Ohio nonprofit that employs many people with disabilities faces lost contracts, possible closure

From The Wall Street Journal:

TOLEDO, Ohio -- Robert Ertle (pictured), 30, has cerebral palsy and can't walk. But he can assemble car parts at a special table designed for him. After one of his frequent brain operations, he's apt to argue with his mother, Dawn Cleveland, that he should go back to work immediately.

"I like to be busy," he says.

Mr. Ertle works for Lott Industries, a nonprofit organization that trains adults with developmental disabilities to do light assembly work and other tasks. In 1993, Lott became the only program of its kind to earn the auto industry's prestigious Quality One supplier award.

Now, Lott and its 1,200 workers are in danger of becoming another casualty of recession. Seven major contracts vanished in late 2007, representing 80% of its business, when Ford Motor Co. closed a nearby stamping plant. Next, in 2008, went the General Motors contract for truck transmission parts. Earlier this year, business with a Honda parts supplier dropped off. Cleaning and other nonautomotive work also dried up as companies brought those functions back in-house to keep their own employees busy.

Lott's struggles show how an economic pall can be particularly tough on the disabled, a group that suffers from chronically low employment. As early as the 1940s, the government launched "Hire the Handicapped" campaigns, urging companies to recruit disabled veterans -- many of them missing limbs -- in a show of patriotism and goodwill. While industry supported the idea in theory, preconceptions about worker limitations often damped opportunities.

Progress has been particularly difficult for developmentally challenged adults -- those who have lifelong impairments such as autism, brain injury or Down syndrome. The Americans with Disabilities Act of 1990 barred employers from discriminating against workers with disabilities and forced them to make reasonable accommodations -- such as wheelchair ramps -- so that qualified disabled people wouldn't be shut out from jobs. But the act didn't do anything to compel companies to hire employees with more severe mental and physical limitations. Unemployment within the nation's developmentally challenged population hovers around 80%.

Lott has been a barrier-breaker. It was founded in the 1940s by Josina Lott, a teacher who believed that children with developmental disabilities should have the chance to make a living. Over the years, it earned a name in the auto industry, where companies like Ford were flush with business and willing to give Lott's eager work force a chance.

"[Lott] was ahead of the curve," says Charles Lakin, who heads a University of Minnesota program that tracks services to the developmentally disabled. Too often, he says, programs provided training for jobs that never came up, like "screwing nuts on bolts, even though no one screws nuts on bolts." Lott also offered benefits, like paid sick leave and 15 holidays.

Despite the Detroit inroads, Lott's ranks are stalled as workers cope with pay cuts and a murky future. Because Lott is classified as a training organization, they do not qualify for unemployment. New gigs aren't likely to materialize soon, due to intense competition in the Toledo area. The city's jobless rate stands above 12%.

Joan Uhl Browne, Lott's president, wakes up in the middle of the night thinking "Oh my God, what am I going to do? It's not like other places where you risk your job and reputation if you mess up," she says. "Here if I screw up, I mess up a lot of people's lives."

All of Lott's workers have developmental impairments. Some are in wheelchairs. Others have autism. Over the years, they've tried with little success to work in restaurants or supermarkets, wiping tables and stocking shelves. One deaf man was dismissed from a local grocery for poor communication skills.

For many, the realities of the downturn are tough to process. Lott's employees don't understand why their work went away or that broader remote forces -- like oil prices and imports -- have been partly to blame. They thought they had done something wrong. Many refused to do other work, less out of stubbornness than bewilderment. "I do Ford. I make those cars," they would tell Gail Little, the Lott supervisor who was the customer liaison with Ford. "I would say, 'Honey, Ford isn't here."

Some had been with Lott since high school. Now middle aged, they had come to rely on Lott for a livelihood and self esteem that is often elusive for those with disabilities.

Eduard Kemp, 46, has had seizures since he was 6 and lives with his mother, Pearline, 79, in Toledo. A few years ago, after her husband died, Pearline suggested moving south to Memphis to be with her family. "He didn't want to move because he loves Lott," she says. His co-workers elected him president of the employee council. Eventually, he earned enough at Lott to buy his own drum set and computer. Because of employees like him, "we have to find work," says Ms. Uhl Browne.

At this point, Lott's revenues are less than half of what they were two years ago. With business evaporating, Lott began burning reserves to maintain its average $101,000 biweekly payroll. Wages and sick pay were reduced, although no workers have been released.

Ms. Uhl Browne's small staff has been scrambling to replace the auto contracts. They've cast a wide net, cold-calling businesses offering to label bottles and bundle linoleum. While dining at the bar of a local restaurant, Ms. Uhl Browne overheard a conversation between a father and son regarding their bookselling business. They needed to unload unwanted volumes. "I butted in," she says. A deal to sell Lott's document destruction services was later struck.

Lott had scored its first contract with Ford in 1980, stapling felt pads to pieces that later went into the racy and powerful Thunderbird. Workers assembled parts in an old industrial three-story building. When elevators broke, employees formed lines handing goods to one another and then down the steps to get them out the door in time. That early relationship helped Lott become essentially self-sustaining, enabling it to buy its own equipment and operate largely without subsidies from the state or federal government.

In 1993 Ford told Lott that if it wanted to continue doing business with the auto giant, it had to earn the highest quality certification, called Q1 -- just like the rest of its suppliers.

"There was going to be no more hand holding," recalls Ms. Little. Lott embarked on an intensive overhaul. It invested in new computers and training. It engineered special tables and hand-held tools for those in wheelchairs and with limited fine motor skills to help them attach clips and clamps to plastic fender and wheel parts.

Ford officials spent five days at its factory inspecting operations. Before leaving, they said Lott would be recommended for the prestigious Q1 award. "It was the greatest day of my life," says Ms. Little. Workers celebrated with an outing to the Toledo Zoo. All received blue Ford jackets.

Soon, Lott was shipping directly to Ford plants in Kentucky, Illinois and Michigan, with quality and on time ratings exceeding 99%, according to data compiled by Lott for Ford. It expanded to three production sites, with close to 300,000 square feet, and began assembling head rests and hoses for Jeep, GM, and Chrysler. By 2006, revenue reached $7 million, with Ford generating about 75%. The rest came from other car makers and non-auto assembling, packaging, recycling, and maintenance jobs.

Assembly-type work, tedious to others, was ideal for Lott employees, who thrived repeating and mastering a single activity. Taking ownership in their work, they asked to visit the Ford stamping plant to see where their parts fit onto vans and trucks and wore Ford baseball hats.

Stars like Patty Zawierucha emerged. Her specialty was belly pans and splash shields. "I loved them," says Ms. Zawierucha, 60, who has a learning disability. She preferred using her hands, now proudly calloused, instead of specially engineered tools because she could work faster that way. At times, her output was so far above average that supervisors suspected a data-entry error. Joe Murnen, chief operations officer, stood next to her and tried to match her numbers. "I tried but I just couldn't do it," he says.

Depending on the type of job, Lott workers are either paid minimum wage of $7.30 an hour or a piece rate, which is based on the competitive prevailing wage. With volumes currently down, that's translated into smaller paychecks for many Lott employees.

Michael Peters, 44, was dubbed Speedy Gonzales, "because I was so fast" adding clips, pins and foam strips to parts, he says. While working for Ford, he earned $800 and $900 every two weeks, which was enough to support his mother, Martha, in their home. "I was paying for all the household bills for me and my mom," says Mr. Peters, who wears a photo of his now-deceased mother, on a metal tag around his neck.

Mr. Peters's diligence, mirrored by many others, earned the respect of those around them. "A lot of regular guys in life think how to cheat and steal from the system," says Mike Walker, who supervises Mr. Peters and others. "These guys work hard."

Robert Ertle, the 30-year old who can't walk, is industrious by nature. In the evenings, antsy to get out of his wheelchair, he will crawl out to the garage to clean his mother's car.

"Lott is the best thing that ever happened to him," says his mother, Ms. Cleveland.

That sense of stability was shaken when Ford launched its Way Forward program in 2006. It was a much-needed restructuring aimed at saving billions by closing more than a dozen factories, including the Maumee stamping plant, which was Lott's major customer.

Ms. Little was devastated. "We worked so hard to get that business," says Ms. Little, noting that Lott workers would sometimes find problems with the auto parts and help resolve them.

"It was nothing that Lott did or didn't do. We were appreciative of the work they did and the dedication the employees showed," says Ford spokesman Todd Nissen.

Lott President Ms. Uhl Browne, a former consultant in higher education, was hired a few months before the Ford contract ended. "I knew it was going to happen, but knowing it and living are it are two different things," she says.

After losing the Ford work, Lott secured a GM contract and invested $100,000 in equipment. Lott anticipated the arrangement to last for three or four years -- enough time to warrant the capital investment. Instead, that work dried up by the end of 2008. A GM spokesman says it was never meant to be a long-term contract. Lott says the business went away faster than expected.

It obtained another auto-related contract for more than 20 small parts for a Honda supplier. Almost immediately, the expected volume began shrinking and was cut by more than 40%.

Meanwhile, Lott's other business took a hit from the financial crisis and recession. Paper mills wouldn't accept recycled paper because prices had tanked. Local companies that employed crews of Lott workers to clean or load boxes cancelled those contracts, or greatly reduced volume.

Revenues fell to $2.6 million, with a scant $100,000 trickling in from the auto-supply business. "And we really hustled to get that," says Jeff Holland, Lott's chief financial officer.

Even though contracts were dwindling, Lott employees continued coming to work, doing odd jobs like shredding paper and repairing wooden pallets. At first Lott tried to maintain their average biweekly pay of about $200 by tapping its investment reserves. But the fund was losing money. "We had to stop," says Ms. Uhl Browne. Workers receive only what they actually earned -- even if it was just $24 every two weeks.

The speedy Mr. Peters could no longer afford the $500 a month payments to stay in his house so he moved into an apartment. Lott contacted a social-service organization to help him and others pay their bills and manage their money.

Pockets of optimism remain. The "Cash for Clunkers" stimulus effort helped revive flagging volume at the Honda supplier. A few other contracts have come through in recent weeks. One involves sorting, labeling and stacking decorative panels on pallets for delivery to retailers like Lowe's. Another short-term stint labeling containers will occupy some workers for three to four months.

"We're keeping everyone busy but we're still losing money," says Ms. Uhl Browne. "We're not out of the woods."