Rubbermaid Incorporated - Company Profile, Information, Business Description, History, Background Information on Rubbermaid Incorporated

1147 Akron Road
Wooster, Ohio 44691-6000

Company Perspectives:

Rubbermaid's vision is to grow as a leading global business by creating the best value solutions as defined by our customers and consumers.

Our mission is to be the leading marketer under our global umbrella brands of products and services which are responsive to consumer needs and trends and make life more productive and enjoyable. We will achieve this mission by creating the best value for the consumer, commercial, and industrial markets.

History of Rubbermaid Incorporated

Rubbermaid Incorporated is a leading U.S. manufacturer of housewares and other goods, with an emphasis on innovation, a record of steady growth throughout its history, and a sterling brand name. The firm is the top home products company in the United States and is number two in home products in Europe. Rubbermaid is organized around four core brand-driven units: home products and commercial products, both under the Rubbermaid brand; juvenile products, under the Little Tikes brand; and infant products, under the Graco brand. Started in a kitchen, the company--whose products are now primarily plastic rather than rubber--has been a household name in household products for most of the 20th century.

Began with Toy Balloons and a Better Dustpan

The Wooster Rubber Company got its start in May 1920, when nine Wooster, Ohio, investors pooled $26,800 to form a company to manufacture toy balloons, sold under the Sunshine brand name. The Wooster Rubber Company, contained in one building, was sold to Horatio B. Ebert and Errett M. Grable, two Aluminum Company of America executives, in 1927. Grable and Ebert retained the firm's management. By the late 1920s, a new factory and office building had been constructed to house the prosperous business, but the fortunes of The Wooster Rubber Company fell during the Great Depression. In 1934 Ebert spotted Rubbermaid products in a New England department store, and worked out a merger between the two firms.

Rubbermaid got its start in 1933, when a New England man named James R. Caldwell, who had first entered the rubber business as an employee of the Seamless Rubber Company in New Haven, Connecticut, looked around his kitchen during the depths of the Great Depression to see what he could improve. Caldwell and his wife conceived 29 products, among them a red rubber dustpan. Although the rubber dustpan, designed and manufactured by Caldwell and his wife, cost $1.00--much more than the 39¢ metal pans then available in stores--Caldwell "rang ten doorbells and sold nine dustpans," as he recalled in an interview published in the New York Times on May 19, 1974. Convinced there was a market for his products, Caldwell gave his enterprise a name--Rubbermaid--and expanded his line to include a soap dish, a sink plug, and a drainboard mat, selling these products in department stores throughout New England.

In July 1934 Caldwell's fledgling enterprise merged with The Wooster Rubber Company, located in a small town 50 miles from Cleveland, Ohio. Still called The Wooster Rubber Company, the new group began to produce rubber household goods under the Rubbermaid brand name. With the merger, under Caldwell's leadership, The Wooster Rubber Company had a happy reversal in fortunes, and sales rose from $80,000 in 1935 to $450,000 in 1941. Of the 29 new products Caldwell and his wife had thought up in their kitchen in 1933, the company had marketed 27 of them by 1941.

In 1942, however, U.S. involvement in World War II caused the government to cut back civilian use of rubber, so that raw materials would be available for products necessary to the war effort. This eliminated Rubbermaid's housewares business, but the company was able to convert to military manufacturing. Beginning with rubber parts for a self-sealing fuel tank for warplanes, and moving on to other products such as life jackets and rubber tourniquets, the company manufactured military goods through the end of the war, in 1945. In 1944 Wooster Rubber introduced an employee profit-sharing plan.

Following the advent of peace, The Wooster Rubber Company picked up its prewar activities where it had left off, and resumed production of rubber housewares. Because wartime shortages had not yet been completely redressed, however, no coloring agents were available, and all Rubbermaid products were manufactured in black for several months. In 1947 the company introduced a line of rubber automotive accessories, including rubber floormats and cup-holders.

The company's first international operations commenced in 1950, when The Wooster Rubber Company began producing vinyl-coated wire goods at a plant in Ontario, Canada. By 1956 the plant was producing a complete line of Rubbermaid products.

Began Making Plastic Products in the Mid-1950s

In 1955 The Wooster Rubber Company went public, offering stock on the over-the-counter market. This capital infusion allowed the company to branch into plastic products, and in 1956 a plastic dishpan was introduced. This switch required significant retooling from the manufacture of exclusively rubber goods.

In 1957 The Wooster Rubber Company changed its name to Rubbermaid Incorporated to increase its association with its well-known brand name. The following year, the company began its first expansion beyond its traditional focus on household goods by broadening its targeted market to include restaurants, hotels, and other institutions. Rubbermaid initially produced bathtub mats and doormats for these customers. By 1974 industrial and commercial products provided 25 percent of the company's sales.

After James Caldwell's retirement and a one-year stint as president by Forrest B. Shaw, the company presidency was taken over by Donald E. Noble in 1959. Noble had joined The Wooster Rubber Company as a "temporary" associate in 1941. Also during 1959, Rubbermaid stock was sold for the first time on the New York Stock Exchange. The following year, Rubbermaid's management set a goal of doubling the company's earnings every six years, a goal which was consistently met throughout Noble's tenure. Noble also placed a heavy emphasis on new product development, evidenced by the objective he set in 1968 that aimed to have 30 percent of total annual sales come from products introduced over the preceding five years.

In 1965 Rubbermaid made its first move outside North America, purchasing Dupol, a West German manufacturer of plastic housewares, whose products and operations were very similar to Rubbermaid's U.S. operations. "Our plan is to grow from within except when an acquisition can lead us into a market we already have an interest in," Noble told the Wall Street Journal on August 2, 1965, explaining the company's growth policy during this period.

In 1969 Rubbermaid added the sales party to its traditional marketing efforts, a sales technique first popularized by Tupperware. The party division had its own line of slightly more elaborate merchandise, accounting for around 10 percent of Rubbermaid's sales within five years. Nevertheless, the party plan was not profitable until 1976.

Difficult Years in the 1970s

In the early 1970s Rubbermaid marketed a line of recreational goods such as motorboats and snow sleds, but the company lacked the necessary distribution to support the products and abandoned the effort. "We bombed," the company's vice president of marketing told a Wall Street Journal reporter on June 9, 1982.

Rubbermaid continued to grow in the early 1970s, but the combination of government controls on prices and the shortage of petrochemical raw materials caused by the energy crisis of the early 1970s kept a lid on earnings. In 1971 Rubbermaid began to market its products through direct supermarket retail distribution. Although initially profitable, this practice resulted in the company running afoul of the Federal Trade Commission (FTC) in 1973. The FTC challenged the company's pricing policies in connection with its role as distributor, charging Rubbermaid with illegal price-fixing and violations of antitrust laws. The complaint alleged that Rubbermaid engaged in price-fixing between wholesalers because it sold its products directly to some retailers&mdashting as its own wholesaler--and also allowed other wholesalers to sell its products, while stipulating the price for the products. Rubbermaid discontinued its minimum price agreements with wholesalers and retailers in 1975, citing pending legislation and negative public opinion. In 1976 the FTC ruled unanimously that Rubbermaid had violated antitrust laws and issued a cease-and-desist order to prevent the company from renewing these practices.

As part of its continued growth, Rubbermaid opened a new plant in La Grange, Georgia, in 1974, to relieve demand on its main Ohio plant and to supply the automotive-products division. Despite rising earnings since 1968, a sharp increase in the price of raw materials, combined with a change in accounting practices, caused a large drop in Rubbermaid profits in 1974. By this time, Rubbermaid was selling 240 different items, of which about one-tenth were products introduced that year. The company continued to place strong emphasis on innovation and the introduction of new products, generated by a research-and-development staff of designers, engineers, and craftsmen. This staff built prototypes to be used and critiqued by thousands of consumers, resulting in an eight-month process from drawing board to store.

The company experienced labor unrest in 1976, when 1,100 members of the United Rubber Workers called a strike at Rubbermaid's only unionized plant, in Wooster, Ohio, after rejecting a proposed contract. Although the strike eventually was settled amicably, traditionally the company has sought to minimize union activity by building plants outside union strongholds, in places such as Arizona, where it began construction of a plant near Phoenix in 1987 to serve its western markets. In 1985 the company successfully negotiated a contract with its Ohio workers, providing a three-year wage freeze in return for guarantees against massive layoffs.

Streamlining and Acquisitions in the 1980s

Noble retired in 1980, and Stanley C. Gault took over as chairman. Gault, a former General Electric (GE) executive and a son of one of Wooster Rubber's founders, had grown up in Wooster and worked his way through college in a Rubbermaid plant. Despite the company's record of steady growth throughout the 1970s, caused in part by Rubbermaid's expansion from old-line department stores into discount and grocery stores, Gault felt that the company had become somewhat stodgy and complacent. In 1980 he set out to quadruple its sales (about $350 million in 1981) and earnings (about $25.6 million in 1982) by 1990. Anticipating a recession, Gault streamlined operations and introduced racy new products, such as the "Fun Functional" line of brightly colored containers. Gault's stress on growth through the introduction of new products was exemplified by his continuance of the company's campaign to reap 30 percent of each year's sales from products introduced during the last five years.

By 1983 Gault had eliminated four of Rubbermaid's eight divisions: the unstable party-plan business and the automotive division were each sold at a loss and the European industrial operations centered in the Netherlands, and the manufacture of containers for large-scale garbage hauling were also eliminated.

The remaining divisions were combined into two areas: home products&mdashcounting for about 70 percent of the company's sales--and commercial products. The home-products division was further restructured into seven product groups: bathware, food preparation and "gadgets," containers, organizers, sinkware, shelf coverings, and bird feeders and home horticulture. Rubbermaid continued to advertise heavily in both magazines and on television, emphasizing consumer promotions to get customers into the store and offering rebates and coupons for its products for the first time.

In tandem with the product reorganization, about half of Rubbermaid's middle management was eliminated, and 11 percent of the company's management was fired. Many top spots were filled by former GE employees.

In 1981 Rubbermaid had made its first outright acquisition, buying privately held Carlan, owner of the Con-Tact plastic coverings brand name. In the 1980s Rubbermaid was able to move successfully beyond housewares and institutional customers, entering new industries through the strategic purchase of other companies. The company entered the toy industry in 1984 by buying the Little Tikes Company; went into the booming computer field in 1986, with MicroComputer Accessories; into floor-care products with Seco Industries in the same year; and into the brush industry with a Canadian company, Viking Brush, in 1987.

Following these and other acquisitions, Rubbermaid created additional divisions to accommodate its new product lines. In 1987 a seasonal products division was formed to produce and sell lawn and garden products, sporting goods, and automotive accessories. The following year the company created an office products division, which included MicroComputer Accessories and--eventually--Eldon Industries, acquired in 1990. Little Tikes became the core of a juvenile products division. The three new divisions gave the company five divisions, with the preexisting home products and commercial products divisions.

Rubbermaid formed a joint venture with a French company, Allibert, to manufacture plastic outdoor furniture in North Carolina in 1989. In addition, the company expanded its capacity in plastic and rubber products in 1985 with its purchase of the Gott Corporation, maker of insulated coolers and beverage holders. Rubbermaid formed a second joint venture--with the Curver Group, owned by Dutch chemical maker DSM--in 1990 to make and sell housewares and resin furniture in European, Middle Eastern, and north African markets through Curver-Rubbermaid. This diversification resulted in continued growth throughout the 1980s, despite the rising price of petrochemical resins, the raw materials for plastics. Rubbermaid ended the 1980s with 1989 sales of $1.45 billion.

Major Acquisitions and a Restructuring in the 1990s

Throughout the early and mid-1990s Rubbermaid continued to pump out new products at an amazing rate&mdashout 400 a year--which along with several major acquisitions pushed sales higher every year. Net earnings grew as well, until a major restructuring in 1995--97 cut company profits. Management changes marked the early years of this period as Gault retired in 1991 and was succeeded by Walter W. Williams, who soon retired at the end of 1992. After a brief transition period during which Gault was brought back to the company, Wolfgang R. Schmitt, who had joined Rubbermaid in 1966 as a product manager, became chairman in 1993 after having attained the CEO spot the previous year and having served as co-chairman with Gault during the transition period.

In 1992 the company acquired Iron Mountain Forge Corporation, an America maker of commercial playground systems. Two years later Ausplay, the leader in commercial play structures in Australia, was purchased. Both Iron Mountain and Ausplay became part of the juvenile products division. Also brought into the Rubbermaid fold in 1994 were Empire Brushes, a leading U.S. maker of brooms, mops, and brushes; and Carex Inc., which made products for the burgeoning home health care market. Carex was placed in the company's commercial products division.

As of 1993, Rubbermaid generated only 11 percent of its sales outside the United States, and almost all of that went to Canada. Schmitt aimed to increase nondomestic sales to 25 percent by 2000 (later, this goal was boosted to 30 percent), and began to seek out acquisition and joint venture opportunities to help reach this goal. In 1994 the company entered into a joint venture with Richell Corporation, a leader of housewares in Japan, to form Rubbermaid Japan Inc. After abandoning its stake in Curver-Rubbermaid, a partnership that ended up being noncompatible, Rubbermaid reentered the European housewares market in 1995 when it bought Injectaplastic S.A., a French plastics manufacturer of such items as home and food storage products, camping articles, bathroom accessories, and garden products. Also in 1995 the company bought 75 percent of Dom-Plast S.A., the leading maker of plastic household products in Poland. By 1996 foreign sales were up to 16 percent of overall sales, a rate of increase which if continued would mean the company would fall well short of its 30 percent goal. Nevertheless, in early 1997 Rubbermaid announced that it had entered into a strategic alliance with Amway Corp. to develop and market in Japan a line of co-branded premium Rubbermaid products.

In addition to slow overseas growth, a number of other factors forced Rubbermaid to embark in the mid-1990s on its first major restructuring. In the spring of 1994 the prices of resins, used in nearly all of the company's products, began to rise and eventually doubled, increasing manufacturing costs. Rubbermaid also faced increasing competition in the 1990s as other housewares makers improved their products but kept their prices lower than Rubbermaid's premium prices, leading to customer defections and retailer dissatisfaction with the company's pricing policies.

In response to these difficulties, Rubbermaid began a two-year restructuring effort in late 1995. A charge of $158 million was taken in 1995 to cover such cost-cutting moves as closing nine factories and eliminating 1,170 jobs (the charge was the company's first-ever). An earlier effort to achieve $335 million in productivity savings reached fruition in 1996. That year also saw Rubbermaid streamline its product lines, by eliminating 45 percent of its stock-keeping units (SKUs), which when combined generated only 10 percent of overall sales. The company also added a new infant product division to its organizational chart with its 1996 acquisition of Graco Children's Products Inc., maker of strollers, play yards, and infant swings, for $320 million. But Rubbermaid also divested its office products division by selling it to Newell Co. for $246.5 million in May 1997. At the same time the company merged its seasonal products division into its home products division, combining these operations because they had similar distribution channels. As a result of these moves, Rubbermaid was left with four divisions: home products, commercial products, juvenile products, and infant products.

Despite its mid-1990s difficulties, Rubbermaid Incorporated remained one of the most admired corporations in America. Although management sometimes set goals that seemed unattainable, such lofty targets were in keeping with a company that possessed such a rich history of innovation. As the company neared the 21st century, it aimed to generate more than 10 percent of annual sales from new products, to enter a new product category every 12 to 18 months, and to have 30 percent of overall sales come from outside the United States.

Principal Subsidiaries: Rubbermaid Europe S.A. (Belgium).

Principal Divisions: Home Products; Commercial Products; Juvenile Products; Infant Products.

Additional Details

Further Reference

Braham, James, "The Billion-Dollar Dustpan," Industry Week, August 1, 1988, p. 46.Campanella, Frank W., "Wide and Growing Line Spurs Rubbermaid Gains," Barron's, October 3, 1977.Christensen, Jean, "How Rubbermaid Invites Profits," New York Times, May 19, 1974.Deutsch, Claudia H., "A Giant Awakens, to Yawns: Is Rubbermaid Reacting Too Late?," New York Times, December 22, 1996, pp. F1, F13.Farnham, Alan, "America's Most Admired Company," Fortune, February 7, 1994, pp. 50--54.Narisetti, Raju, "Can Rubbermaid Crack Foreign Markets?," Wall Street Journal, June 20, 1996, pp. B1, B4.Neiman, Janet, "New Structure Poured for Rubbermaid Push," Advertising Age, November 9, 1981.Noble, Donald E., Like Only Yesterday: The Memoirs of Donald E. Noble, Wooster, Ohio: Wooster Book Co., 1996.Nulty, Peter, "You Can Go Home Again," Fortune, June 15, 1981, p. 180.Ozanian, Michael K., and Alexandra Ourusoff, "Never Let Them See You Sweat: Just Because Rubbermaid Is One of the Most Admired Companies in the Country Doesn't Mean Life Is Easy," Financial World, February 1, 1994, pp. 34--35, 38.Schiller, Zachary, "The Revolving Door at Rubbermaid: Is CEO Schmitt's Tough Style Driving Executives Away?," Business Week, September 18, 1995, p. 80.Smith, Lee, "Rubbermaid Goes Thump," Fortune, October 2, 1995, pp. 90--92, 96, 100, 104.Stevens, Tim, "Where the Rubber Meets the Road," Industry Week, March 20, 1995, pp. 14--18.Taylor, Alex III, "Why the Bounce at Rubbermaid?," Fortune, April 13, 1987, p. 77.Yao, Margaret, "Rubbermaid Reaches for Greater Glamour in World Beyond Dustpans and Drainers," Wall Street Journal, June 9, 1982.

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