Downturn forces company to end tuition benefit
JANESVILLE — The economic downturn has forced a Janesville manufacturer to drop a generous employee benefit that has paid more than $3 million in college tuition since its inception nearly 20 years ago.
RathGibson will stop paying tuition for employees' children at the end of this academic year, said John Fortin, vice president and general manager of the company that makes stainless steel and alloy welded tubular products.
The scholarship program paid the tuition and book fees up to an annual cap tied to rates at UW-Madison.
It dates to 1989 when a Santa Claus-attired Duane Rath announced at a holiday party that the company would cover the cost of tuition for employee's children.
Duane Rath, however, is deceased, and ownership of the company started by his father in 1952 has changed hands several times since.
Formerly known as Rath Manufacturing, the company has grown and prospered, acquiring other companies around the country.
Like other manufacturers, it ran into an economic storm in 2008. RathGibson's sales fell in the second half of the year, and the forecast for this year is equally challenging.
"This was a very difficult decision, one that was not made lightly," Fortin said. "This was a program that the employees and management were very proud of, and there was a lot of emotion around it. We regret having to eliminate this benefit, and we only made this decision because of the severe economic conditions that RathGibson and others in our industry are facing."
Fortin said the company looked at a variety of options to cut costs. It laid off 10 of its 124 production employees in November and another seven in January. It has also implemented a limited work schedule.
"We're facing some severe challenges and had to look at several cost-cutting measures to ensure the ongoing competitiveness of the Janesville operation," he said.
That included RathGibson's entire benefits package, everything from health care costs to 401(k) and profit-sharing contributions.
"We determined that we had an outstanding pay and benefit package, and we would still have an outstanding package even with the elimination of the scholarship program," Fortin said. "We're still in the top tier of local employers."
Fortin said the cost of a college education goes up every year, and the benefit was unique to RathGibson's facility in Janesville. None of its other plants offers the scholarship program, he said, and the company wants its benefits consistent from plant to plant.
Company officials were open with employees as they discussed its options, he said.
Since it was making a decision in the middle of the school year, the company decided to continue the program through the end of the current academic year so students solely dependant on RathGibson wouldn't have to leave school in mid-term.
Since its inception, the program has paid tuition for about 131 students, Fortin said
"Our employees were upset, and they preferred that the program would be maintained," he said. "It was a truly unique, truly extraordinary program, but it was an extra benefit that was costly to sustain.
"The goal is to weather this economic storm and come out of it as a stronger business. We want to maintain as many jobs as we can in Janesville."
Feb 26, 2009 at 4:10 p.m.
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This is a shame, and appears to be what happens when outside corporations own businesses. The original owner/founder, a local person, wanted to help the children of employees. How was he able to make a profit and still fund these scholarships? He probably ran his company in a reasonable fashion and did not over-expand, which is what the trend is now for these corporations.
I am a bit surprised at what appears to be a callous response from others to the loss of a benefit to our country's future - students. The original owner wanted to give back to his community and help build a stronger society.
Why don't the officers of this corporation instead cut their salaries in half? Why does the government bail out the multi millionaires who are the ones to blame for their banks and auto companies failing in the first place.
And why is it okay in the opinions of so many people that this is happening?
Feb 25, 2009 at 1:03 p.m.
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yup im living in a bubble....if you knew me and what I have went through this year you would never say that.I have lost more this year then anyone can think of.And okay so maybe this is the best choise to keep this company going ...its is just hard to see hard working people losing so much.
Feb 25, 2009 at 12:37 p.m.
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aparent,
Are you living in some kind of economic bubble? Few businesses are seeing flat sales this year, with most experienciing and projecting huge declines. Continuing such a generous benefit while employees get laid off doesn't seem fair to those being laid off. Your 401k analogy is also wrong. You would only be correct if the company asked the employees to pay any tuition money back they have already received. The employees did not contribute their own wages for the benefit, so there is nothing lost. The only challenge I see is that parents will now have to scramble to apply for fall financial aid. I understand being upset about losing the benefit, but it was very generous.
Feb 25, 2009 at 12:06 p.m.
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okay before the spell police come out I ment to say "NO, I don't need to work I'm rich...and you"
Feb 25, 2009 at 12:02 p.m.
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no, I dont need to work in rich....and you
Feb 25, 2009 at 11:25 a.m.
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Aparentwhcares, this does not affect every employee, only those with children. The only employees that would warrent grandfathering would be those that are currently in college right now. How would they give a cash amount to those with children and nothing to the others? I disagree that anyone is taking advantage of the economy and lowering wages. Are you working in the public sector right now? Your comments would lead me to believe that you are not. Rathgibson is doing what most companies are doing - reducing benefits so they don't have lay off more employees. I'd much rather have my job and look for resources elsewhere for the college tuition.
Feb 25, 2009 at 10:51 a.m.
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I am in no way saying that this is part of their pay -yes it is a very good benifit they provided. But thier are alot of people that have worked there in the beleaf that thier children would have collage covered . The worked the hours and all the over time . this is kind of like having them reach into your 401k and grabbing their contrabutions back out of it.
-so maybe the way the should do it is by giving a grandfathered in amount to each employee ,or cap the amount ,or even just cover a portion of the fees.
and. I still stand behind some work places taking advantage of the bad economy.To lower peoples wage and benifits.
Feb 25, 2009 at 9:58 a.m.
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I give credit to the company for having offered this unique benefit as long as it did. I have no ties to the company, but I do know that a college education is not cheap.
Feb 25, 2009 at 9:44 a.m.
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Benefits are not guarenteed. You receive 40 hours of pay for 40 hours of work. Anything over that is a bonus/benefit. Employers have the right to change/adjust benefits and bonus programs to be in-line with business needs. Do you think beer distributors still allow you to drink while you sit at your desk working? That used to be a benefit...
Feb 25, 2009 at 9:22 a.m.
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okay ...I believe that some work place are taking advantage of the economy . WE NEED TO LOWER YOUR PAY OR YOUR OUT OF A JOB. They say and do this to make more profit in the long run. You know the new buyers have wanted to get rid of this for a while the just chose to do it now in hopes the employees would not react badly to it.
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