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The Creativity of Worker Ownership

One of the greatest innovations of John Eagan, founder of American Cast Iron Pipe Co., was in his will: He gave the company to the employees.

Ownership in the company may be American’s best employment perk, but the firm is also an innovator in other benefits, including a well-equipped wellness center.

Ownership in the company may be American’s best employment perk, but the firm is also an innovator in other benefits, including a well-equipped wellness center.

Perhaps more so than any company in Alabama, innovation goes way back at American Cast Iron Pipe Co.

To be sure, hard-core heavy manufacturing is alive and well at the Birmingham firm, which has been making iron pipe for the waterworks industry since 1905. The ductile iron pipe plant there is a loud, cavernous place and is the largest manufacturing facility of ductile iron pipe in the United States. Sparks fly like fireworks as fiery molten iron is poured into molds inside casting machines, where centrifugal force churns out pipe in 20-foot lengths up to 64 inches in diameter. 

At a different part of the 2,000-acre complex, steel pipe up to 24 inches in diameter and 80-feet long is produced for the oil and natural gas industries. Massive steel coils are unrolled in a production line that subsequently shapes the steel into a circular form that’s completed by a high-tech machine weld. 

Leather-tough workers wearing scuffed hard hats, safety goggles and other protective apparel work at various stations along the ductile iron and steel pipe manufacturing lines, and chances are they will sweat and get dirty during their shifts. 

Despite the gritty, blue-collar veneer, the company’s manufacturing revolves around highly automated machinery and equipment turning out products that meet or exceed stringent quality-control requirements and industry standards. Having a qualified, experienced workforce to run the company’s manufacturing facilities is supported by innovative training and continuous improvement programs.

It is ironic — and extraordinary — that American’s innovative culture is basically as old as the company. It started with the founder, a man named John Eagan, who was almost an anomaly because he was so far ahead of his time.

Eagan strongly believed that the Golden Rule — “Do unto others as you would have them do unto you.” — should be applied to both employee and customer relations. American was founded in an era when most industrial workers were grossly overworked, underpaid and unappreciated while toiling in workplaces both filthy and dangerous.

Eagan would have none of that. He paid his employees well, provided additional financial incentives, health-care benefits and empowered them to improve the company’s processes. In return, he expected superior performance from employees in the form of the best product at a fair price.

Intended or not, Eagan’s beliefs and programs ensured that innovation would at least have a chance at American for the long term. He established a management structure, for example, that guaranteed representation of all employees and encouraged bottom-to-top feedback. That structure, established in 1922, remains in place today.

Eagan’s most lasting legacy came after his death in 1924. His will stipulated that the company’s stock be put in a trust and that American employees be the beneficiaries of that trust, so he essentially gave the company to the employees. 

Today, employees who start working at American tend to stay there. Workers in the company’s manufacturing and technical divisions, for example, have been with the company an average of 23.9 years. Seventy-nine percent of all employees have worked there more than 10 years, and 26 percent have been at there more than 30 years. 

A stone’s throw from the firm’s manufacturing operations is another result of an innovative culture — it’s the company’s wellness center, equipped with weights and other workout equipment for employees, who can even do aerobics and yoga classes there. 

The wellness center is part of a company wellness program — a voluntary program that has more than paid for itself, mostly by saving millions of dollars with lower medical claims and other health-related costs.

Since 1996, more than 1,250 employees at American have lowered their cholesterol to normal or better; more than 675 reduced their blood pressure, and more than 400 employees quit smoking. Also during that time, wellness program screenings led more than 100 employees to seek further tests that revealed a diagnosis of diabetes. 

More than 80 percent of company employees participate in the program’s health screenings and health coaching. During a recent five-year period, the company realized net savings of more than $670,000 through reduced health-care costs, getting back $1.70 for every $1 invested in its wellness program.

“One of the pillars of the program’s overall success is that our management recognizes employees as being one of our most valuable assets,” says Sheri Snow, wellness manager. “I think management sees the benefits of the program in terms of productivity.”

Among other things, American also has undertaken an employee-driven safety program that is on pace to decrease employee accidents and illness to rates far below the national average. 

Charlie Ingram and Cary Norton are freelance contributors to Business Alabama. Both are based in Birmingham.

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