Rubbermaid, Irwin Tools not giving up research in tight economy

Huntersville, N.C. — In a room at Rubbermaid’s testing facility here, just north of Charlotte, a machine opens and closes several trash cans in a rhythmic thump-thump-swoosh, thump-thump-swoosh to test the longevity and strength of the lids’ spring mechanisms.

In another, a technician rotates plastic containers with screw-on caps in a quality control test against leakage. Yet another lab is devoted to deconstructing the competition’s plastic products to their base components, while in a fourth they culture bacteria to lengthen the shelf life of fruits and vegetables in food-storage containers.

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JASON E. MICZEK/Special

Aaron Smith, a lab technician for Irwin Industrial Tools, uses a Vise Grip testing machine at the Newell Rubbermaid facility.

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JASON E. MICZEK/Special

A robot continuously opens and closes Rubbermaid trash cans at a Newell Rubbermaid test facility Huntersville, N.C.

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At this 36,000-square-foot testing center, Rubbermaid and Irwin Industrial Tools, both units of Sandy Springs-based Newell Rubbermaid, along with a third division will have conducted some 2,500 such experiments this year.

For the consumer products giant, which makes everything from trash cans and pens to baby strollers and circular saws, testing and development is the cornerstone, it says, of its efforts to be the leader or near leader in its product segments.

Creativity and research and development are the intangibles of big business. You can’t see the creative process and thinking isn’t something you can touch.

And in a tough economy, with Wall Street investors demanding some promise of positive returns, many companies are under pressure to deliver, even as their sales outlooks remain bleak. Often, to prop up profits, research and development is among the first things to be sacrificed.

Rubbermaid is not immune to the economic environment. In the third quarter, the company posted a 68 percent plunge in profits to $55 million, or 20 cents per share. Further, it warned fourth-quarter results would be lower than expected and full-year earnings would be below the $1.49 per share that Wall Street anticipated.

But the company isn’t cutting research.

“We spend a lot of time looking at consumers and really understanding what they’re looking for,” said Debra Wiesenberger, director of consumer research at Rubbermaid. “Our goal is really to figure out what can we do to make our consumers’ lives easier? What can we do to make things work better.”

Cutting your nose…

That research — which includes studying people in the kitchen, looking at organization of storage containers in the fridge and cabinets, following work crews on construction sites and watching woodworkers use tools — is intensive. But creativity and research experts say those are critical components to a firm maintaining its position in the marketplace, even in the midst of a faltering global economy.

“The very smart companies try not to cut back in creativity and in a down market you actually want more creativity,” said D.T. Ogilvie, who studies the use of creativity in business and is associate professor of management and global business at Rutgers University’s Rutgers Business School.

“A lot of companies, when they start cutting, they cut without strategically cutting; they cut more muscle than fat,” she said.

Part of the problem companies face is that research can take six months at best and 15 months to 18 months for more long-term projects before they bring something to market, said Walter Herbst, director of the Master of Product Development program at the McCormick School of Engineering and Applied Science at Northwestern University.

But publicly traded American businesses are under pressure to improve quarterly performance, so long-term plans get scuttled to meet short-term expectations. In contrast, Japanese companies famously operate under 50-year plans.

“Everyone looks at it as pure expense,” he said. “But the smart guys are still aggressively spending because they know we’re going to come out of this and we need competitive products.”

Newell Rubbermaid won’t disclose actual dollar amounts, but Wiesenberger’s consumer insights budget increased more than three times in as many years. The Irwin division, in addition to its research facilities here, opened design centers in Germany and China.

And it’s not just coming out with new products, Herbst said. Sometimes it means tweaking what’s already in the corporate stable to anticipate trends.

Listening to consumers

That explains Rubbermaid’s launch of its Produce Saver containers earlier this year. Consumers complained fruits and vegetables they purchased would often spoil before they could eat them all. The company tweaked its existing product line to create a container that has vents in the lid and a tray that raises the produce up from the bottom of the container where moisture tends to collect. The result, the company says, is produce lasts about 33 percent longer.

Launched in March, the containers’ sales have exceeded initial goals, executives said, as consumers are redirecting their eating-out dollars toward dining at home and buying more organically grown fruits and vegetables.

Similarly at Irwin, designers say coming up with new products is balanced with modifications to the existing lineup.

“It’s not just OK to say that we invented the first version of something if you can’t keep that meaningful and fresh for the remodeling contractor or the automotive technician on the job today,” said Sue Smith, Irwin’s marketing vice president.

Case in point: the division’s Marathon-branded circular saw blades. With the housing boom of the 1990s and into the first half of this decade, home builders wanted saw blades that could cut faster to build more homes. The company developed a thinner blade, and varied the widths of the teeth.

“So what that does is you’ve got one tooth that takes out just a little bit of material and the next tooth cleans it up,” said John Smith, vice president of research and development of construction accessories for Newell Rubbermaid. The result: a saw blade with a 20 percent faster cutting time, he said.

But as housing construction turned from explosion to implosion, the company last year intensified marketing of a blade with welded tips that lasts up to 50 percent longer, the company says.

“Back in the day it was all about speed,” Smith said. “Today, unfortunately, they’re not building as many homes and everybody is looking at every dollar that they spend and looking to get more cuts for the money.”

Experts say other companies, like Procter & Gamble and Johnson & Johnson, are good examples of firms that don’t skimp on research and are more adept to weathering downturns and therefore better positioned to take advantage of a rebound in the economy.

“Look at the Fortune 500; if you go back 25 or 30 years, many of the companies that were on it are no longer on it,” said Ogilvie.

“The ones that are, they realized that innovation is what’s going to keep them alive and viable. Companies can’t rest on their laurels.”