IBEW Local 86 (Rochester NY) Members Struggle To Preserve American Jobs

Fighting to survive
Victor company tightens belt to compete

Amy Wu, Rochester Democrat & Chronicle Staff writer

(February 28, 2005) — Inside Victor Insulators' 110-year-old factory, Ira Knickerbocker, the company's jovial and baby-faced vice president, can manage a smile again.

This was not the case two weeks ago. The company in Victor, Ontario County, had came close to going bankrupt after its sales began spiraling downward last October. Creditors were breathing down their necks. The saving grace: The 90-plus union workers and 22 salaried staff at the oldest ceramic insulator maker in North America accepted a 20 percent pay cut.

Knickerbocker, 56, who started his career here in 1972, says that Victor Insulators' troubles are industrywide. Insulator makers in the United States have been severely squeezed by competition overseas, rising labor and utility costs.

In the last decade, the industry in the United States has shrunk from 14 companies to four, which are going after an industry worth $250 million.

Industry observers concede that offshore production of insulators, which are used on power lines to protect the electrical currents, is inevitable.

"All the signs are that true commodity parts will be made offshore," Knickerbocker says, "and more complicated and difficult parts will be made in the U.S ... at least for the foreseeable future."

Andy Schwalm, Victor Insulators' marketing manager, says the industry's troubles are the same as those of other older sectors.

"Other industries have been through it, the steel industry, automotive industry. It's just our time and we're trying to do the things they did: Improve cost structure, find better ways to compete and focus on providing what customers want rather than what we think they want."

Indeed, the miniature American flag that hangs over a station post insulator in Victor Insulators' modest conference room is a constant reminder of a time before globalization became a reality — and the changes the company needs to undergo.

The company's latest battle plan went into effect Sunday.

The pay cut most severely affects workers such as Jack Meredith, a 58-year-old worker who now makes about $12.60 an hour instead of $14. Meredith crosses his fingers that the new "incentive program," which makes workers eligible for potential bonuses, will materialize.

Those workers who remain are staying out of loyalty or fear that they will lose their benefits, he says.

"Where does a 58-year-old go now? There's a lot of people here at that age, can't make a move or no one would want them," Meredith says. Starting this week, he is working an added five hours in hopes of making up lost pay.

Over the years, the company also has bought new technologies and machinery to improve efficiency. It is targeting customers that its now-dead competitors left behind. And it will continue to diversify its product lines and produce high-end niche products such as earthquake resistant insulators from the Maple Avenue factory.

Competitors are taking similar measures. Lapp Insulator of LeRoy, Genesee County, recently moved some production from Georgia to China and India and says it will move other lines to LeRoy.

Victor's transformation really started a decade ago when the company started to search for partners overseas.

"We recognized that things were going to happen, that imports were going to be more of a factor, so we made some efforts during the '90s; it was a way for us to compete in other countries," Knickerbocker says.

At the company's peak in 1996 sales were $23 million, and then the decline started. In 2004, sales were $15 million, and they are expected to be the same for 2005.

Schwalm, the marketing manager, weaves through the factory past workers hovering over humming machinery, and he is reminded that Victor Insulators has a long legacy as the first of its kind.

Fred M. Locke invented the porcelain insulator and founded the company that is now Victor Insulators in 1894. It spawned a generation of competitors. In 1984, it was incorporated by its current owners, Ronald Graczyk and Knickerbocker.

The company was once a golden boy partially fueled by its many customers who wanted to buy Made in the USA. The benefits were good, workers say.

"When I worked here in 1978 it was one of the highest-paid industries in this area," Meredith recalls.

But Made in the USA doesn't matter as much anymore, observers said. "There are still a few good old boys who will say, 'We will only buy U.S. products,' but that portion of the customer base that really demands U.S.-based products is dwindling," Knickerbocker says. "We can do what we want to avoid that, but eventually it's likely to go offshore. We will be technically competent importers."

awu@democratandchronicle.com