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RANDOLPH — Vermont Castings CEO Ricardo Leon is placing a bet on “Made in the U.S.A.”
The premise of the bet is that despite higher labor costs, his company can grow and profit by bringing jobs back from overseas, he said.
By manufacturing stateside, the company hopes to save on transportation and delivery costs and to improve quality management. Consumers place a premium on quality, and manufacturing in the United States can generate additional goodwill, he said.
Leon is part of a small employee ownership group that bought the company last summer. In his first year at the helm of the stove, grill and iron part manufacturing company, Leon stopped manufacturing in Mexico and jettisoned suppliers in China.
Vermont Castings then expanded operations in Vermont and Kentucky. The company has added 35 jobs to its factories in Randolph and Bethel where a total of 200 people now work, according to Leon.
Ninety-five percent of those jobs are in manufacturing, he said.
Though the headquarters will remain in Paris, Kentucky, he said the company’s Vermont roots were a strong draw and a big part of its branding.
Gov. Peter Shumlin joined Leon and other company executives for a tour Tuesday, and afterward the governor spoke to factory workers.
“The work that you’re doing here … is why Vermont is in such good shape right now,” Shumlin told reporters and workers.
The state can support the growth of businesses like Vermont Castings through the Vermont Enterprise Fund, which uses financial incentives to attract or retain major employers, the governor said. The Vermont Economic Development Authority, the state’s entrepreneurial lending program, is another tool companies can use to leverage capital.
When Shumlin took questions from workers, a woman called out, “How about a pay raise?”
The governor turned on the charm, smiled and said, “I’m gonna stay away from that one.” Then he went on to tout Vermont’s pending minimum wage increase.
“My view is … if you work 40 hours, 50 hours, many people working two-three jobs to make it happen, you shouldn’t have to live in poverty,” he said.
Starting Jan. 1, the state’s minimum wage will jump to $9.15 per hour, followed by three more incremental raises to $9.60 per hour in 2016, $10 in 2017 and $10.50 in 2018. The minimum wage is already tied to cost of living increases.
Workers at the Randolph factory said they started as temps making $11 per hour, but when they were hired as full-time employees and given benefits, their pay dropped to $9.33. Raises are given to employees that stay with the company or those who are able to specialize, they said, and most appeared optimistic about the future.
One employee who did not want to be identified said he was trained as a welder, but took a pay cut four years ago when operations were moved to Mexico.
Now that operations are shifting back stateside, he said, the company is contracting for much of its welding work, and he’s still working in lower paid position.
Leon said the company uses regional contractors for some metal fabrication, but only because its Vermont operation is straining to meet demand. They hope to eventually bring that work in-house, he said.
Inside the factory, Richard Locke, a foundry supervisor who has been with the company for nine years, said production has grown immensely in the past year and workers are staying busy.
Locke said he thinks it’s good that manufacturing is coming back to Vermont, and he would support policies that encourage more factories to locate operations in the state — up to a point.
“It can’t all be factories and warehouses,” he said. “I like the mountains; we need those, too.”