NOTE: This document is provided for historical purposes only.
Gail Sater, Red wing Shoes
MS. HIRSCHBERG: Thanks, Eric. I didn't bring any bibs, so no solicitation.
Our first presenter is Gail Sater. She has been in the insurance, the risk management insurance, field for 23 years. She has worked for an insurance company, a broker and now is in the risk management area. Gail has experience in a variety of companies: computers, farm co-ops, grocery wholesale and airline, and currently is with the Red Wing Shoe Company out of Red Wing, Minnesota.
Gail holds a bachelor degree from the University of Minnesota and an MBA from Metropolitan State University. Gail is also current co-chair of the Remus Educational Committee.
Gail.
MS. SATER: Thanks.
Well, as Eric mentioned, the textile industry is in a bit of trouble. So is the shoe industry. In 1966 there were 1,100 shoe factories in the United States. In 1994 we were down to 340. Shoe imports in 1966 for leather footwear was 13 percent. In 1994, 89 percent were imported. Fifty-five percent of all the leather footwear comes from China. The U.S. supplies only 11 percent of all leather footwear.
In 1996 there were 214,000 U.S. production workers. By 1994 there were 49,500. In 1994 there were 795 million pairs of men's and women's shoes manufactured. Six percent of those were work boots, or 48 million.
For those of you who don't know about Red Wing Shoe Company, I will tell you a little bit about us. We were founded in 1905 by 15 investors. The current owner's grandfather bought controlling interest of the company in 1920. We manufacture about three-and-a-half million pairs of shoes and boots annually, and they are primarily work and service shoes. We are also the largest steel toe or safety shoe manufacturer in the United States. We employ about 1,350 employees in our 3 factories. We make about 9,000 pairs of shoes a day in some 150 styles ranging from size 4½ to size 18. These go from size AAA to EEEE.
We have been seen on the big screen. Our shoes have been in Grumpy Old Men, One Flew Over the Cuckoo's Nest with Jack Nicholson, Overboard with Kurt Russell, and most recently Clint Eastwood wore them in Bridges of Madison County.
We are still using our original plant that was built in 1905 right in Red Wing. And we also have another plant in town that was built in the 1960s, and we have a plant in Danville, Kentucky, and Petosium, Missouri.
We were in some big trouble in about 1988. Remember I said right now we have 1,350 employees. Our pay-in, the red bars, what we were paying in to the insurance company in the first year, we have now been able to reduce them down. We are on what is called a retrospective rated plan, so it is adjusted each year as we bring people back to work or reduce their injuries. We have done this by some light duty programs, our ergonomics, things like this. But we were paying in over $4 million a year in '91/'92. We have brought those down. And in '95/'96 with our addition of our two plants, we are a little over $1 million a year in our workers' compensation coverage. But back then, we almost had no insurance coverage, because we weren't bringing anybody back to work.
I don't know how many of you work with this, but this is the history of our experience modification factor. If you are average, you are 1.0. We were 2.3. So for every dollar of premium that we had, it was multiplied by 2.3. That's what we were paying in. We are now down to .85. That's because we have put in some good programs.
Our frequency rate, if you are familiar with that, back in 1995 was 46.5. We had some big problems. The insurance companies were going to cancel us unless we implemented a comprehensive safety program, introduced ergonomics, and started some return-to-work programs.
We hired a consultant. Our first risk manager was hired from our insurance carrier, or insurance broker. And our losses started to decline.
In one of those years where we had the pay-ins and the big returns, once Bill came on board -- he is my predecessor, and I always give him a lot of credit for this -- our return premium was $2.6 million. That's a lot of money that the insurance company got to use instead of us using it to improve our facilities. And it was all because we agreed to bring people back to work and that we made some modifications to the work stations.
We also started job rotation. We went off the piecework system. We are now working towards modular manufacturing.
One thing, and it will come out through some of the other programs, is we had to work a lot with our unions, too. We are in the Boot and Shoe Workers' Union and the Teamsters. We did a lot of partnership with them. We changed the way we communicate with them. They are involved in every committee that we have in the company and work with them very well.
We had to change a lot of language in our contracts to allow for flexibility, to allow us to bring somebody back into an area where they didn't work before. We did a lot of job rotation. That was a biggee. We have been doing that for about four years now, and we still felt the growing pains of that.
Our new plant started out that way, so they have never known any different. But it was very difficult to take somebody that had been putting the hooks on a boot, just boom, boom, boom, boom, doing that same job for 30 years, and all of a sudden telling that man or woman that now you have to learn how to sew this gusset in a boot. The gusset is the tongue of the boot, by the way.
We also worked with our local doctor. Being in a small town, we have one clinic. We are about 45 miles south of Minneapolis, if you are wanting the geography. And we are right on the Mississippi River. We can see Wisconsin from our plant, so we have a lot of Packer fans there.
We also have a physical therapist in the plant, and we have him under contract. He is not in our plant, but he comes once a month, works with the people in our facility and our maintenance department. Eric will come in and do stretching exercises. He also works with our maintenance people in setting up the work stations. So we have a regular contract with him. It is approximately $1,200 a year, something like that, not a biggee. But he is there every month working with us, and we have a regular scheduled meeting with him.
We hire out some of our audio-metrics. We use our insurance carrier a lot. If you are with a smaller business, you may not realize but 15 to 20 percent of your insurance premium goes to your broker. And your broker has a lot of services that you can utilize.
We also have, as I mentioned with Eric, some stretching and exercise programs. Our return-to-work rates were great. We now have a full-time work comp coordinator that works exclusively on our return-to-work programs. Many of our alternate duty jobs are in the office, light maintenance, maintaining our bulletin boards, a recycling program, sorting materials, running messages around, whatever.
Our biggest success story this year was a young fellow that, unfortunately, lost a hand in one of our trimming machines. But this will show you our company commitment. This happened on a Tuesday night. He had his hand amputated Thursday morning. Saturday, or Friday, a bunch of people from our company were at Rochester -- he was down at the Mayo Clinic -- going to see him. Saturday the president of our company drove down to Rochester to see how he and his family were doing. And Sunday the owner of our company drove to Rochester to see how he was doing and to check on him.
We have a rule, if anyone is in the hospital, we are obligated to call the owner and the president within 24 hours and let them know. That is how much they are concerned about the safety within our company.
In our ergonomics, like I said, we used to work around the piecework system. And so you just had to set up one work station. The first big thing we did was we bought everybody new chairs. Voilą. Big deal. Now they can raise and lower them. You know, the backs went in and out. We spent a few thousand dollars on those; made all the difference in the world. And also, we are not beating our people up a lot.
If any of you have gone and bought a pair of boots in the last ten years or so, you may have seen the shoelaces manually tied onto the boots. Well, somebody had to tie those. A machine doesn't do it. We do everything in 12-pair cases, so they are on racks 4 high. The highest rack on me -- and I am about 5'5" -- was about here, and the lowest one is about a foot off the floor, because the boots themselves are about this high. So you have to tie the laces on the boots up here, and you have to tie the laces on the boots down there. We had a lot of shoulder problems, a lot of knee problems, and a lot of wrist problems.
What we did was we went to the manufacturer. We found, one, a manufacturer that made longer little plastic things, you know, that you have to cut off with your price tags on your clothes. We needed a longer one of those. And also, we bought prepackaged shoelaces. Now they take the boots, put them on a shelf, on a counter right in front of them, pick up all those little hang tags, pick up the shoelace, go thunk with a little gun. They're all done. No more manually tying. A little more expensive on the front end, but reduced the injuries 100 percent.
I have some slides that we can show, and if we need to stretch, we can do the video later. But this is a very simple one. You notice that the machine is at about a 30-degree angle. We built these in our maintenance shop. When you think about it, if any of you have ever worked over something like that and if you are in the textile industry, many you people do, it is hard to do it when it's flat. But its just like your keyboard tray on your computer. If you slant it about 30 degrees, all of a sudden you have tipped yourself back a little bit. You are not bending over quite as much, and your back is straighter. Every machine, every sewing machine, in the factory is tilted like this.
I don't have a slide on this one, but if you think back to your grandmother's old treadle sewing machine, the big old flat pedal that you had, we built little stands with some angle iron, and they can raise and lower those and slide them all around. And now the foot pedal sits on that. So no matter what height you are, you can move that wherever you want.
This is an example of -- this is a computer stitching machine, but it is also -- and this gets a little grainy from blowing up these slides, and I apologize. But it is just a movatech table, and you can just see right off her knee a crank. So now you can sit down on part of your job or you can stand up. And because we are rotating and we all come in different shapes and sizes, the individual operator can go there and just crank that thing up or down, and it is very simple to do. No big deal. I believe -- and don't quote me on these prices -- one of these tables is only about $700.
Another change we made in an operation like this, if you see someone standing like that and if you are dealing with a single foot pedal, you have to put all your weight on the other foot while you are running the foot pedal. What we did is we found a body bar, so it would hit this operator -- and I'm sorry I don't have a picture of it. It would hit her mid thigh, and there is another one that would be on the side of her leg. So on the side of her leg, she just leans a little this way, the presser foot comes up; leans this way, it comes down on the leather; leans forward, vroom, the machine goes; she leans back, it stops. So now all of her, she is balanced on both of her feet. Okay?
Throughout the factory, especially on our waterproof lines, which are very heavy boots, we have the arm slings. They can use them or not. Also, you can adjust them, and they just take a lot of the weight off your arms. These boots, if you have picked up a men's size 16 boot, these things get pretty heavy. So it just helps take some weight off their shoulders.
Next one?
This is a sample of one of our new computer stitching machines. There is about 120 steps, manual steps, that go into make a standard boot. This machine now clamps the pieces together and with one motion they don't have to move anything around and twist it anymore. The machine does it. And we have about 20 or so computer stitching machines now in the factor. But just one like this I believe is in about the $35,000, $40,000 range. So they are a little pricy to do, but we are slowly getting more of them in.
The next speaker is ready, I think. And if we have time, we can show some of this real time on a video.
MS. HIRSCHBERG: Thank you, Gail. I thought for sure you were going to announce that Red Wing was going to Velcro ties or Velcro closings instead of tied, but you found a solution to your problem. That's real good.
