For Steuben's Craftsmen, a Fragile Future


After decades of taking a loss on the high-end glassmaker, Corning has sold Steuben Glass to private equity firm Schottenstein

On July 23, Corning (GLW) executives called a 1:30 p.m. meeting in an auditorium near the glassblowing shop in Corning, N.Y., where Steuben Glass artisans have crafted crystal for more than 50 years. The Wednesday morning shift had just let out, and the workers were still warm from the glowing glass furnaces as they filed in and sat down at round tables spread out as in a dining room.

There was reason to be anxious. Steuben, a division of Corning, had been unprofitable for years. Cost cutting at the corporate parent had taken on new urgency, after Corning extricated itself from a series of disastrous bets on fiber-optic technology that nearly sank the company (BusinessWeek.com, 10/18/04)> in 2002. Corning executives had sounded Steuben's death knell a few months before. If they couldn't sell the 105-year-old company, it would be shut down. "There were rumors going around," says Max Erlacher, an engraver who first started working at Steuben 50 years ago. "Some people said: 'Maybe they're gonna sell us, maybe they're gonna ship us to China.' "

Reassurance from New Owner

A manufacturing company in the red. The economy in the tank. It's a familiar story today, and the outcome is predictable: Time to get out those résumés. At the meeting, Corning officials confirmed they had found a buyer, a private equity firm from Ohio called Schottenstein Stores. As these things go, though, the news was reassuring: Schottenstein Stores executives said they weren't looking to liquidate Steuben's crystal or to send the plant to China.

Still, the sale takes Steuben away from Corning Inc., which had acted for decades like a benevolent but vaguely disinterested parent. And even though the sale to Schottenstein Stores is complete, Steuben employees remain on edge. The Schottenstein family, after all, made its money as liquidators, buying up bankrupt companies and either selling their inventories or trying to turn them around.

In this case, Schottenstein Stores says it hopes to boost sales by opening new stores and exposing Steuben to newly rich consumers in countries such as China, Russia, and the United Arab Emirates. But if the marketing plan doesn't pan out or if the new owners eventually decide that the work can be done much less expensively overseas—Steuben's 84 unionized workers (of 150 total employees at the division) make nearly $30 an hour after including benefits—those workers could be looking for new jobs in a field with about as much growth potential as the typewriter industry.

How Steuben Became Deadweight

How had Steuben—whose glassmakers' work was once so exalted that U.S. Presidents would present it to other world leaders to smooth over such nasty disagreements as the Cuban Missile Crisis—lost its parent's affection? A better question, perhaps, is how it managed to hang in for this long.

In recent years, Steuben's crystal objects, which sell for anywhere from $125 for holiday ornaments to tens of thousands of dollars for specialty pieces, had become anachronisms, sitting untouched for months on counters at Neiman Marcus stores. Even the presidential gifts became less ornate; when asked what sort of glass had been sent to the White House recently, Steuben President Marie McKee says President George W. Bush "likes baseballs."

Steuben has lost of some of its former glory. But it nonetheless occupies a unique niche. Here in the town of Corning there's a sense of hand-crafted workmanship—and corporate paternalism—that's nearly extinct in today's globalized, Web-connected world.

Old-World Craftsmanship

Corning (population 10,842) is located just south of the Finger Lakes in western New York. It has long been known as the Crystal City; there is, indeed, no getting away from the stuff. At least a half-dozen shops on Market Street sell art glass, and they call downtown the "gaffer district," after the workers who shape the glass. Among other activities, tourists can blow their own glass at the Corning Museum of Glass or visit the Little Joe Tower, where workers used to stretch hot glass 196 feet and cut it to make thermometers. "If a city has a heart, Steuben is Corning's," wrote master gaffer Jeffrey Babcock in a letter to Corning's local paper, The Leader, in April.

At Steuben, the danger and difficulty of creating art out of molten glass fosters deep camaraderie. Workers with an average of about 30 years experience with Corning rush through the plant with 1,200-degree glass drooping off of steel poles. Heating the glass too long or cooling it too quickly can mean the difference between a $10,000 piece of art and a worthless, distorted glob.

Steuben is named after the county where it is located. Founded there in 1903 by Thomas Hawkes, who owned a glass engraving company, and Frederick Carder, an English glassmaker, the company was sold to Corning Glass Works in 1918. Carder had become famous for making colored glass pieces in every shade from green to gold, but Corning changed the mixture, pouring and blowing lead-infused glass into crystal stemware and ornamental pieces. The result was a flawless clear glass that appeared to create its own light from within.

Steuben glass became a popular high-end gift for departing executives and visiting dignitaries, and the company started to gain a reputation for artistic excellence. Artists such as Henri Matisse, Georgia O'Keeffe, and Salvador Dali designed pieces for a glass exhibition Steuben put on in 1940. Steuben pieces delight in whimsy; One famous piece depicts an ice fisherman plunging a spear into a crystal frosted over to look like ice; beneath the ice, the spear reappears in the clear crystal


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