Rubbermaid Incorporated

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Rubbermaid Incorporated

1147 Akron Road
Wooster, Ohio 44691
U.S.A.
(216) 264-6464
Fax: (216) 264-5206

Public Company
Incorporated: 1920 as The Wooster Rubber Company
Employees: 8,400
Sales: $1.34 billion
Stock Exchange: New York

Rubbermaid 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. 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.

The Wooster Rubber Company got its start in May 1920, when five Wooster, Ohio, investors formed 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 the mid-1920s. 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 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 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 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.

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, which make up more than 80% of the company’s sales, 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 door mats for these customers. By 1974 industrial and commercial products provided 25% of the company’s sales.

After James Caldwell’s retirement, the company presidency was taken over by Donald E. Noble, in 1959. During that same year, 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.

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 policy towards its steady growth 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% of Rubbermaid’s sales within five years. Nevertheless, the party plan was not profitable until 1976.

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—acting 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 drawingboard 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 lay-offs.

Noble retired in 1980, and Stanley C. Gault, a former General Electric (GE) executive who had grown up in Wooster and worked his way through college in a Rubbermaid plant, took over as chairman. 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 the company’s campaign to reap 30% of each years’ 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—accounting for about 70% of the company’s sales—and commercial products. The home-products division was further restructured into seven product groups: bath ware, food preparation and “gadgets,” containers, organizers, sink-ware, 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% 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 Carian, 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.

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, which makes 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. Rubbermaid expanded its existing product lines into the office supplies market as well during this time. This diversification resulted in continued growth throughout the 1980s, despite the rising price of petrochemical resins, the raw materials for plastics.

The company had set a goal of $2 billion in sales by 1992, looking to international markets such as Europe for its next arena of growth. Throughout its history, Rubbermaid had successfully relied on constant innovation and strong management to grow steadily. Rubbermaid faced challenges in tailoring its familiar U.S. formula to foreign markets, and in lessening its reliance for raw materials on volatile petrochemical supplies, but given the company’s past record, Rubbermaid’s future appears bright.

Principal Subsidiaries

Rubbermaid-Allibert Inc. (France, 50%); Curver-Rubbermaid (Netherlands, 40%); Rubbermaid Commercial Products Inc.; The Little Tikes Company; Micro-Computer Accessories, Inc.