The Company Town

by Hardy Green

  Maytag Co. was a pathbreaker in the field of washers. It evolved from small-town beginnings in Newton, Iowa, to become a major international corporation by the mid-twentieth century. Never straying from its small-town domicile, Maytag prospered as a result of a commitment to quality rather than flash, successful innovation pioneered by an inveterate tinkerer, and the growth of the vast consumer market. The founding Maytag family was, like so many others in this book, quirky, possessive, sometimes exploitative of its town and workforce, and anti-union but not suicidally so. Finally, like too many other U.S. manufacturing concerns, Maytag no longer exists, having been absorbed after a period of crisis by a larger competitor, Whirlpool Corp.

  Frederick L. Maytag, a farm boy born near Elgin, Illinois, moved with his parents in the late 1800s to Newton, a village of 2,500 souls thirty-five miles east of Des Moines. In time, he found employment as a lumberman. In 1892, Maytag joined with inventor and entrepreneur George Parsons to market a “band cutter and self-feeder”—a threshing-machine accessory. Peddling their device directly to farmers, they had modest success, and in 1896, to help them make refinements they hired a talented mechanic out of Austin, Minnesota, Howard Snyder. Snyder would prove his worth many times over, rising to be head of the company’s “experimental department,” then plant superintendent, and finally a company vice president.

  After the turn of the century, Newton had become home to several makers of hand-operated washing machines, including the One Minute Washer and the Automatic Electric Washer. In 1907, Parsons and Maytag began producing a washer, too—the Pastime—basically a wooden tub with a crank mechanism that dragged clothes against a corrugated surface. Although they viewed the product as a sideline, it had several advantages. Unlike farm equipment, the Pastime could be sold in all seasons. And its manufacture would draw upon skills and materials similar to those the outfit already employed. Mechanic Snyder turned his hand to the machine and never stopped making improvements.

  Within a few years, the company—now known as Maytag Co. after F. L. Maytag bought out Parsons—was producing a model that ran on a gasoline engine and another that was electric-powered. A prime venue for exhibiting and market-testing the machines: state fairs across the Midwest.

  By 1915, Maytag’s washing machines were outselling its farm implements, a field it would soon abandon. The Maytag Multi-Motor, which ran on gasoline, became a hot seller, and the company’s production more than doubled. In part, the machine’s popularity was due to the fact that, while in operation, its engine could also serve as a power source for other appliances, such as butter churns and ice cream freezers. Ads in the Saturday Evening Post showed a housewife blithely reading a book while the Multi-Motor labored away, its flywheel propelling three household appliances simultaneously.

  Although some 120 manufacturers were making washing machines at this time, four companies in Newton, Iowa, made more than one-third of them. Maytag produced several pioneering models that utilized metal cabinets, electric motors, and the “millrace washing principle,” which tumbled clothes and forced hot water through them. By 1920, the company had the largest factory in Iowa, a network of thousands of dealers, and a backlog of orders. Early in that decade it introduced a model employing an innovation that would become standard in modern machines: a bottom-of-the-tank agitator that used water alone, rather than any sort of corrugation, to do the cleaning. Maytag’s employment in Newton rose above 2,000, and it erected a new 600,000-square-foot factory.

  Maytag became a public corporation listed on the New York Stock Exchange in the 1920s, establishing a separate Maytag Acceptance Corp. to help facilitate installment-plan purchases. But, for better or worse, the company continued as a family-run operation, with F. L.’s sons taking turns as chief executive and the founder keeping an active hand in the game. Corporate welfare measures included a piecework-pay plan that allowed factory employees to set their own pace of work. Then there were other acts of questionable benevolence: CEO Elmer Maytag joined with a Newton contractor to buy vacant lots around town and build hundreds of homes that they sold to employees. Mortgages, paid via payroll deduction, were offered by a savings bank where Elmer was an officer. A company gasoline station accepted scrip-like coupons that were also charged against workers’ pay. The Maytags funded a local YMCA—workers were required to join and pay dues. They gave away free tickets to various concerts and public performances and sponsored a yearly family picnic that included a parade to the fairgrounds site and speech-making. For employees, attendance at the picnic was also mandatory. In 1935, city fathers dedicated F. L. Maytag Park as a memorial to the aging founder, and the dedication was delivered by a local radio personality, Ronald “Dutch” Reagan.

  In the late 1930s, union activism swept the Midwest, and it would have been surprising if Maytag had not been affected. But the enthusiasm for a union was startling to family members, who imagined that workers appreciated the family’s beneficence: Within nine days in 1937, the United Electrical Workers signed up 1,400 Maytag employees. Among the issues motivating organization, there was one oddball matter: A sure-fire way of getting a job at the company, it seemed, was to purchase a Pontiac, on credit, at a local dealership owned by one of F. L. Maytag’s cronies. Maytag himself may have been part owner of the dealership, many figured, and that encouraged workers to feel that just maybe they weren’t all one big happy family. Although the company quickly recognized the United Electrical as its workers’ representative, two years later during a confrontation the union demanded a 25 percent pay raise and the company instituted a 10 percent pay cut. A three-month strike that brought the National Guard to Newton resulted in few changes.

  During World War II, Maytag shifted all production away from washers, instead making parts for aircraft and armored vehicles. It returned to washer making after the conflict, where it faced a raft of new competitors including General Electric, Westinghouse, Ford’s Philco, GM’s Frigidaire, Amana, and—soon to emerge as Maytag’s primary competitor—Whirlpool. In a marketplace once dominated by small appliance stores, the likes of Sears, Roebuck and Montgomery Ward took over. Opening a new plant in 1949, Maytag held its own and in 1967 began a series of popular television ads featuring the lonely Maytag repairman—underemployed as a result of the company’s next-to-unbreakable products.

  With management no longer in the hands of family members, Maytag began acquiring other companies. In 1982, it would purchase stove maker Jenn Air and in 1989, vacuum-cleaner maker Hoover.18 (It would sell Hoover to an Italian company in 1995 and end its European operations.) In 2001, it purchased another small-town-Iowa appliance maker, Amana, which had twice changed ownership since its 1934 creation by members of the German pacifist religious sect at the Amana colonies, an hour’s drive east of Newton. That acquisition made Maytag number three among appliance makers, behind only Whirlpool and GE. And a mid-1990s innovation, the pricey, energy- and water-saving Neptune washer, seemed to portend a brilliant future. The Wall Street Journal said Maytag was “faster-growing and more profitable than its main rivals” and called profits produced by the ecologically friendly machine “extraordinary.” “We can’t make them fast enough,” a Maytag executive bragged of the machines.

  Then came a nasty surprise. Uncharacteristically for a “dependable” Maytag machine, the Neptune developed a seemingly endless number of defects, from faulty seals and latches to failing circuit boards. A class action featuring more than 120,000 claims forced the company to pay out millions in claims and attorney fees.

  Perhaps more significant, competition from makers that employed foreign labor prompted Maytag to outsource production abroad, skimp on materials, trim new-product investment, and introduce a low-cost line of products that tended to degrade the brand. Layoffs, strikes, and post-9/11 hard times all made an impact. By 2005, Maytag’s share price and market share had tumbled, and customer surveys put Maytag in the appliance-field cellar. After a takeover battle involving several other parties, Whirlpool acquired Maytag in 2006.
The new owner quickly announced that it would be closing Maytag’s headquarters and two large factories in Newton, along with plants in Arkansas and Illinois. 19

  The purchase left 2,800 workers jobless, nearly a fifth of Newton’s 16,000 residents. Whistling in the dark, the town’s mayor, Charles Allen, wrote that the community was far from dead, having received commitments of $100 million in private investment, with $70 million going toward a new motorsports complex. He gamely predicted that Newton was “on the cusp of a paradigm change like no other the state of Iowa has seen.”20 Others pin hopes for economic revival on the likes of a new 150-employee wind-turbine plant that was promoted during a recent Earth Day visit by President Barack Obama.

  But Maytag’s specter continues to haunt Newton. Its presence lingers at such local landmarks as Maytag Park, the Maytag Bowl bandshell, Maytag Pool, and Hotel Maytag.

  In my hometown of Memphis during my youth, I regularly passed a Purina plant that roasted and processed animal feed; the aroma, as writer Willie Morris has recalled, was comfortingly reminiscent of “ham in the oven.” But the actual smell of the bacon cure at a meatpacking plant is far from lip-smacking. Rather, it is a stomach-turning stench, a daily rot that one hopes to avoid, an “odor that hovered in the air on the Northside and hit the rest of us with the wind,” recalled memoirist Cheri Register of her hometown of Albert Lea, Minnesota. Nor is the actual labor involved in meatpacking something to savor. Remembering a school field trip to Albert Lea’s Wilson plant, Register wrote of the “large, high-windowed rooms, some filled with steam from vats of hot water, others damp and cold as the inside of a refrigerator, where men hacked at red flesh, ground blades against bone, stripped blue veins still leaking blood, and scraped pale yellow globs of fat from foul-smelling hides.” On the killing floor, newly dispatched hogs hung from hooks, the blood draining to vats below, before they were plunged into de-hairing tanks. Over the decades, this work became more mechanized—today instead of knives, much of the cutting is done with such power tools as the Whizzard, an electric knife with a spinning round blade—but fundamentally, the tasks have remained the same. 21

  From the Civil War through the 1950s, companies situated in such rail-terminal cities as Chicago, Milwaukee, Kansas City, and St. Louis dominated the U.S. meatpacking industry. But much as Milton Hershey decided to locate his chocolate-making close to key suppliers—in his case, dairy farms—smaller meatpackers began as early as the 1870s but especially after 1920 to locate in smaller towns near the farms that raised the animals. This was especially the case for pork packing in Iowa. That state experienced a pig-population boom in the twentieth century, producing 22 percent of the total U.S. hog supply by 1940. Ottumwa, where Liverpool, England-based John Morrell chose to locate in 1877, was a leading packing town from the 1870s on.

  Chicago and other major cities were home to the so-called Big Five—Swift, Armour, Cudahy, Morris, and Schwarzchild and Sulzberg, which changed its name to Wilson in 1916. (This became the Big Four when Armour bought Morris in 1923.) These companies ran huge factories of death and dismemberment: Armour employed 6,000 to 8,000 workers by 1900, and Swift, between 4,000 and 6,000. Concentrated as they were, the Big Five enjoyed huge economies of scale, proximity to vast terminal-market stockyards, and good rail connections to eastern cities. They were also tech innovators: Swift famously developed the first successful fleet of refrigerated railcars, and Armour employed cold storage at its branch distribution points.

  But the small-town packers had their own advantages. Their buyers developed close relationships with the farmer-suppliers, who learned that animals lost less weight and thus commanded higher prices if they could be delivered via short truck runs rather than lengthy trips aboard trains. Farmers who dealt with the independent packers also avoided other costs, including stockyard commission fees charged in cities such as Chicago. As for the costs of slaughtering and disassembling the animals, pork packing demanded fewer laborers and less sophisticated assembly-line activity than beef packing and so was more amenable to smaller-scale production.

  Dubuque Packing began operations in the Iowa city of that name in 1891, and by the 1940s was one of the largest such operations in the country. It was outdone only by Rath Packing Co. of Waterloo, which had the largest plant in the state by 1920. Other nearby states were home to independent packers, too, including Sioux Falls, South Dakota’s Morrell plant, and Madison, Wisconsin’s Oscar Meyer facility. Another sizable operation was that of Geo. A. Hormel & Co. in Austin, Minnesota, which by 1933 was handling a million hogs and 186,000 cattle. Even some of the large companies joined the movement to smaller towns, including Wilson in Albert Lea, Minnesota.

  Both Ottumwa and Austin were railroad centers before they became home to meatpackers. Waterloo—which along with Rath was home to a John Deere farm-equipment plant—and Dubuque were both considerable manufacturing centers. But the packing plants employed large numbers of workers relative to these towns’ overall size: By 1935, Hormel employed 2,500 of Austin’s 12,000 citizens, while Morrell provided work for the same number in Ottumwa, a city of 25,000.22

  Austin, a town ten miles north of the Iowa border, fits the company-town model well. Although other businesses have existed there, Hormel has long been the only truly important enterprise. For years, the company has exerted strong influence over the local media, including the Austin Daily Herald, and over what was taught in local schools. For a time, Austin teetered precariously between utopia and exploitationville, with Hormel a part of an industry not famed for its progressive employee and community relations. In the 1930s, plant foremen were dictatorial, asserting authority over everything from workers’ family problems to their choices in the voting booth. But by the 1940s, Austin had in effect become a model town, with row after row of worker-owned single-family homes and a generous and philanthropic employer, namely Hormel. It was “as good a company as there is anywhere to work for,” a worker told a 1953 industrial-relations researcher, who found that the overwhelming majority of workers had positive feelings about the enterprise. 23

  Founded in the 1890s by George A. Hormel, a traveling hide-buyer out of Toledo who started by taking over an Austin retail butcher shop, the company experienced slow expansion in the 1900s, erecting a refrigerated plant for slaughtering and packing pork and beef with a workforce of two hundred. Before long, Hormel developed distribution centers throughout the Midwest and the South and began running advertisements for its products in such national publications as the Ladies’ Home Journal. In the 1920s, Hormel perfected a means of canning ham, which proved a popular item. Expansion and construction of a national market continued into the 1930s. In 1933, the company opened a new $1 million beef-slaughtering facility in Austin.24

  Even after the development of ice houses and then refrigeration, meatpacking remained a seasonal occupation. Animals matured in the warm months, and slaughtering and other work was performed in the winter, largely by farm workers idled by weather. But Hormel’s burgeoning facilities called for a year-round workforce. Shorter summer hours and consequent reduced pay led to friction and economic woes for the town as a whole. Recognizing these facts, beginning in 1931, the company initiated what it called a “straight time” pay plan, which paid employees a weekly flat rate rather than one adjusted to hours worked. You might spend more time on the job during winter and less during the summer, but your pay would not vary—and the company regarded workers as permanent, salaried employees entitled to a fifty-two-week notice prior to any layoffs. This approach seemed to offer greater job security and to benefit the company and workers alike.

  Hormel extended its corporate welfarism with mandatory 20-cent weekly deductions for an annuity savings plan. An additional stab at dogoodism: enforced contributions to the local community chest. Neither of these two measures went over so well. The community chest “was for the poor people,” one worker exclaimed. “Hell, we were the poor people.” When gruff and tyrannical foremen attempted to browbeat employees into signing the
necessary checkoff cards, they touched off a rebellion—which in turn led to a company-employee-community social contract that lasted for more than forty years.

  The payroll deductions, arbitrary treatment by bosses, and low pay prompted a union drive led by a remarkable Trotskyist plant foreman, Frank Ellis. A former organizer and executive board member of the Industrial Workers of the World, Ellis had lived the life that killed IWW organizer Frank Little: He’d ridden the rails, been jailed from Texas to Minnesota, forced out of towns by gun thugs, and beaten by vigilantes. He’d become a Hormel foreman only because of meatpacking skills honed during stints in various midwestern packinghouses. Ellis and other radical employees—some of whom he’d hired—organized mass meetings and a series of in-plant sit-downs. In fall 1933, the workers shut down the plant altogether and escorted from the facility Jay C. Hormel, George’s son who’d become company president. Hormel was surprised by the emergence of the union; he felt he had done a lot of good for employees. But the company quickly recognized the workers’ union, the IWW-inspired Independent Union of All Workers (IUAW). “When the union was organized, I was fearful of its use,” Jay Hormel told an audience some time later. “But I like the idea now.”

  All the same, friction continued between the union and Hormel management for several years. Anti-union vigilante groups emerged in Austin, sporting such dramatic names as the Secret 500 and the Citizens Alliance. Meanwhile, the union organized repeated sit-downs over plant grievances and began a regional organizing drive that recruited members from across southern Minnesota and northern Iowa. To counter the Daily Herald’s perceived antiunion barrage, the IUAW began its own weekly newspaper, The Unionist. In 1939, the IUAW affiliated with the CIO and became Local 9 of the United Packinghouse Workers of America. 25