RPN Executives of the Year: Grand River thrives under Selip, Misinec

Up and down the line at Grand River Rubber & Plastics Co., employees echo one theme when discussing Richard D. Selip and Joseph A. Misinec: both have a unique, caring and creative management style.

For decades, Selip, the firm's president, and Misinec, its executive vice president, have been successful entrepreneurs and hands-on, dedicated, innovative leaders, employees said, adding that they've kept the business in the black during the most difficult times, relying mostly on organic growth, new products, upgraded offerings and a creative work force to forge new paths to success.

That held true for the manufacturer of flat drive belts, cut washers and tubular gaskets again in 2014. Sales for the year should close out at about $47 million, up about 7 percent from 2013.

There have been many firsts in their lives at Ashtabula, Ohio-based Grand River. The latest is being named Co-Executives of the Year by Rubber & Plastics News for 2014, principally for their consistent leadership in guiding Grand River from a speck on the rubber industry radar screen decades ago to the highly successful business it is today.

It's the first time two top executives have received the top honor since the award's inception in 1989. And Selip joined Stanley E. Gault—who won first at Rubbermaid and then at Goodyear—as the only two-time winner of the award. Selip previously was Executive of the Year in 1997.

Misinec, 71, and Selip, 65, plan to retire in March. In early 2011, they sold the business to their employees in an employee stock ownership plan—or ESOP—and financed the deal. They remained on board in their present positions at the employees' request to help guide the company.

They have a unique philosophy. “We've never made decisions based on the bottom line,” Selip said in a recent interview. “It distorts everything. It's just the opposite. You make decisions based on everything else in life. That's where the bottom line comes from. Some companies don't succeed because they don't take a long-term view.”

“Ric and Joe have been the driving forces of innovation at Grand River,” said Kristin Marchewka, accounting and IT services supervisor and an employee at the company since she graduated from college in 1996. “I believe they complement each other very well. Their management styles exude both honesty and confidence.”

Both have demonstrated genuine care and concern for the company's employees, and “decisions made over the years of being privately held were not solely made for their benefit but for the long-term benefit of the employees,” Senior Vice President Donny Chaplin said.

They don't make corporate decisions and walk away, nor do they manage from afar, he said, adding that “this mentality shows the employees that Ric and Joe are working with them side by side.”

Dennis Arcaro, who works in the shipping and receiving department and serves on the firm's Health and Wellness Committee, said both are very approachable and have “gone over and above the call of duty as business owners,” adding that “the way they conduct business on a daily basis is empowering because you always feel like they are right in the trenches plugging along with you.”

He said their generosity is evident to every employee. “They are always willing to stop what they are doing ... to listen to an issue, sometimes work related, but many times non-work related and give advice, guidance or assist in any way possible to help mentor, educate and redirect someone headed down the wrong path.”

Arcaro has been with the company for 23 years, and during that time he has dealt with Selip and Misinec on numerous levels. “As a past officer of the United Steelworkers Local 1020L, I've sat across from them at the negotiating table on numerous contract talks,” he said. “My experience was nothing but one of passion, mutual respect, understanding and spirited problem solving.”

Grand River focuses on niche product lines that have become No. 1 or 2 in the world, Chaplin said. Those lines are mature in terms of product and process, “but Ric and Joe have been key to being innovative and allowing the employees to be innovative in how we produce the products by reinvesting in new technologies and equipment to make the same types of products more safely and economically.

“We now produce more product in less than a week than we did in a full year back in 1976.”

Much of the development and growth came from the top, Marchewka said. “But they have always entertained ideas that have come straight from the employee. They are always willing to listen to their employees on any ideas we may have.”

Misinec and Selip are hands-on leaders, Chaplin said, and they search for ways to give Grand River the edge, but not at the expense of employees.

For instance, a clause in the contract with the United Steelworkers says that any employee displaced by automation or new technology will be trained in a position commensurate with their seniority. “We don't want our employees to fear technology or automation,” Selip said.

Selip, Stephen Knowles and Robert Jessup formed the company in 1976 after purchasing Geneva Rubber Co.'s lathe-cut and extruded goods plant in Ashtabula. Selip was 27 at the time and was already the sales manager for Schlegel Corp. in Rochester, N.Y., before he made the leap to become part-time owner and vice president of a tiny rubber goods producer.

“Bob Jessup called and asked me if I'd be interested in being a part owner. I had four years—mostly sales and financial—in the sponge rubber industry and had no ties to the area,” Selip said. “I said, "I own a couch, and the bank and I own a car.' So I figured, why not. I got nothing to lose.

“I thought we could grow the business until I was 55, and then we'd sell it. But along the way I found I really liked the people here. That's why I stayed.” He soon became vice president, a post he held until 1987 when he was named president.

Grand River's sales in 1977 came in at about $600,000. The firm operated one plant in Ashtabula with 30 employees. Its primary focus was the production of extruded tubes, which were mandrel-cured, ground and cut into gaskets, Chaplin said.

Misinec came on board at the request of Knowles in 1978 to handle some technical consulting on equipment used for the lathe-cut production line.

“At the time,” he said, “there were many opportunities from a technical viewpoint to position Grand River more solidly as a competitor in the marketplace.”

The company focused on that goal, he said, and gained additional market share. Over the next several years, it moved into other markets in the lathe-cut arena, according to Misinec, who became a part owner in 1982.

In 1987, the manufacturer took a major step and expanded into the five-gallon pail gasket market, posting sales of a little more than $1 million in that segment. In 2014, that business likely will have revenues of about $21 million, Chaplin said.

Grand River entered the market for non-reinforced flat drive belts for upright vacuums in 2000, he said, which produced revenues of $450,000 initially. Sales in that segment have climbed to more than $6.5 million today.

The company began exploring that market in the late 1990s principally because it wanted another niche product line, Selip said. “You can't get in a market for which there is no need for you, other than buying your way in. What we found was there were just two manufacturers of sweeper belts, and the technology of the belt itself—the compound the belt is made of—is extremely important.

“The Chinese were using tire compounds to try to make sweeper belts. It didn't work. We recognized the opportunity ... and we started going after the aftermarket, so that we could learn the market.” It continued to advance its technology and name, and today “I don't think there's a sweeper you can name that we don't make the belt for,” he said.

Arcaro credits both executives for the successful development of the company nyny from the 1970s through 2014.

“They each have a specific talent which perfectly complements each other,” he said. “Ric is a very talented salesman who over the years was able to immerse himself in the rubber industry and become in tune, at a high level, with what our customers want, need and expect out of suppliers.

“Joe, through his engineering and maintenance expertise, has been able to keep us ahead of the curve for many years by designing and implementing proprietary equipment to be able to produce at high levels, which gave Ric the ammunition to be able to compete in the marketplace in spite of sometimes small margins.”

Together, he said, they've provided a secure, opportunity-driven workplace for the firm's employees.

Over the years, the company has averaged about 7 to 8 percent growth annually, expanding its operation several times as it moved into new niche markets to handle the growing needs of customers.

All of its growth was organic until 2011, when it purchased the first of three companies in a three-year span. Today it operates three adjoining facilities spanning about 120,000 square feet and employs about 210.

By 2008, Selip and Misinec were looking down the road at retirement. During contract negotiations with USW Local 1020L, which has always had a good working relationship with management, the prospect of creating an ESOP came to the forefront.

The two executives met with an attorney who specialized in ESOPs and with the Ohio Employee Ownership Council before they introduced the concept to the union. Both sides were making strides on an ESOP plan before the economic collapse of 2008 temporarily halted discussions.

In October 2008, there was panic in the market, Selip recalled. “The economy headed south and fast. So the banks suggested that we suspend ESOP talks because the economic forecast was not good.”

The company's worst period—although it was short—in its history began on the Wednesday before Thanksgiving in 2008 when the company was forced to displace 55 employees, basically the equivalent of the firm's whole second shift.

Many of those workers had a chance to move to secondary operations with a lower salary. But they kept their cost of living, 401K, vacation, seniority and health care. About 30 accepted and stayed on board. The others were laid off.

“It was terrible,” Selip recalled. “We never had to address anything of that magnitude before, especially before the holiday, the worst time of the year.”

Most companies spent 2009 battling to get back on track. For Grand River, the economic slide was short-lived.

By early January, it began bringing people back and by May, it actually started hiring additional employees. Sales had dipped about 10 percent over the previous six months, but by the second half of 2009, revenues were up by 10 percent.

“We have such a diversified customer base and product line, the economy started to stabilize and come back for us,” Selip noted. “That's the nice thing about being a small company—I think small is just as much how you act as it is your actual size. We're pretty flexible, we can move resources, we can go after opportunities in different markets. We didn't necessarily see the cascading effect.

The fact that it specializes in niche product lines helped immensely. “We know our competition, we know the markets, and we don't mold because there are 1,000 molders out there,” he said. “We lathe-cut because there are only six.”

By 2010, the two executives began discussing the ESOP plan again with the union, which overwhelmingly approved the proposal. The ESOP plan was established on Dec. 15, 2010. “On Jan. 11, 2011, we did a stock transaction,” Selip said, and sold all of the shares to the employee stock ownership trust. The trust holds the shares on behalf of the employees.

The transaction was completed without bank debt, and Misinec and Selip hold the note along with their positions of president and executive vice president, Chaplin said. A plan was established to pay off the loan; the ESOP will make its fourth payment to the executives in March, when Selip and Misinec retire.

The two executives probably could have made more money by putting the company on the open market, but they felt that the people who depended the most on the company were the employees. “We have a mission statement that talks about the value to customers, safe work environment, opportunity to our employees ... things you expect to see in a public mission statement,” Selip said.

But Grand River also has an internal mission statement that says the company “exists for the 210 people lucky enough to work here, myself and Joe included,” he said. “The people who would be hurt long term (if the firm was sold and production moved) are the employees.

“Joe and I got a sense that maybe we had an opportunity to do something that is special, to be able to work for the rest of our careers for 210 of the nicest people in the world.”

Misinec and Selip said that when they retire in March 2015, they'll leave with the knowledge that the crew at Grand River is well trained and prepared to continue building on their strong legacy well into the future. They'll remain members of the board of directors until 2018.

Both are lavish in their praise for each other. “If you were to ask Joe why we were successful, he might attribute a lot of it to me,” Selip said. “If you ask me, I'm going to attribute an awful lot of it to Joe.”

Without Misinec's ingenuity and understanding of technology and automation, “we would have been out of business many years ago. If you look at the sales to employee ratio, we had 175 people back in 1997, and we were doing $25 million in sales. We now have 210 employees, up by not even a third, but our sales have almost doubled. Some of that is price increase, but an awful lot of it is automation.”

He said he can't imagine what the company would have been like had Misinec not joined Grand River in 1978. Other than the rubber mills, extruders and auto-clamps on the plant floor, Misinec has designed the remainder of the custom-built machinery.

On the other hand, Misinec credited Selip as being the driving force behind Grand River's continued growth. It only came about, he said, “as a result of a grass roots concept of customer driven philosophy authored by Ric Selip.”

He attributed that to Selip's philosophy and leadership: “We have only been flat one year in the 36 years of my tenure. In good times or tougher times, there are always customers. Keep them happy and your goal to success is much less challenging.”