MARLAND 60th ANNIVERSARY

Sitting under glass at my desk is the official “warn” notice of the plant closing for Marland dated January 2, 1992.It is in the form of a letter from Tredegar to the employees indicating that the plant would be closed on May 1.It reads, in part, as follows:

“1. The planned closing by Tredegar Molded Products is permanent.

2.The entire facility is to be closed.

3. The Pittsfield plant will cease operations and close effective May 1, 1992.All but 30-35 employees will be separated from the company on March 1, 1992.If your services are required beyond March 1, you will be notified by your supervisor. . .”

The IUE contacted me in my capacity as a consultant for employee ownership to see if anything could be done to save jobs.Over the next 10 months I worked closely with the employees and the community leaders all of whom contributed in important ways to making the employee-owned Marland possible.

The late Bob Scott, Treasurer of IUE District 2, provided the leadership locally to get the community mobilized including the Office of Mayor Riley, the Chamber of Commerce, Senator Kennedy and Congressman Olver.The late Mike Surowiec led the effort to organize the employees to support this self-help strategy.

The first task was to conduct a feasibility study.I obtained the services of the ICA Group, a non-profit organization specializing in the development of employee-owned enterprises.Seth Evans of ICA and I worked with the help of both hourly and salaried employees to figure out whether an employee-owned Marland Mold would be successful.We were aided in these efforts by financial support from Local 225 of the IUE, the Pittsfield Economic Revitalization Corp., the Chamber of Commerce and the Massachusetts Economic Stabilization Trust.

The study showed that Marland would be successful if we could get agreement from the seller, Tredegar Industries, not to raid Marland’s customer base during the first few years of the new company.Our concern was that Tredegar was still operating another mold making facility in Florida and they would siphon off customers who were traditionally Marland customers.We negotiated a workable agreement with Tredegar as to whose customers were whose and a number of other issues that could easily have sunk our yet to be launched employee ownership.

Two IUE pension funds put up the lion’s share of the equity.IUE District 2 President Peter di Cicco served as Chairman of the IUE Multi Employer Fund and Trustee of the IUE Employee Pension Fund.His support was critical in obtaining funding but it took forever to fight our way through the legal gauntlet to allow this investment.There were numerous delays and on several occasions we had Tredegar call the negotiations off because of our failure to complete the financing in a timely manner.To their credit, Tredegar came around each time despite the fact that their original intent was to close the plant in May and we did not close on the transaction until October.

We received early and constant support from the First Agricultural Bank in the form of an equipment loan, mortgage and line of credit.At the 11th hour, however, we still found ourselves short of the required capital to complete the transaction.Twenty-three employees dipped into their pockets and raised $138,000 to fill in the missing piece.

In addition to the pension funds and employee equity contributions, we borrowed money from the National Cooperative Bank Development Corporation and the Local Enterprise Assistance Fund (specialty funds that support employee ownership), the Pittsfield Economic Revitalization Corp and the Mass. Economic Stabilization Trust.

We had an ESOP Committee of about 12 salaried and hourly employees a few of whom had to come in from layoff to attend our meetings.The Committee was kept informed as to our negotiations and went through an emotional roller coaster as it appeared on many occasions that we were on the verge of success only to have the seller threaten to call the deal off.The Committee worked to define our ESOP Plan and went through the incorporation process for the new company.

At the end, it took 2 days to close the deal.The closing had its excitement when the seller walked out in a huff at the end of day 1 and Don Madison and I did a tour of Pittsfield barrooms to find him to make sure he was coming back the next day.At the start, the employees owned 30% of the stock through the ESOP (employee stock ownership plan).15% of the stock was owned by the 23 employees outside of the ESOP and 55% of the stock was owned by the 2 pension funds.

1993 witnessed eloquent testimony to the power of employee ownership with a 43% reduction in labor costs in our first year.Marland was named, “ESOP Company of the Year,” in 1994 and repurchased $200,000 of its stock from the pension funds which was then distributed to the employees through the ESOP.Marland was also named, “Entrepreneurial Company of the Year,” by the Northeast Industrial Developers’ Association.

Marland continued growing in 1995 and was able to repurchase the balance of the stock held by the pension funds for later distribution to the employee ESOP accounts.Marland was named, “New England ESOP Company of the Year,” for the second time in 1996.Marland achieved ISO 9001 registration in 1997.

1998 was a banner year for Marland winning the “Commitment to the Workforce Award,” from the Corporation for Business Work and Learning; and the, “Excellence in Communication Award,” from the National ESOP Association.To top the year off, Marland moved into this new 70,000 sq. ft. state of the art facility.At the dedication of the new building, Marland presented a check to Mayor Doyle for the $10,000 that the City had contributed to help fund the feasibility study.Marland also repurchased the remaining shares held outside of the ESOP making Marland 100% employee owned.

The ESOP is a qualified pension plan under the law and, as such, does not pay any taxes.In the years since the purchase of Marland from Tredegar there was a change in the law of which Marland was quick to take advantage.The change provided that if a company was owned 100% by an ESOP and it was also an S corporation, it did not have to pay corporate taxes.Marland converted from a C corp. to an S corp. to take advantage of this change and today Marland does not pay federal corporate taxes.

Marland again received the National ESOP Association, “Excellence in Communication Award,” in 2000.Not long after Marland won the right not to pay corporate taxes, our business suffered a significant downturn and Marland wouldn’t have had to pay corporate taxes anyway.So much for market timing.

As they did in 1992, the employees pulled together and took the steps required to return Marland to profitability.Since 2004, Marland has pioneered in the development of exceptionally fast high cavitation molds that significantly enhance the profitability of Marland’s customers.Marland has won new business by improving methods and equipment and by pursuing a very active research and development program.

In 2005, Marland entered into a formal partnership agreement with a major closure manufacturer and the Marland’s current client list reads like a Who’s Who in the Closure Industry.The average value of the stock held by an employee of Marland in his ESOP account at the close of 2005 was over $70,000.2006 has seen the acquisition of nearly 3 million dollars of state-of-the-art equipment to further enhance quality and productivity.

The story of Marland started with some brave and creative mold makers from GE who thought they could do better on their own and they did.The last 14 years of Marland has been the story of a larger number of brave and creative mold makers who thought they could do better on their own and they have.

John A. Barmack, President/CEO