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BY MARILYN ODENDAHL
ELKHART -- Sitting in the heart of the former battle zone, John M. Stoner Jr., eases back in his chair and smiles.
The president and chief executive officer of Conn-Selmer talks in detail about the musical instrument manufacturing business and its future in Elkhart. But despite his knowledge and affable manner, it is hard to forget the conversation is being conducted in the Vincent Bach factory.
This was the place where a protracted, bitter labor dispute with the United Auto Workers happened. This is the place where the recession savaged revenue, production and workers' hours. This is the place with the reputation of crafting some of the finest trumpets in the world.
This is now the place built by John Stoner, a man with a corporate pedigree who is relaxed in an industry populated by craftspersons, musicians and artists.
STURM AND DRANG
"I promised myself, I wasn't going to talk about the strike," Stoner said, "because it's past, it's everything else."
On April 1, 2006, the 230 members of the UAW Local 364 walked out of the Bach plant, picked up their strike signs, lit fires in metal trash barrels and fought against what they said was an profit-hungry corporate mindset that eventually would churn out poorly made horns and ruin the reputation of the place they had built.
Stoner became the focus for all things union members saw as off-key with Vincent Bach. And to prove their point, they used red spray paint to make signs that taunted "Stoney" and were then placed at the entrance to Conn-Selmer headquarters.
However, the relationship between Stoner and the union soured long before the strike began.
"I don't know if it was me coming in, I don't know," Stoner reflected. "I can remember some of the first employee meetings we had here, people would stand up and just chant me down. I mean, 'Down with management,' 'I'm not giving you any ideas on improvement unless you pay me for it.'"
The atmosphere changed after the meetings, Stoner said. Some union members pulled him aside and asked him not to judge the entire work force by a the vocal few.
Stoner's response was direct.
"I have," he told those workers. "I said, 'I can't get rid of those few.' I said, 'You can. So you either have to decide, I mean, competing against each other in the same company gives you no opportunity to compete against (other musical instrument makers) Yamaha (Corp.) or Jupiter (Band Instruments) or anybody else.'"
For much of the problem, he blames "bad management." The parents watching the union did not keep the children in check. The atmosphere that led to the strike took shape in mid-1990s, he said, and that's when the management of the factory and expectations should have been re-examined.
As Stoner see it, he is the foster parent who moved in after the children had been spoiled.
Within months of the walkout, some UAW members began turning in their union cards and walking back to their benches inside the factory. The strike grew more contentious as contract proposals were rejected until finally, in November 2007, a vote to decertify the union took place. More than a year and a half later, the National Labor Relations Board issued upheld the results of the vote and ended the strike.
Did management win?
"The easiest thing would've been to not do anything and just roll over and let the business continue to deteriorate," Stoner said. "So, somehow, we had to get the facility, the management team and the facility back on track. Again, that's both management and the people on the floor and I think we have that today. Could we have gotten there without going through the whole strike? I don't know. I really don't know."
Conn-Selmer is the band instrument division of Steinway Musical Instruments Inc. In facilities in Indiana and Ohio, the company manufactures the "best" student, intermediate and professional level piccolos, flutes, clarinets, oboes, bassoons, trumpets, French horns, tubas and trombones, according to the 2009 annual report filed with the U.S. Securities and Exchange Commission.
Coming from Ames True Temper, a lawn and garden equipment manufacturer based in Pennsylvania, Stoner arrived at Conn-Selmer in 2002 as the president of the band instrument division. Announcing his appointment, Steinway noted Stoner came to the company with 24 years of experience in consumer goods and Steinway CEO Dana Messina called his new chief a "dynamic leader with a proven track record of combining manufacturing businesses and increasing market share."
Sixty days after taking over, Stoner streamlined the band division by removing the duplicate departments and personnel that resulted from the creation of Conn-Selmer.
Today, Stoner proudly identifies Conn-Selmer as the "only full-line (musical instrument) manufacturer left in the U.S." The "Made in the U.S.A." label provides a competitive advantage in the music business and to maintain its domestic foothold, the company has done two things: acquire other musical instrument makers and consolidate manufacturing space.
The mergers removed UMI and LeBlanc from the market and brought Selmer and Conn together shortly before Stoner arrived. Conn-Selmer also has reduced its manufacturing footprint by half from roughly 1 million square feet to 500,000 square feet. In Elkhart, the Selmer plant on North Main Street was the biggest casualty but plants in Kenosha and Elkhorn, Wis., Nogales, Ariz., and LaGrange, Ill., were also shuttered.
Although these changes have cost millions of dollars, Stoner insists they made Conn-Selmer stronger and better able to compete with rivals Yamaha Corp. and Jupiter Band Instruments.
In addition, he countered what he sees as a mistaken assumption people have made when they learn of the factory closures.
"We do something like that, people say, 'Well, they're taking everything offshore,'" he said. "When we closed Main Street, everything that Main Street produced at that time is now being produced in our woodwind facility (on Industry Parkway). Every single SKU (stock keeping unit) -- bassoons, oboes, flutes, clarinets -- every model that was being produced at Main Street is being produced in the South facility."
At the Bach plant, a change has made the student trumpet offerings more competitive and more profitable. Previously, the student trumpet, the TR300H, was costing the company $10 for every one sold to dealers at a price of $446. That model has been discontinued and replaced by the TR300H2, made in Eastlake, and the TR305, made in Elkhart, with dealer price tags of $350 and $370, respectively.
The retail price is slightly more than import competitors but, Stoner said, it is still within a range that customers are willing to pay for a USA-made horn.
Changes at Conn-Selmer have sent many of the workers and their skills to the unemployment line. The current payroll of 775 employees at all Conn-Selmer facilities is down from the 1,150 in August 2005. In Elkhart, the South facility has 175 full-time and four part-time workers, the Bach plant has 124 and corporate has 97.
Stoner hinted the previous employment count at the Bach factory may have included some padding. Specifically, he noted the amount of reworking that needed to be done on the finished horns that led to hiring instead of fixing the cause of the problem.
"...we used to pay the people that reworked horns more than the people that were on the floor," Stoner chuckled. "I could never understand that. ... At one time, people had to rework the instrument that they produced. So if you produced a bad instrument, you reworked it on your own nickel. And then that changed when we set up rework departments. Then all of the sudden, people were sort of, it almost felt like people were sending products into the rework loop to make sure these people stayed by and employed and everything else."
He credits implementation of a process called Quality Management System with reducing problems with the finished product and cutting customer complaints.
In 2008, Stoner said, Conn-Selmer had 480 complaints per month on quality issues. In 2009, the average was 71 a month. In the Bach facility, the complaints dropped from 130 monthly in 2008 to 23 each month in 2009 and continue to decline.
"You've got to eliminate the rework," Stoner said of remaining competitive. "You just have to eliminate the rework. You've got to realize what people are willing to pay for and what people aren't willing to pay for. And people are willing to pay for the instrument being made right the first time but they're not willing to pay for it to be made two and three times just to get it right."
Once the union was decertified, workers at the Bach facility saw their paychecks reduced. It has enabled the company to bring back the student instrument production, Stoner said, and stabilized the downsizing.
"When you talk to people, usually office people and people in the factory, the biggest thing they want is security," Stoner said. "They want a fair wage but they want security. They always pick security over wage."
A NEW THEME
On the heels of the Bach strike came the worst economic recession since the Great Depression. Prior to the UAW walkout, the band division of Steinway realized $183.6 million in sales and $37.5 million in gross profit, according to documents files with the SEC. Those figures have since fallen to $126.4 million in sales and $28.4 million in gross profit in 2009.
Stoner does not consider the fall in revenues and profits as evidence of the strike but rather as a result of the recession and a reflection of the current Conn-Selmer.
"I don't know if we could have weathered 2009 with the same management team and everything else that we had in 2003 or whenever," he said.
Conn-Selmer now is launching new product lines. Among them are the student instruments, the Galway Spirit Flute, 100 percent made in the South facility, and the Bliss clarinet. From the Bach plant is coming the new Bach Stradivarius Artisan Collection, a new product line of five professional trumpets that, Stoner said, already has $1 million in orders.