Category Archives: Employee Ownership News

Can ESOPs Provide Better Outlook for Construction & Engineering Industry?

According to a recent statement from Verit Advisors (C&E Industry Outlook and Company Valuation), employee ownership may be a valuable tool for driving C&E companies during this uncertain time for the industry. Although the industry outlook predicts an increase in infrastructure growth, there are a number of factors stacked against companies in construction and engineering.

Rob Ruszkowski, currently vice president at Verit Advisors, has a background in chemical engineering at S&C Electric Company in Chicago, an ESOP company. He knows first hand how insentives like employee stock ownership plans can drive performance, increase equity, and attract and retain employees.

The article states:

“C&E companies are driving value different ways. Many of the top performing companies have significant employee ownership in the form of options, direct ownership, stock appreciation rights and employee stock ownership plans (ESOPs).”

The National Center for Employee Ownership lists “The Employee Ownership 100: America’s Largest Majority Employee-Owned Companies,” and more than a quarter of the companies fall within construction and engineering, some of which are 100% employee-owned.

Engineering consulting firm, Boucher & James Inc, headquartered in Doylestown, PA recently saw the benefits of converting to an ESOP and announced their new corporate structure on PhillyBurbs.com.

The Bluebook Building and Construction Network, a publishing company specializing in contractor and project information for commercial construction also recently converted to an ESOP to celebrate the company’s 100th anniversary. According to the article at TMC News, an ESOP was attractive to the business because it would “ensure it would live on with the people who helped build it.”

“The Blue Book Network employees now own the company and the ESOP enables them to control their own destiny. With the investment of a little hard work and an unbeatable team of employees, the ESOP will help steer The Blue Book Building and Construction Network into the future!” -Blue Book Network President, Richard Johnson

Casino Queen Becomes Employee-Owned

Casino Queen opened on the East St. Louis riverfront in 1993–the first casino in the core of the region–and was recently bought through an employee stock ownership plan for $170 million. 

Jeff Watson, the Casino Queen’s general manager and president will help manage the ESOP as a trustee. Watson believes his business is the first ESOP casino in the country and the new system will benefit the employees as well as the company, which has been struggling with increased competition and the weakened economy. 

To learn more about this transaction, read the full story in the St. Louis Post-Dispatch.

The benefits of ESOPs are also making prominant headlines. According to a December 28th article in Forbes, “Employees Quietly Emerge as New Force in Buyouts,” experts are expecting more Employee Stock Ownership Plans to buy companies in the coming year. Not only does the ESOP offer tax advantage, layoffs are less likely, and there’s less risk of defaulting on acquisition debt, making it an attractive strategy for retirees looking to sell their business.

Read more on this topic:

Austin Cooperative Summit organized by NCBA and the Austin Cooperative Think Tank (Jan 2013)

The National Cooperative Business Association and the Austin Cooperative Think Tank have announced a Cooperative Summit at The University of Texas at Austin to “facilitate the exchange of best practices and cross-sector learning among cooperators and to strengthen the local cooperative community.”

Benefits of Attending

  • Share common best practices and innovative approaches on key issues
  • Identify challenges and opportunities that exist in the co-op community
  • Develop relationships and network with cooperative leaders across sectors

Who Should Attend

  • Cooperative leaders, board members, staff and supporters
  • Regional representatives from all co-op sectors
  • All those interested in learning about the cooperative business model

Friday, January 25
Reception/Exhibit Showcase & Introductory Panel
Vuka Co-op
7 – 10 pm

Saturday, January 26
Cooperative Summit
The University of Texas at Austin
8 am – 7 pm

Registration & More Information

Employee Ownership in the News: Companies Achieving Goals

New and old employee-owned businesses are making headlines as they help companies reach goals and overcome obstacles.

In Peoria, IL, Muir Omni Graphics, a family-owned manufacturer of industrial graphics wanted to reward employees for working hard to make it through the tough economy. Marry Sutton, Vice President and Owner, explains, they choose an ESOP “to retain the culture and the personal attention provided to our customers, suppliers and partners. The ESOP allows the perfect structure for retaining our service-first, caring culture and positions us for growth.” Read more on the Muir Omni Graphics webpage.

Likewise Joe Luekin, owner of Lueken’s Village Foods in North Dakota, wanted to retire and travel the world with his wilfe while also rewarding his employees. Based on his belief that his employees are responsible for his success and deserve to reap the benefits, he recently opted to transfer ownership of the business to the employees despite multiple offers from independant chains. He stated, “You can’t always take. You also have to give back.” Read more on this story from the StarTribune

Earlier this year, independent publisher, Chelsea Green, also chose employee ownership over other options. Margo Baldwin began transfering the company over to employees on July 2 because it aligned with the democratic culture already alive in the company. Not only are employees reportedly “very pleased” with this decision, the company is flourishing because of their ability to stay ahead of the game. See the full report on Truthout.

 

Studies Continue to Find that Employee Ownership Can be a Boost to Companies and Employees

Earlier this month, employee owned company Automated Packaging Systems of Streetsboro, Ohio, was rated 8th among the Top Work Places in Northeast Ohio for the second year. According to the news release on the company’s website, “Automated Packaging received feedback that employees feel like they can make a difference, they do have an impact on the company’s success, and they feel appreciated.”

As these articles suggest, this is one of the many benefits employee ownership can offer a company. 

Christina Nelson, Managing Editor of the Journal of Financial Planning, also blogged earlier this month about how an ESOP can be a “Relationship Builder” in a company, and is especially beneficial for companies with retiring owners. You can read her post on the Practice Management Center Blog for more details. 

Loughborough University of Leicestershire, UK, also published the results of their own study into the impact of employee share plans. Among the results, the university found that “employee share plans can deliver positive outcomes for employees and employers alike — even during financially challenging times.” Read more about the resuts in this article from HR Magazine.

Employee-Owned Businesses Reaching Milestones and Voicing Importance of ESOP

In these recent announcements from the ESOP world, the importance of employee-ownership is highlighted as companies reach milestones or prepare for transitions: 

On September 10, Stow-Glen Retirement Village of Stow, Ohio announced the celebration of their 2nd Anniversary of 100% Employee Ownership. The retirement village, home to more than 300 residents, became 46 % employee owned in 2000 and the employees purchased the remainder in 2010. The employee-owners spent week celebrating the milestone with a OWNER-BINGO game developed by the OEOC and an ESOP dinner. 

Oswald Companies of Cleveland, Ohio has announced that current chairman and chief executive officer, Marc S. Byrnes will be succeeded as chief executive officer by Robert J. Klonk effective January 1, 2013. The employee-owned company was founded in 1893 and is currently among the top 55 largest insurance brokers in the US. The retiring chairman reports that the new leadership is “committed to employee-ownership and remaining privately held. That alone distinguishes us from our competition and gives Oswald the client-focused outlook to keep building on a 25-year period of exceptional growth as one of the premier brokerage and consulting firms in the country.”

The St. Louis, MI electrical products distributor, Graybar, also announced a change in leadership. Robert Reynolds Jr., executive chairman of 40 years will be retiring and Kathleen Mazzarella, current president and CEO will succeed him as chairman of the board. Graybar is a Fortune 500 company and is one of the largest employee-owned companies in North America. The article quotes the retiring chairman saying, “Graybar is a remarkable employee-owned organization, and I am grateful for the opportunity I have had to lead the company.”

A new ESOP was recently created at GLMV Arcitecture as stockholders sold their shares to the GLMV Employee Stock Ownership Plan. This transition created 120 new employee-owners at the Wichita, KA based company. GLMV Chairman, Bill Livingston, believs that the ESOP will give the company a long-term edge over the competition. 

For all of these businesses, Employee Ownership is an integral part of their business plan. Recent studies by the Employee Ownership Foundation as reported by The Business Journal shows that companies with an ESOP saw a financial upturn last year and experienced improved productivity. The artical quotes Michael Keeling, president of the foundation, “Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment.”

Employee-Owned Bimba Manufacturing selected as tour site for AME Conference

On October 18, 2012, participants in the Association for Manufacturing Excellence (AME) Conference will be given a tour of Bimba Manufacturing and introduced to the company’s manufacturing processes. Bimba, located in University Park, Illinois is a 100% employee owned company and provider of actuators used in machinery and automation. Part of this the tour and demonstration for the AME Conference will be an introduction to the company’s employee-ownership and engagement structure.

According to the article on MarketWire, Jim Umland, Director of Operations said, “this will be a great opportunity for Bimba to showcase the lean processes that empower our employees and position as an industry leader.” 

Congratulations to Bimba for being selected for this opportunity. 

Rutgers announces recipients of the 2012-2013 J. Robert Beyster Fellowships

Four new scholars will be joining the members of the J. Robert Beyster Fellowship program this year. The members of the fellowship are identified as the most distinguished and talent researchers in the study of workplace issues and company success.

Congratulations to the 2012-2013 J. Robert Beyster Fellows;

  • Michael Bikard (Ph.D. candidate at the MIT Sloan School of Management)
  • Tony Fang (Associate Professor at York University)
  • William C. Gerkin (Assistant Professor at the University of Kentucky)
  • Danny Yagan (postdoctoral scholar at the Center for Equitable Growth at the University of California Berkeley.

For more information on these scholars and their research as well as information about the J. Robert Beyster Fellowship Program and the Rutgers’ School of Management and Labor Relations, view the full news article available at PR Newswire.

According to Forbes contributor, Spock would have hated ESOPs?

“Sometimes logic doesn’t make sense. And sometimes the illogical is the real deal.”

This thought occured to Forbes contributor, Steve Parrish after speaking with an ESOP expert. Parrish, with more than 30 years of experience as an attorney and financial planner, explains that not all features of ESOPs appear logical on the surface. 

Among the (il)logics discussed are;

  • “The tax code is your friend.”
  • “You can borrow to fund your pension.”
  • “The best way to keep your business is to sell it.”
  • “1 percent plus 99 percent = 110 percent.”

According to Parrish, these factors are what make ESOPs a compelling finance, retirement and exit tool for business owners. To follow his (il)logic, check out his article “Spock would have hated ESOPs, but Spock never owned a company,” on Forbes

Boosting Productivity & Profitability while Retaining Jobs: Spinnaker CEO on Employee Ownership

In a recent editorial for the Cleveland Plain Dealer, Louis A. Guzzetti discusses his choice to set up an ESOP at his $100 million, Troy, Ohio based company.

Guzzetti recently sold 100% of Spinnaker Coating to an ESOP trust “created for the benefit of all current and future employees.” By creating an ESOP, Guzzetti hopes that Spinnaker, a pressure-sensitive lablestock manufacturer with 250 employees, will continue in their tradition of outstanding customer-service while providing employees with enhanced financial security and a personal stake in the company’s success. 

Other benefits that influenced Guzzetti’s decision to create an ESOP include tax code provisions which will allow his S Corporation ESOP to “avoid double taxation of their earnings,” and create a more resilient company. He also hopes it will unite management and front-line workers.

To read Louis A. Guzzetti’s full editorial, click here