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."