-belt models whose steel blades
spool out across a room and quickly retract into stubby cassettes at
the click of a lever. Many of the claw hammers bear Stanley’s name,
and also the scraper blades, the linoleum-cutting knives, and every
variety of saw-hacksaws, wood saws, keyhole saws, compass saws, pull
saws. But even on these shelves, the colorful tools of other
companies are well represented. And the Stanley label no longer
dominates the displays of socket wrenches, screwdrivers, adjustable
squeeze-handle pliers, levels, wood planes, counter punches,
chisels, and bolt cutters. What all the tools have in common,
including Stanley’s, is origin: the great majority are made outside
the United States, particularly in Asia.
Shifting manufacturing abroad was not in Davis’s thinking in the
late 1970s and early 1980s. Struggling to prevent the imports from
gaining a foothold, he tried at first to bring down labor costs by
shrinking the previously sacrosanct white-collar staff, not through
layoffs-that would not happen to America’s white-collar workers for
a few more years-but by attrition. He froze hiring and decreed that
as white-collar workers resigned or retired, those who remained
would have to pick up the work of their departed colleagues in
addition to their own. “Wearing two hats,” he called it. The goal
was a reduction of six hundred employees over two years, or 15
percent of the white-collar staff-a mild cutback by later standards,
but worthy then of a display of anguish. Davis and his second in
command, the chief operating officer, engaged in an exhausting tour
of Stanley’s plants, concentrated then in the Northeast and Midwest.
They divided them up, and at each stop, one or the other explained
to the assembled workers how the company’s survival had become the
issue. “We had a meeting of all the employees, salaried,
white-collar, blue-collar, management, everybody,” Davis said, “and
where that was too big a crowd, we’d break it up into two or three
groups. Then we’d have the night shift in another group. And he or I
spoke to each one of these groups about the revolution that had
taken place in competition, and how we had to respond to it if we
were going to survive as a major player.”
(Continues…)
Excerpted from The Disposable American
by Louis Uchitelle
Copyright © 2006 by Louis Uchitelle.
Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Knopf
Copyright © 2006
Louis Uchitelle
All right reserved.
ISBN: 1-4000-4117-1
