Employee Ownership, Strategic Sectors, and Supply Chain Resilience

I'm Adria sharf I'm an associate director at The Institute for the study of employee ownership and profit sharing at the Ruckers University School of Management and labor relations and we are so pleased to be co-hosting this second annual employee ownership ideas Forum together with our really incredible Partners at the Aspen Institute economic opportunities program having participated in some of the planning conversations it was just extraordinary this morning to listen to the richness of the morning panels um I am excited to continue and I think we'll probably pick up on some themes that have already been surfaced um so far today um with this next session on employee ownership in strategic Industries and supply chain resilience and we have with us here today A really extraordinary panel of company leaders all leaders of employee owned companies um who I'll introduce in just a moment but this this sort of idea of the relationship between employee ownership and the importance of strategic industry and supply chain resilience those ideas are sort of are critically important but they're kind of underexplored what the specific relationship is um between employee ownership and and these very important important Concepts we've learned as a society over the last several years you know the consequences of supply chain fragility for our public health for our economic functioning for our national security and I think there's a growing convergence of of an understanding of the absolute importance of our investing Society in our critical Industries and protecting supply chain resilience um and each of these extraordinary panelists will help us kind of learn about the role of employee ownership in the context of these Concepts um here today by sharing their stories and experiences so I going to introduce our panelists again all leaders of employee owned companies and I'll start um closest to me here with MOA hila CEO of Apex underground and president of sky blue Builders so leader of two employee owned companies and then we have Rick Plimpton CEO of optimax Systems Incorporated Joey neard CFO of schwitzer engineering Laboratories and Maryanne Fuller CFO of Columbia chemical welcome thank you all so much for being here so I think um we're going to start just by inviting you all just to introduce yourselves introduce your companies kind of your approach to employee ownership just a couple minutes each and then once we kind of have that shared background sense for one another we can kind of dive in more specifically to the to the topic so Maran maybe I'll start at the end with you sure uh as Adria said my name is Maran Fuller I'm CFO of Columbia Chemical Corporation uh we've been around for about 50 years just about to hit our 50th Anniversary um employing about 40 employee owners in Cleveland Ohio so I'm probably representing the smallest um esup here today but we're small But Mighty um from our Cleveland Ohio office we uh sell throughout the continental US and into 30 different countries um so found about 50 years ago family run business um after the second generation was ready to exit um we explored the concept of employee ownership uh we're very fortunate we've talked a lot today about the importance of State Centers in Ohio we have one of the oldest State Centers located right in our backyard and our um owner the the second generation owner was humble enough to know and recognize that the employees built the business uh he may have been fortun enough to lead it but it was built on the employees hard work so we started our eastup transition um 20 years ago this year as a partial ESOP and now we've been 100% ESOP since 2011 uh Columbia chemical manufacturers um chemistry that is sold to plating shops to coat metal uh primarily steel but getting more into aluminum as the market shifts a little bit uh primary function is for rust prevention but also to give it a specified appearance we do about 50% of our business within the automotive industry um our customers plate the interior and exterior parts of cars things like headrest seat belt buckles brake calipers General Fasteners that go on the car um we're considered a tier 2 tier three supplier but we do get the privilege of working directly with some of the automotive manufacturers because our industri is run on specifications and approvals uh so we have direct contact with all the major automotive industry uh leaders the rest of our business ends up in uh medical equipment agricultural equipment um Furniture appliances anything basically metal that you want to stop from rusting Mar and thank you Joe Contin down the right hi my name is Joey negard I'm the CFO of schwitzer engineering Laboratories we're uh based in Pullman Washington we have about 6,500 employees in about 100 offices around the world about 5,000 of those are in the US 4,400 or so are in the ESOP um this is our 40th year and our 25th year of being an ESOP and 15 years of being 100% employee owned uh we make products for all utilities and large producers and consumers of power uh all over the world Rick hi uh Rick Plimpton thank you for inviting me to be here today um I'm the CEO at optimax we manufacture Precision Optics for research and Industry and just give you an idea we're a key supplier to NASA pretty much anything they've launched in the last 30 years has optimax lenses on it it's wonderful to be part of their success with all the Mars rovers and New Horizons that went out to Pluto and many other missions um another sector that we serve is semiconductor industry about 40% of our revenue is historically making optics for Semiconductor machines and and inspection tools um maybe you've heard of the chips and science act that went through our chips Science and Technology act uh Promises to Keep Us busy for many years uh to come as they build out these new uh foundaries or factories here in the US to manufacture semiconductor chips domestically um our journey uh into an EO uh we actually did eot an employee ownership trust it started about 10 years ago when my partner and I were trying to figure out what succession plan was going to look like for us because he's 10 years older than me he's so he's 70 and uh I'm 60 years old now um and when we were looking at what are the important things about you know transitioning uh leadership at optim we want to make sure that we didn't disturb the culture too much we've created a culture of open book management for 30 years we've been sharing profits with our employees and we didn't want to see that get disrupted um want to make sure that leadership remained local and that whatever we chose for succession planning at least laid the foundation for decades of prosperity and we we chose a 100 years as our objective who knows what the world's going to look like in 100 years but we ended up with uh developing a Perpetual purpose trust and I'll talk a little bit more about some of the tenants of that and some of the important uh things that we put in place let me test oh you can hear me um thank you for having me here uh moila president of uh sky blue Builders and CEO of Apex underground uh because having one job sucks um I am extremely humbled hard to be here um I am ownership I'm an example of it and the reason I say that is my story I'm originally from East Africa escaped war came here in December 18th 1981 uh left a world that was of brown Earth and brown people I land in Denver uh Colorado December 18th 1981 you guess yeah you figured it out right and so to to come to this country and have this opportunity and I think uh uh Barack Obama said President Obama said it best when he said only is my story possible in in in America and so to have this opportunity to be here with you guys today is is just truly amazing and humbling um to the the opportunity for ownership I got to learn that early on when in my corporate career uh with stock ownership uh strike price and all those kind of things that I had no idea about growing up right cuz I just didn't have that opportunity to learn about the stock market my parents were immigrants working two to three jobs each to try to make it work for for us and so I am the example of the possibility of of ownership and so uh when I started uh sky blue Builders back in 2009 I knew that my goal was to eventually have the employees have that same opportunity to own a piece of the company and so back in uh 2022 I started selling portions of my ownership to to my employees not through a uh ESOP program but I just started selling ownership to some of my employees and then I read about apis and Heritage Capital converting Apex underground to ESOP owned and this was on The Denver Post what C my attention was there's this firm Apex and Heritage Capital that was a social impact private Equity Firm which is kind of an oxymoron but I was like okay let me test these guys out so I reached out to them and you know after meeting with them or what they were doing it just I was very impressed the impact ownership has in this country is profound and so between sky blue Builders um and Apex you know we have um 140 or so employees uh but I always multiply it times four right so that's 550 people that were impacting because you're talking about families so a CEO you it's not just one employee you think of them as four and so that impact is huge and somebody mentioned earlier the wealth um that provides and the generational wealth that it can have it's profound and so just between Apex and and sky blue Builders that's 560 lives we going to be impacting for not just years to come but generations to come so again thank you for having me here um I appreciate the opportunity to speak to you today MOA thank you for sharing um let's start digging into the question of kind of supply chain resilience and critical industry and Joey I'm going to start with with you we've all heard horror stories about the the risks involved with weak Supply chains with with fragile Supply chains can you talk a bit about your experiences with Supply chains resilience and how employee ownership kind of fits into how you think about it sure so we we make products for the electric power industry so uh if you think about the last few years there was some some industries that just couldn't make product and that was not an acceptable answer for us because our our products keep the lights on and protect the power system um so for years we've been trying to onshore as much as we could um our our products are complex uh they use they electronic devices uh computers if you will uh to protect the power system so uh coming out of the pandemic we started to see lead times expand so we we've always used inventory as our friend which which is counter to most uh business school perspectives um but we also realized that we couldn't wait for suppliers to give us parts so at one point we had about half of our R&D group instead of doing Innovative things they stopped what they were doing and designed out components we couldn't get for things that we could just so we could make sure that we could continue to ship and delight and serve our customers and we didn't have to like push people or rally everybody because we have we have something called Friday lunch uh we have people all over the world but we have lunch every Friday where we talk about how we're doing every new employee gets introduced I do a financial update and and a lot of these things and we could talk about hey this is what's happening in the company we need to we need to act and people worked weekends and holidays to do the right thing for our customers um and we we started to vertically integrate probably 15 years ago uh heavily we uh built a printed circuit board Factory uh with employee owner dollars not taxpayer dollars uh in the United States so that we wouldn't have to buy things from China so we've tried we've tried everything and we'll continue to look at ways we can bring things onshore or closer to home uh and we're organizing people to do those things and have been for some time really interesting thank you and I think the what you just said about your the flexibility and the willingness of your employees to kind of lean in at that critical moment echoed and resonated with some folks on the earlier panel said just before lunch with Molly hemre and Jenny from hyperm talking about that the way that employee ownership can can provote that kind of employee commitment and willing to be flexible and to really lean in and we used Friday lunch to acknowledge those people and thank them for the this the sacrifice and and we've had people go up and help in manufacturing to go up and and work through backlogs so that we continue to to meet supply chain challenges it's been pretty remarkable nice thank you Maryann you've had some experience with the challenge of meeting the needs of customers during the pandemic would you share a little bit about that and how employee ownership factors in sure so you know the AR arcade game when you're a kid where the little mole pops out and you whack it you feel really good about yourself for about half of a second and then another one pops out another one that was kind of our experience throughout the supply chain um kiding kiding aside we we dealt with price increases we dealt with stockouts we dealt with uh being put on allocation where um you know we normally need 20 drums a month and the supplier has two uh allocated to us and we we dealt with just where they just decided critical raw materials were no longer being manufactured um so it was two years of fun for us but uh we had a similar approach to what what Joey was saying um we actually we compete on customer service and one of the um key components of that is our speed of shipping uh where the industry standards a week or more ours is 48 hours or less um often we gain new business because somebody else can't ship something it's a high cost of changing in our industry but when somebody's backed into a corner they do what they got to do and that's where we gain business so we often ship in 48 hours or even same day next day to keep customers up and running um so prior to the pandemic similar to what what Joey was just saying we had to look at our supply chain and build our model around that uh we we looked for domestic sources that were close by had a one or two day transit time we're willing to keep material on the floor multiple sources um we really got to know our suppliers and we leaned on that during the pandemic um to to get us through with certain a challenging time I think employee ownership played a big part in that um that effort which started in 18 and 19 was Employee Leed from the bottom up it wasn't a a corporate initiative it was our employees recognizing um that the company is built on the customer service and that comes with the transparency and accountability that esops create so I think that helped um doesn't mean there wasn't hiccups during the pandemic um even with the best preparation it was whacking that mle all day long um the department really came together you know when you have a normally run company of people looking at their own 10t in front of them but when you have 40 employees getting in a room and fighting fires together um you really you can solve problems um things just went so much smoother because we were employee home definitely thank you so Rick you mentioned supplying NASA you work on some pretty sensitive Optics technology and I know that your company also provides very high quality good jobs um can you speak about the employee ownership trust and how it supports both yeah um so I'm just a foundation I'm from Rochester New York it's a home of Kodak and Xerox there's a lot of small businesses in our region that have really Innovative technology that they've used to create value in the marketplace um and it's not unusual for big conglomerates to come in and try to B buy up these little companies to take the technology that they're interested in and with optimax we were founded in 91 in a very small way we're kind of carrying on that Legacy of Kodak and banom of manufacturing Precision Optics here in America and we didn't want some multinational conglomerate to acquire our company and just totally you know take what they want and and oftentimes the local Rochester company just gets shut down and we lose hundreds of good jobs in our community today optimax employs almost 500 employees and like I said we uh a lot of what we make is used in the semiconductor market so let me kind of use that as the basis for um talking about supply chain we're a key supplier to these big corporations that are in the semiconductor market and every week for several years I've been getting offers to buy the company and we always reject them when we converted to an eot in 2020 I went out and talked to some of our top customers and I told them about the new corporate structure that we had that there's a Perpetual purpose trust that now owns optimax and optimax is 100% owned by the trust and one of the tenants of the trust is that optimax could never be acquired and I really didn't know how they were going to react to that but the beautiful thing is many of them reacted very positively because they were fearful of when optimax was going to be acquired and how that was going to compromise their supply chain and now that they know that they can partner with us for years and years for decades some of those custo some of those same customers are now investing in us they're buying very expensive equipment and putting it in our facility and building stronger relationships with our engineering team and our and our manufacturing team and that's a really beautiful derivative outcome that we did not expect expect Ling thank you for sharing that so MOA let's talk about both of your companies could we start if you're willing with with Apex underground um I understand that you're working on some water and pipes in the Denver area could you speak about how employee ownership helped you win that contract and how it's helping you execute on it yes um absolutely um so at Apex underground uh Dumber water is replacing about 880,000 Le service lines these are residential lines um if you guys aren't aware the EPA is mandating uh that every city and every water district by I believe 2035 or 2040 don't quote me on that they have to replace all the lead Serv service lines they've set aside $15 billion to do this and so U Apex went after the these contracts with dember water uh for two years they they didn't they didn't win it after the conversion to ESOP and I I'm I'm not going to just say it's because of ESOP that all these things happen but I think the team effort was there so after the conversion the team went after the contract it was a three-year $25 million and we won it we sharpened our our pencils were strategic about the RFP we made a big note of the ESOP and the old employee ownership and so all of a sudden we were going to D or almost double our Revenue in one year because of this contract our HR Team all of our folks we had to hire 25 people within two months get them trained so you can imagine the level of effort that takes I have never seen anything like this we got him trained and now we're Denver wat's number one contractor we're replacing five to six water lines a day and beyond that when we talk about the supply chain the team took it on themselves to say hey I think we can take the drilling on internally instead of subcontracting the work and it made absolute sense they did the numbers they did the math and it made sense now they're looking at taking over the traffic control so we're taking that in-house again the team is taking it on themselves because they are the owners at the end of the day right and so so now they keep surprising me it's it's truly as a CEO to not be the one that's like hey I got to think strategically the team is mentally there in terms of employee ownership and it's only been a couple years and now we're teaming with a software company that helps cities uh find if they have lead in their line in their lines right they're they're doing poth hauling investigations and tracking this in a software system the team went to a software company and now we we presented to Colorado Springs how we can help them prepare for lead service replacement lines and so all that to say what we've done over the last year and a half has been employee Leed more so than I've seen it it doesn't it's not coming from the top down it's really a holistic approach where the team's coming up with these amazing Solutions thank you so turning to Sky Blue Builders which is the company that you founded and you shared a minute ago your kind of personal story about the importance of ownership and kind of your motivation to share ownership with your employees that was beautiful um I guess could you share a little bit more about employee ownership at Sky Blue Builders and how you see employee ownership kind of supporting your where you envision the future for the company yes um so as sky blue um it's been three weeks since we converted to employee owned weeks three weeks so um thank you uh uh we just made the announcement right now um um so we have uh we're at 45 employees um and so not not a huge company uh but it was interesting story in terms of last year uh early in 23 we were approached to sell the company to somebody else and we went through an eight-month process we signed a letter of intent the company was going to be sold to a larger business um and so thankfully uh A&H stepped in to uh help us convert it to an ESOP instead so we terminated that agreement uh that whole time it did not feel right just because we had employees that were with us for 10 years or longer and so the future of sky blue and what was going to happen to it with all these employees that helped bring it to where it is today it just didn't sit right and so with that conversion uh it's great to see that 45 employees are going to own it and the beauty of it is you know the company's going from about 20 some million a year in Revenue we're at 50 million the next three years because of our backlog that we have with airport infrastructure work that we do so if you guys don't know Denver International Airport is the third busiest airport in the world and so that type of work we're doing kofax brt which is a transit system it's about a $30 million contract and so the team's taken over at a very opportune time uh and so for all of our 45 employees to be able to enjoy in that ownership is is is absolutely amazing congratulations to all of your employee owners very very exciting um Rick tell us more about the future of optimax where you see it going how employee ownership figures into the Future Okay so let's go back to We Run The Company open book um for almost 30 years we've been sharing profits with our employees and just to give you a better picture of that at the end of each month we close the books and within a few days we figure out how much profit we made and we give out 25% to our employees and it doesn't matter if you're the janitor or the president everybody gets the same check at the end of the month for the past several years the average monthly bonus check is over $1,000 so that kind of frames it a little bit for you so you know in in my opening remarks I said one of one of our goals with uh succession planning was not to destroy the culture and obviously if some big conglomerate bought optimax first thing they do is cut off our bonus plan no company gives away 25% of their profit right off the top to their employees um this is the sound bite I like to give to politicians it'll come out and meet with us and and take a look at what we're doing in the first 30 years of optimax we generated about 500 billion or $500 million in revenue and roughly half of that was shared with our Workforce through payroll benefits and bonuses so $250 million given out to families in our community where they spend it at the grocery store auto dealership save a little bit for retirement with the growth path that we're on even a even a uh conservative growth path over the next 30 Years optimax will generate over5 billion dollar in Revenue where 2.5 billion of that is shared with our Workforce creating Financial Security for the families that we support and strengthening our community and if we can get even 10 more companies in our community to go the eot route or the and or esap either way it's a different you know EO there's different ways to solve the problem or or to create a solution for the organization I don't I don't believe there's a silver bullet that works for everybody or for every company but to have these hybrid solutions that can be used to strengthen communities Across America I think is an evolution in capitalism that's much needed here in America thank you Joey you're next I know Schweitzer is succeeding thriving growing tell us um what lessons you think there are in terms of employee ownership playing a role in a company's Innovation and growth path I was smiling when you guys were talking we're a small company we're a small company so I started uh 22 years ago and we had 550 employees and through purely uh organic growth we have 6,500 when we became an ESOP in 1994 we had about 25 to 30 employees so you know it just feels growth right and so we do some we have we do everything from inventing designing manufacturing selling supporting our products so we have Engineers we have uh direct labor folks and we we talk about Innovation from all of those aspects and including things like you were talking about the employees they come up with the ideas that that spark things we've been doing all of these vertical integration activities and it's usually because somebody has an interest in making something that we buy from somebody else that maybe it's hard to get or it's low quality uh or it's from a far away land and it doesn't need to be um and and another thing we we use what's called worldclass manufacturing principles and it empowers the people on the production floor those closest to the work to solve problems uh try new things uh not be afraid to to uh fail small reversible experiments and those are the things uh our our head of our Factory says it's it's heartwarming when you walk out on the floor and something has changed from the last time you went out there and nobody asked your permission to do it they try it works and it's ended up we we now have 5day lead times to make high quality Hightech products at a low mix a high mix low volume in the United States so it's uh it's those sorts of things when you Empower people uh truly makes a huge difference thank you um Maryann I know you're in a tough industry where there's been a lot of selloff can you talk about how you've maintained your Independence um share some of of that story sure so our industry has been consolidating in recent years um there's a couple major players that have taken the initiative to buy out a lot of the smaller companies um we we've taken the strategy of staying in esap um it's definitely where we expect to be in the next hundred years um but one of the interesting Acquisitions that occurred um probably about two years ago the the largest player uh decided to buy out um a fairly good-sized company but one that kind of competed on customer service not quite it's not quite ingrained in their culture the way it is at Columbia chemical um where it's our core values and kind of our our competitive Advantage but they did have a customer focus and this particular acquisition they did it so that they can buy out a monopoly I mentioned our Automotive sector runs on approvals well one way to get more work through approvals is to buy out the other person on the approvals and now you have a monopoly um but it doesn't work so well they paid they paid a a huge premium for it and what they found was um customers weren't happy they they missed that um customer service Focus so we're we're Landing a the shake out of it is landing us a lot of business uh we had pretty aggressive growth goals to begin with and now we're uh those are accelerating so I'm excited to see what kind of wealth we can build in the next a few years for our employee owners we have a young Workforce I think we'll have our team in place for many years to come um and we're also looking uh to go on the the other side and start acquiring people uh we mentioned I mentioned earlier minding to shore up our supply chain uh we've got a great uh plan in place for some vertical integration and that we can you know if we if we need to have that speed of service on the supply chain part of it might be buying into joint ventures or acquiring our our um supply chain uh so we're definitely going to look in that in the future we've done a few small Acquisitions um but we just waiting for those to fall in place interesting thank you um let's see here um the the topic of resore ing was brought up maybe by Joey a a few minutes ago um but let's just turn to that for a minute and and this may be a question primarily for Joey and Rick but everyone is welcome to chime in can you speak you know there's can you speak about reshoring in other words kind of the idea of the importance of bringing critical industry critical um pieces of a supply chain back into the United States um and I'm curious to hear maybe first from Joey and Rick and then also from MOA and Mariana if you have more to add um on this topic of reshoring and its connection to employee ownership so we we've tried to use so we take great pride in being a US manufacturer right and um our customers rely on us for for products and so we want to make sure that we can deliver and the longer the supply chain the harder that can be right uh and we learned many of those things during the pandemic where we thought we had done a really great job and we hadn't um so we we've been trying for uh uh as long as I can remember and I've been there 22 years to bring components closer to home uh and we we actually organized a group uh whose job it was was to identify Parts based on risk and how they could bring them closer to home whether that was working with uh another manufacturer to bring them uh from Europe or or wherever um or whether we need it to vertically integrate and uh be being an ESOP uh founded by an engineer who's never taken a business class in his life who's a business genius though you know he he is uh he is an anti- Jack Welch person and he instead of uh when and doubt ship it out he says uh with a grin bring it in um and so we've we've really embraced that and uh we get high quality high quality lowcost products that our employees are excited to make things you might not even think of sheet metal Parts uh possibly even screws uh printed circuit boards you name it we're trying to do it Furniture everything so when I think about reshoring um let's let's stick with the chips act analogy Intel got an award through the chips act about two weeks ago 8.5 billion sounds like a ton of money but for that 8.5 from the federal government Intel committed committed a hundred billion doll and that's to build four new factories in the US I forget exactly which states they are New York was not one of them I was a little disappointed um reshoring can be crazy expensive and and it's not going to happen without support from the federal government I'll give you another example from my industry the Precision Optics industry in the early 1900s when the US uh ended up in a World War uh we were cut off from the supply of Precision Glass from Germany and so the federal government went around to select areas Rochester was one of them and convinced companies to well actually provided financial support for companies to stand up foundaries to make Precision Glass here domestically unfortunately all of those foundaries have been shut down so here we are in this Century where Optics is the enabling technology and Precision Optical glass is so critical to so many of the things that we use every day including our cell phones um and and medical instrumentation and all sorts of other things and yet we we are not making the fundamental raw materials that are needed to support that industry here on our soil so um I'm not sure how to tie this back to EO to employee ownership I think I got lost there but that's a pet peeve that I have I all right I'll say this employee owned companies tend to be much more Innovative than than command and control companies and we've experiened this over and over at our company at optimax be and the reason is because in employee owned Country Companies more a greater percentage of the employees are engaged in trying to create solutions that help grow the company help create jobs and and help create greater um Financial Security for for the company and their and their families thank you for that Tada any other thoughts on reshoring MOA Maran anything I'll just add um in addition to what we've talked about already with um you know having control of the speed of service because you've got your supply chain close to home um we found great benefit in the quality um in having your materials manufactured in the the us our industry is battling um you know raw material changes are causing things to behave different in the chemical baths um so we've actually brought in some of the reactions that we would previously Buy um either from us sources or even overseas uh from China we actually manufacture it inhouse and we've brought that part of our supply chain inhouse um done some Innovative things led by our employees in terms of the reaction to not only be able to do it but to be able to do it in an eight hour shift um and be able to create this reaction that not only meets our internal demand but that we can also resell um so we've also we've approached it from the quality side as an advantage as well interesting touched on this briefly already but you know all these incredible examples of kind of um employee Innovation employees willing to go above and beyond and do the kind of almost impossible um to me it it points to the importance of of retention I mean you know if you don't have those workers um retained you don't get those kinds of results and I know the academic research which I'm most familiar with um has consistently pointed to the very strong effects of employee ownership on reducing turnover reducing quit rates also reducing layoffs um and a couple of you mentioned this briefly but I'm curious if any of you could speak to that to to what extent do you see employee ownership maybe not alone but employee ownership as a piece of your overall kind of employment model um playing a role in retention do you find that you're out competing competitors um on retention especially in the context of the great resignation Etc so so uh Michael was here from black and Beach I don't know if he's still here we we actually compete with black and Beach and some other EOP companies so that's sort of levels the playing field uh for that but that tells you something about our industry um I think I'll flip it instead of retention we've been able to hire when the whole world was having Help Wanted signs and and all those things because I think esap companies treat their employees better than non-ap companies I don't know how else to say that we had a hiring event in 2022 we needed to hire 100 direct labor people we had 500 people line up in the rain to interview and we ended up hiring almost 200 people to work on our manufacturing floor when every headline in the on the national press was that you can't find people oh we live in a rural community in the middle of Wheatfields in Eastern Washington so we treat people better than other uh business models I think yeah and I'm um you know fairly new to the to the ESOP World um but I can tell you from uh Apex when we got that demor water contract and we had to hire I think 25 people uh with within two months and get them trained uh and so you're talking about in Denver or Colorado or in the US where you have low unemployment in the three whatever per right and so this was in 2022 and when others were struggling to hire um Apex had no problem hiring um and I also had sky blue Builders at the time so I saw the difference and so the only rational that I could come up with or the reasoning was because of the ESOP we were able to tell employees that they were going to be working for an employee owned company and then of course uh the Denver Water contract which gave you security right in terms of it's a three-year contract so there were guaranteed work as well and so from what I've seen in my short time I think it's very benefic beneficial for employee hiring um and I think retention to but again I'm I'm I'm fairly new to the ESOP world so at optimax um we have a wellness team that makes sure that our employees have a good work life balance they look at things like um Career Development personal financial security emotional social and physical well-being and you know I think it's with with employee owned companies um the employees have greater opportunity to share their opinions or their ideas or their tensions that they're that they're struggling with and for those issues to be heard and dealt with um a few years back Mor invited me to participate on the job quality initiative at the as Aspen Institute and then a couple years later I was invited to work on a committee for the US Department of Commerce and labor that develop developed the job quality toolkit which is a uh issue it's posted on the nist website um but the job quality toolkit provides it doesn't provide answers for Business Leaders but provides guidelines and eight pillars of what it means to create good jobs and that's what it's really all about we want to be creating good jobs and strengthening our communities and um the uh even if you're doing really well by your employees if you take a look at the job quality toolkit there's probably areas that you are doing well and then there's other areas where you could make improvements and it's it's just a good way to do a self assessment and see where there's opportunities for improvement um just picking up on on that we've heard throughout the panel each of you have kind of shared a little bit I feel like how employee ownership kind of fits in the context of some of your other approaches to um management to the employment relationship even operations um with a Friday lunch you know with work family balance Etc um and sometimes researchers were were curious how can we sort of unpack these things because we see how employee ownership on the one hand it can kind of cohere and reinforce all of these other kind of good jobs practices High job quality practices and there's something that employee ownership adds above and beyond for one thing the wealth accumulation um that employee ownership can deliver but I'm curious if anybody else on the panel has additional thoughts on how employee ownership specifically kind of adds value to what is otherwise a high road employment model that you offer a respectful job place um and to what extent does employee ownership kind of create synergies with those other other practices and like if you removed employee ownership what would you what would be missing any additional thoughts and I'm going a bit off script here well I'll tell you with my company for the first 30 years of the company we averaged 25 % Revenue growth per year and with decent Mar with decent margins or profits and about 5 years ago we put in place a younger leadership team and they've been operating the business for five years and they've increased the value of the company by 4X in just five years it's just because of the employee ownership component and them seeing the potential for growth where we were we thought we were being aggressive at 25% Revenue growth and they took it to a whole new level so it was really beautiful to see how when getting the younger team even more engaged in the leadership of the organization was a way to grow the business even faster and it and it was because one of the things I didn't uh anticipate was their sphere of influence is so much broader than the original executive team of just four people and so that that younger team just took it to a whole new whole new level and did having the employe ownership trust helps sort of like amplify their Vision in terms of spreading it out and getting the Buy in of the whole yeah because they knew every they they and all their peers they knew they were going to be sharing and where we were going right right right than you I think because we're in ESOP our employees are really interested in the company and the industry um you know they understand the role we play you know the the connection to our purpose and the customers that we serve uh I think is greater because we're employee own than if we weren't I worked for a software company before I uh worked atal and and was privately held and I couldn't have told you the mission statement or connected with you in the purpose and I remember being interviewed and the the person who interviewed me could rattle off the mission statement and the values off the top of his head I'll never forget that and I think that's because we're employee owned um it's been interesting running two two companies one that's employee owned um and then the other one Scott blue Builders at the time wasn't and so you could tell the difference and just in terms of um at Apex the people were very hungry uh because they were owners they were they wanted to get leadership coaching development they were very engaged in their work and how to improve things they're also more involved in the community because they saw Apex as their company and so whenever we had community events they were the ones that were volunteering more often to represent the company and go out there um and again sky blue Builders is a great company but as much as I try to do in terms of getting them more engaged in the community and Leadership and those kind of things at the end of the day all of more owners right we had five total or six total owners at the time we had 40 some employees and so you can see the difference and the Dynamics when it's at Apex and it's employee owned they're just a lot more engaged across the board whether it's in the business as well as in the community else no I think they pretty much covered everything with that one great fabulous great well let's turn to the audience we have a a few minutes for some audience um questions um anyone you can direct a question to an individual panelist or to the group as a whole um is that Evan back oh I can gra no hold on somebody back there's I think I don't have my glasses on no you don't Mary you start you start okay Mary first and then okay this is really um interesting as thank you it's first of all thank each of you these are great stories and appreciate you taking the time to be here and share um for Rich and Joey what I see as companies grow the challenge to retain that culture and keep that level engagement and avoid entitlement by the employee owners and it sounds like you each have such Rich cultures in spite of your growth I would love to hear your perspective on that yeah you're absolutely right and well we've experienced at optimax about every 120 people we had we really have to buckle down and reinforce corporate culture so we have you know terms of training we have Technical Training cultural training and Leadership training and um it's uh where' you go with the end of that question oh how do you keep it how do we keep it yeah so the the cultural training has been the most challenging and we actually have a c internal in-house we have a cultural Ambassador now that it's her job to just run cultural trainings year round so that at the at the growth rate we have in the size we are are about 50% of us have been withal for less than 5 years right so and that's been that way since as long as I've been there right so it's always been a challenge so we have we we use Friday lunch you know it's it's expensive to get everybody to shut down the production line to get everybody together to share the program to record it have everybody around the world watch it but it's invaluable for uh Dr schwitzer to be able to get up and tell stories for us to be able to get up and tell stories for us to talk about challenges you know we goof up and we talk about it um to talk about our customers and we have to continue to do that uh forever and that you know I'm I'm an accountant by by trade and I spend 98% of my time talking to people so um you but you just have to do that that's that's the focus and that's something we've been been working on for a long time and will continue to work on forever Julian McKinley thank you so much um thanks everyone for sharing your your stories was really crystal crystal clear the uh the impact that employee ownership has had in your businesses I have two questions one one is pretty short um what's the where is employee ownership in your marketing hierarchy is it like you know front and center for you is it something that you're very vocal about as a as a company um not just internally but externally and then I'm curious to hear a little bit about what your competitors are like what what is their response to witnessing your success um and also maybe even just companies who maybe they're not not your competitors but they are within your communities when they see your success are they curious about the structure are they critical um what what are some of the things that you're hearing uh I can tackled the first part of that question I guess um are I wear the HR hat as well um are hiring everything we do is is tied to our company core values we use a program called EOS and entrepreneurial operating system system which works really nice with the esap culture it's all about creating accountability um and driving towards your um your growth goals um so we use that we we do quarterly reviews of our uh employees based on meeting the core values we hire by it we Fire by it um it is so ingrained in our culture um from the day one interview um we have an entire core value we only have four and one's built around um ownership mentality and those up uh intangibles in terms of teamwork and uh we have one on Innovation which we've talked about quite a bit here in customer focus so our entire our entire process is around that we do a lot of uh profiling personality profiling to make sure they fit as part of our ESOP and part of our team um and we started from first interview through the hiring process we involve as many employee owners as we can uh we take them on tours and they talk to our employees and that's one of the things they comment on the most is that your employees really like working here yes that's why we take you around to talk to them uh so you can see that in action right it's one thing to sit in interview and everyone says oh I love my job but when you you see you know you walk around they're excited to tell you about what they do and learn about you as a candidate that's coming into our family um it really it really shines in our interview process yeah we we talk about employee ownership when we interview candidates it's prominent on our website it's on probably every piece of marketing literature we have um so we have we have a few business lines some of them uh services company like B uh Burns of McDonald black and Vach are also esops uh um there's uh our our founder is a third generation entrepreneur one of the other his grandfather's company is also an ESOP also in our industry so there's some some other esops uh that understand the power of being in ESOP um we also compete with really large publicly traded companies and because of the ownership is a value for us one of our nine values and our focus on customers and the the way that we you call a person answers the phone it's not a machine right the the little things that we do to add up makes it so those big publicly traded companies they they can't compete on service and value quality all those things that we hold so they've got to go after price that's how they have to react it's from a marketing perspective it's definitely front and center 100% when we go go after proposals it's in our cover letter uh especially more recently with um uh with Dei and Equity uh from a the federal perspective or public uh projects that we Chase uh they love seeing things like that right uh even private sector companies are starting to wanting to see things like that and so it's definitely something that we talk about and I think uh quite frankly it's helped us win some contracts but from a competitor perspective I do not know I can't address that question so it's it's a great question because we're still wrestling with it we tend not to talk about uh an employee ownership trust or a PPT on our website because it tends to create more confusion than it's worth esops have been around a while so I think they're better understood uh in the marketplace um but for years we've hired people um based on their attitude as opposed to aptitude or skills because we know we can teach the skills if they if they're the kind of people that want to work and learn and better themselves and be part of a high high performance team and actually one of the kind of interesting points about our Workforce over half our employees are musicians we found a really great correlation between people that doesn't matter you could be homeschooled or university educated in music but you have a lot of gifted traits that we can use to that we can leverage to help you learn how to make Precision Optics and be part of our team it's a musical musical Optics company additional questions or comments Daniel have you ever had a down cycle or a down year and how did you address it and if not how will you all right so 0809 I think everybody anybody that's been in business since then had a pretty tough pretty tough year there um yeah at optimax what we did was we reduced um everyone's wages by 10% and the the leadership took a a bigger haircut um we put a priority on keeping the team together someone else earlier today talked about that the importance of keeping the team together and and in employee owned companies I think it the workforce has a greater appreciation for that um you know if you're in a command and control you know company run by mbas that are just looking at the the bottom line they're they're going to be less inclined to to do that they're going to look for ways to make cuts and and keep the bottom line in the black but uh I in fact I had when the chips sack came out as I said 40% of our business is semiconductor Optics when the chips sack came out 18 months ago that industry slowed down all the big boys pulled back they quit placing orders they're like oh we got to see how much of this we can get so we've been a little slow at optimax for the past uh year or so and with my leadership team I've been having a discussion with them about are you afraid to run in the red for a few months because we know it's going to come screaming back and you know it's just a question of how soon do this do the orders start rolling in and so we we're really focusing on keeping our team together keeping the trainings going taking advantage of this call it slower time where we can do training and and maybe cross training get people work learning other roles in the organization um so if if you you know if your goal is to keep everyone employed um there are there's opportunities for work and and creating value we we had a boom in 2022 so we had a lot of work in the beginning of last year so we actually sent people from around the company to go help in production so from vice presidents to accountants to you you name it they went up about 100 people went up and helped and then on the back side of that you know we've got a little bit of L and Order orders like a lot of companies and so we've been having folks go from production to help in accounts receivable or it or the law department or whatever in what we call apprentices so they get the experience of that job and then frankly those people end up usually getting hired full-time into those rules when they're supposed to go back to manufacturing so it kind of works itself out and we've never had a layoff these anecdotes about layoffs are extraordinary and my own qualitative work um doing case study research on ESOP companies it's I hear these stories remarkably frequently from from ESOP company leaders talking about just the ways that they bent over backwards to retain the the entire team even during periods of considerable downturn um and a important Ruckers Institute study found that during the covid pandemic broad-based ESOP companies were three to four times more likely to retain their staff compared to other similar um similar firms Maran can I chime on here um so going back to the Great Recession of 2008 2009 we actually gave our employees an option uh to either take a pay cut or lay reduce her staff and they voted unanimously to take a a hit to themselves of 10 or 20% whatever it was rather than lose some of their their teammates uh and management really took that to heart and you we we kind of lessened that burden when we're senior leadership took a bigger hit knowing that our our employees we're committed to seeing this through long term and we came out of it stronger for it friends we have just time for one more question this gentlemen awesome um my question is for Rick optimux is the only company um on this panel that's not an ESOP um you're you're an employee ownership trust or PBT um tell us why you went with a eot as opposed to an es sub okay so I I I looked at eot or uh esops early on when we were looking at succession planning and it really at first I thought it was wonderful it was going to work out great for us but when I looked at some of the things that are possible through ESOP it it didn't hit all our metrics like one of the things we wanted was never sell the company and if you have an ESOP that there actually is an opportunity where the or scenarios where the company could be sold because somebody's making a big offer you know and and that you have to do what's best for the for the workforce at least what seems to be best in the near term so that that was a a big no no for us but the other the other thing that's true of our our region our Workforce being in Rochester we're in the home of Kodak and Xerox and there we have thousands of families in our region where most of their retirement was in corporate stock and they're not living the retirement they thought they were going to live because companies go through ups and downs and it's just a reality of business and so anytime we survey our Workforce and we say hey do you want a piece of paper with a promise for cash later or do you want to share the profits as we go they always say let's share the profits as we go and it's it's kind of interesting along with that we have to do a lot of financial counseling with our with our team members our employees i' I've had 20s somethings going out and buying $80,000 pickup trucks and it's like hey guys you you got to put something aside for retirement so we have worked with our Workforce and we have a four 1K plan where anyone that works with us for their career can has a path to being a millionaire or a multi-millionaire um and that's you know there's there's a lot to that but um it's you know if if you're careful about how you do it or conscientious about how you do it you can create a path where every employee can can make out well and have a nice retirement nice thank you with that I'd like to thank our take another few minutes okay wonderful another Senator van Holland's gonna be here in four minutes friends um let's take one more question then anyone having a burning question Joseph I can I can project if that's okay um um so I've had I've had two thoughts kind of listening to this um one of them is about uh the fact that so much offshoring happened in part because of cost but in part because of worries about the kind of restiveness of the American Workforce um and folks would that you know would be agitating for for better conditions and things like that that's not a question so much as that's something that I was just meditating a lot on y'all's perspective on that's been really really interesting to see how that's a asset for you is to to provide that and that helps your workers I I have a strategic kind of question what's your annual Pro planning process look like um if you could tell us a little bit about what it looks like to involve the workers not just in how to optimize a particular contract or how to over time make sure that you're bringing uh more and more processes uh closer and closer to home but as you set things like annual targets and make sure that everyone's financially literate and keeping an eye on them just like bread and butter stuff but I'm something I'm thinking a lot about and you guys seem like excellent folks task I want to tackle your first comment um so offshoring seems brilliant if you're just looking at the shortterm it's a great way to drive cost down but unfortunately you're giving away your future when you offshore C you know skills and capabilities um it reminds me of in the early days when we were looking at succession planning the easiest thing for a business owner to do is just clean up your financials and sell to the highest bit bidder by far the easiest succession plan but you're giving away the future when you do that and so it's if you know for some Business Leaders that's that's what they want to do and and that's fine but um for us when we were looking at succession planning we want to create a legacy create and make sure the company would keep creating jobs in our community and strengthen our community so your second question about so we're we're uh a company with a board uh accountable to our shareholders the trust but we we still have a management team we prepare an annual plan written plan um we communicate to our employees we have Friday lunch which is an easy mechanism for us to talk about what we're doing uh we also create a 5-year plan that's part of the valuation process um and then provide regular updates and check-ins and communication uh to Across the company about how we're performing so they know you know uh in know in a week or this Friday or next Friday I'll update through q1 on how we're performed what we're projecting what actions we need to take um and we sort of do it in an on we we we have a monthly process that we just roll into an annual plann so it's not really a big production for us uh but we do strategic planning and that sort of thing um figuring out how we can double twice in 10 years profitably again so um at Apex uh for the first time ever uh we had what we call the summit it's a full day event uh first half of the days a year in review uh we talk about what we did well how we performed what we could have done better second half is a three-year out uh which is talking about the next three years and where we're going to go not only in terms of Revenue uh profits um but also systems and processes what can we improve on um and that's shared it's with with mainly the management team so once that's completed then we had a halfday session with majority of the employees to give them the debrief on how we did and how we're what we're going to do looking forward and so uh it's a little more intensive than your normal like hey the man just the manager team and here's what we're going to do this is a combined team effort did you have something to add Mar it was curious Joey mentioned a couple times how's primary competitors including black and Vach Burns McDonald seem to all be esops and I'm curious about for some of the rest of you and thinking in the context of the silver tsunami and the importance of you know silver tsunami in the manufacturing sector specifically and in the context of our conversation of supply chain resilience curious about do any of the rest of you see a similar pattern do you see more interest in employee ownership do you see key competitors adopting our employee ownership or are you really sort of the um the thought leaders in this area and do you see some potential for developing increased incre increased interest among your peers um so for our industry no our competition is not going ESOP um I mentioned we focus on customer service whereas a lot of the competition does not its private equity and large conglomerates um what we are seeing is and maybe this is just our natural desire to partner with them but a a lot more of our suppliers okay are are ESOP um or at least partial esops and and they could just be you know esops gravitate to each other um similar philosophies and and ways of thinking and and and partnering but we have seen that quite a few of our suppliers are now esops that's interesting um the the thing that I've noticed the trend that I've noticed is pre pandemic we came through Decades of too many workers not enough jobs right and then in the pandemic the pendulum shifted and now we're in an era where there's too many jobs not enough workers and that's not going to change so the the trend that I am seeing is that companies that are creating good jobs are having the the most success at recruit Recruitment and Retention um and that's going to be a challenge for several years that's interesting oh anything to add in your your Universe in Denver yeah I think there's a lot in construction uh but it's not your typical ESOP uh you know you have to buy into the ownership and so um we are seeing more of it an in Denver though wonderful friends thank you for such a rich conversation much gratitude shed much light thank you audience