Since 1985, man hours per ton of product manufactured at AMERICAN have decreased by 44 percent. The main reason for such increased efficiency is that AMERICAN has become a high-tech company with highly trained employees. A lot of our sophisticated equipment is designed such that employees have to be better skilled to operate it effectively. AMERICAN has always made it the highest priority to constantly improve our performance. To that end, extensive company training programs are ongoing. At any given time, roughly 40 percent of our employees are enrolled in technical training of some kind or another in one of eight classrooms on our premises. These classes are aimed at meeting two primary objectives: one, to offer training that provides skills required in an employee's current job or a job to which the employee aspires and, two, to train apprentice program employees. The apprentice program lasts for four years and requires four hours of training per week plus 8,000 hours of on-the-job training. Most of our production supervisors began their careers as apprentices. Our other training programs focus on numerous areas of importance. A few of the many courses taught are blueprint reading, troubleshooting electric motors, welding and burning, and American Production and Inventory Control Society (APICS) modules, which are intensive courses focusing on inventory and materials management. Because our operations include more than 900 computer devices, training in such areas as computer keyboarding and application software has become vital. Instructors for our courses are seasoned pros. They include retired and present AMERICAN employees, business school professors from area colleges and universities, and other experts in their respective fields who thoroughly cover the assigned course topics and their applications in the workplace. For example, a course designed to develop supervisory skills includes a good deal of role playing in which the trainee must deal with real-life situations. Here, employees are taught such things as how to give effective instructions -- what to say and how to say it while assigning tasks. They are taught listening skills and how to work in a group. They're given tips on how to write effective internal memos -- all within the parameters of getting the job done the right way in the real world. Our overall approach at AMERICAN is based on teamwork in which the individual's importance is emphasized. On the other hand, we expect performance from our people. Does it work? Does it ever. The turnover rate at AMERICAN is less than 1 percent, compared with 10-15 percent in the manufacturing industry. Thus, we maintain a highly experienced work force while being very selective about new hires. And believe me, people want to work for AMERICAN. When we advertise job openings for manufacturing positions, we receive literally thousands of applications. It reached a point where we simply could not manage such a selective process on our premises. For the past dozen years or so, we've asked the Alabama Department of Industrial Relations' Employment Service Division to make our hiring announcements and do the initial screening of responding applicants. The screening is tight. Prior to an interview with us, applicants for manufacturing jobs must take a dexterity test that evaluates their hand-eye coordination. After they are referred to us, even their behavior is evaluated to ensure that those whose personality and attitude are best-suited for work in our plant are the ones we hire. From January 1995 to January 1997, 4,750 people applied for manufacturing jobs at AMERICAN that were advertised through the State Employment Service. Of those, 515 were referred to us by the State for interviews. Of those 515, we hired 125. So, on average we hire one out of 38 job applicants. Once someone makes it through our search for the best, they usually stay with us. Our average tenure of employment is 19 years, which, of course, means that we're making your pipe and other products with experienced employees, many of whom -- because of training opportunities -- are increasing their skills along the way. And each of these employees has an ownership stake in the company, which further encourages superior performance. I've said this before and I'll say it again: I would put our work force up against any in the World. When our sales engineers make their calls, each of them knows that they are backed by the most-experienced, best-trained manufacturing group in the ductile iron pipe industry -- and the first one in North America to become ISO-9000 certified. I would imagine that makes our sales personnel more confident when they make a call. I know for sure it makes me feel better. Van L. Richey President & Chief Executive Officer

Van L. Richey President & C.E.O.