Hometown Ownership: The Impact of Employee Ownership in Rural Communities

thank you very much um because I really want uh everybody to hear this next panel they're terrific so I'm very excited about it um I mentioned the resources um this next panel is about um esops in rural areas uh and um uh Joseph blazzy Doug Cruz and Jack Mori arti have a new brief available for the first time at this forum that looks specifically at esops and rural areas it's among the things available to you um and uh and the analysis shows over 1,600 esops in rural areas covering about 300,000 workers which is significant uh but there is clearly room and opportunity for growth for more uh esops cooperatives and employee ownership trusts in rural areas employee ownership trusts employee share ownership can be particularly valuable in rural areas to address challenges of business closures and Associated job loss um and can contribute to job creation Economic Development and Community wealth building so how do we use the tools of ownership to help more rural communities address the challenges they face and build the economic future they want that's what we're going to discuss next we have an amazing panel to discuss that um so I'm going to briefly introduce them to you uh with us today we have uh Daniel goldsteen chief executive officer go ESOP LLC also an executive fellow with the Ruckers Institute for the study of employee ownership and profit sharing Molly hemstreet founder and co-executive director of the industrial Commons another executive fellow with Ruckers um Jenny Levy Executive Vice President people community and environment hyper hypertherm Michael Williams CFO black and Beach and it's my pleasure to introduce Jeff go uh co-host and reporter for Planet Money and NPR as the moderator for this event on Planet Money Jeff tackles a range of complicated topics and issues affecting our economy breaks them down into engaging and compelling stories previously Jeff covered economics and policy for the Washington Post he has a bachelor's degree in math and economics from MIT and a JD from Yale law school so thank you so much for being here Jeff and let me turn it over to you well thank you so much for for having us um we I'm really excited about this panel today um at Planet Money we you know we love trying to figure out what makes markets work and also more importantly who they work for and um I feel like we have a fantastic lineup of guests today to help us understand you know how can we make Market Works make markets work for people and for more people and also for the communities that they live in and so um I'm very excited about this um I think uh let's get started by um I want each of our panelists to to to tell us a little bit about their story um and and the way in which the the the context uh of their communities uh how how that all operates so um maybe Molly we could start with you um you're based in Morganton uh North Carolina um and and to tell us tell us your story and also the story of your of your of your um company in context with your community wonderful thank you Jeff can everyone hear okay okay great so again Molly hstr and I am from U Morganton North Carolina which is beautiful Southern Appalachia you've probably heard of Charlotte and Asheville you might not have heard of morgon but we're between the two of those as many rural communities are we're between two people or two places that people know um it's where I was born it's where I was raised and where I continue to raise my family I think it's a really wonderful place to be and I'm sure as we talk about rural communities today well we'll be talking about place because that is so much of what is Meaningful to us and why we choose to stay in our communities and build our companies there so just for a little context on the where I live in North Carolina um it is really the heart of textile and furniture manufacturing which yes is still still alive and well um struggling sometimes um and has struggled in the past this is still continues to be one of the largest metropolitan statistical areas of the concentration of textiles and Furniture however we lost a lot of that work when I was growing up we lost about 40 ,000 jobs in that area it was one of the highest amounts of job loss um in that the country saw however that infrastructure is still there and so I walked into this work actually as a teacher coming out of the public school system saying wow a lot of my students families don't have work how do we root wealth locally which started my journey on this road to employee ownership was this question of rooting wealth and how do we grow Community resiliency um so I started my first company um which has a still a thriving Cooperative around those three ideas of the three PS people planet and prosperity with the idea of using employee ownership as a way to root wealth in my community and then the industrial Commons grew out of that because I wanted an organization that could give me the things that I never had when we were trying to figure out how someone like myself could stay in our community how I could create something that was revitalizing for for my community how I could really think about the environmental aspects of how you take a Heritage industry and you drive it forward and you create a future for it so that was really how we created the industrial Commons so we have both a 501c3 and a public benefits Corporation attached to those um there's several things that we do to promote employee ownership one is we work a lot with young people so that the first time that they're hearing about employee ownership isn't when they're in their 20s and 30s or they're ready to sell their business but they're thinking about it as this idea of stewardship from a very early age we also incubate some strategic companies that are part of the value chain because a lot of what we're doing is building sustainability in the textile industry and then we also look at as we've all talked about the silver tsunami how do we build a saturation of an employee owned companies that are strategically placed through value chains in our region of I feel like you're giving away the whole panel I feel like you're giving away all our we're going to we're going to we're going to get to all of that excited about that um Daniel give us a give us a sense of what what your company and your companies do and also the the kinds of communities that they invest in sure but I really wanted to just keep listening to here um soen I have to start with a disclaimer that I am recently retired presiden CEO folian so I'm not speaking on behalf of them I am also serving on the boards of several esops and I'll bring in their stories and I not speaking on their behalf either I'm speaking to what is available as public information but um so iance the uh company that I came into was started in 1883 around the Cedar Rapids Gazette newspaper there was a question about media before happy to respond to that as well um and the uh 100 years later the families that owned the business started a partial ESOP in 1986 in 2012 it became 100% employee owned in 2015 they sold their 62-year-old broadcast business which meant that the business was back to being primarily a print newspapers as far as Revenue uh was concerned and that was not a good path forward for the next 130 years I was brought in and restructured the company into a holding company structure and went to allocate the capital that was generated from the sale of the broadcast business and this was in Cedar Rapids Iowa um and I acquired a ambulance Manufacturing Company in uh suar Iowa small town of 2100 with 180 employees that was the major uh employer of the Town it had started in 1985 when I met the company in 2016 the 75-year-old Widow of the founder had no heirs to pass the company to did not want to sell to private Equity or to a strategic buyer and so it was a very precarious situation so why would in newspaper Company by an ambulance Manufacturing Company why would an ambulance manufacturer be bought by a newspaper it was about esops employee ownership they knew that if we were investing in their company and their employees and their community that we were going to continue that Legacy and continue having that Community Thrive after that we went on to buy a horse and livestock trailer Manufacturing Company in chiet Oklahoma about 45 minutes south of Oklahoma City a larger Town 20,000 but um still a significant employer 125 employees during Co and this would be for a whole other story that uh company first fell off the edge of the Earth and then exploded we expanded the company greatly on site and then opened a second location in Manhattan Kansas a much larger Community 50,000 people but these are pretty small communities these are very important to the livelihood of the employees their families to the communities I uh did a quick calculation on the boards of ES shops that I now serve it represents several thousand employees in eight different states and almost all of them are rurally situated and I won't give away the rest of it I'll leave some more for Jeff to do afterwards we got to keep some some uh fresh ideas to to keep these this lovely audience in their seats actually Jee can I just bring on one other thing um speaking on what Carrie did because those of you who know me know that I I still am in uh doing this even though I'm no longer the CEO of fence how do you get the employees to be involved it's not just about the financial benefit it's also about having better work conditions better work lives getting more engaged having more say in in what they do and um what I came up with at fance was and I'll read it to you it's the license to act it's what Carrie and others you're going here talk about today how do you get employees to act as owners to think as owners because they are owners and there's a difference between being the owner and being an employee owner it's about shared value and having some influence on that sh shared value but as uh you heard earlier you're not the owner you're not liable for the bank debt for the covenants and all that and we can get into that later too fantastic so for those of you keeping track Molly textiles North Carolina we got Daniel a a variety of different things uh including newspapers and uh ambulances um based in and around Iowa um uh Michael let's turn to you um and and and and your company and tell tell us more about that sure first uh pleasure to be here uh to talk about a topic that uh I'm very passionate about and is for our company as well um so I'm uh the CFO of black and Beach and uh we are um 100% employee owned Global Engineering uh procurement Consulting and construction company uh we've been around for over 100 years now and um our mission is building a world of difference through sustainable and resilient critical human infrastructure so uh think everything around Energy Water Communications the infrastructures that we all take for granted uh that we depend on to be there when we need it um is the areas that black and Beach really serves our clients and coming up with innovative solutions uh that are also sustainable um can really reach you know the broader uh pieces of our population uh we've been uh we started as a partnership for many years and our ESOP employee ownership Journey um transition happened in '99 the partial ESOP that we created then and the 15 years that followed took us uh to get to 100% ESOP owned and uh we made our es Corp election in 2014 and uh we have uh over 12,000 employees across the globe and uh almost 8,000 uh employee owners here in the United States uh spread across 67 offices um about uh a third of those offices are in rural community the rest are more in urban environments and um I'd say a little over half of our uh employees in the United States live in communities that are less than 100,000 population so um not only our professionals our employee owners that live and work in the communities um but the passion that they bring in employee ownership is also the passion they carry in building a world of difference in the communities in which they live and work every day um but also the work that we're doing uh really crosses a lot of rural communities across the United un states in the work that we're doing and and really helping put innovative solutions in place so people can have clean drinking water uh we have know what to do with our Wastewater how do we capture uh and solve some of these Mega trends that are facing really Humanity um from a water scarcity perspective uh the energy transition that we're going through that you all hear about all the time uh electrification and the impact that that has in our aging infrastructure in the United States um and the same issues that have in our Urban environments are the same issues that our rural communities are facing as well and a lot of our clients really touch both and it's really really important and uh employee ownership the the shared value uh the shared accountability that we all have to really share in the success that we create for our clients but also for each other really is the critical element I think that makes uh black and Vach so special um and makes the employe ownership model so such a special thing to be a part of and Michael just to double check you said construction you said engineering ing Consulting nothing related to horses or ambulances no horses or ambulan double checking double checking um let's turn to let's turn to Jenny um who is uh based in New Hampshire and I and and before you get started I just kind of wanted to ask did you get to see the eclipse yesterday I was on an airplane coming here so I left totality in order to join all of us for this so we appreciate your sacrifice tell us a little bit more about hypertherm uh hyperm um we are located in Hanover New Hampshire we were founded in 1968 and that's still where our headquarters are I'm honored to be representing 2,000 associate owners of hypertherm Associates we at our Essence make machines that cut metal and the people who use our machines then are building infrastructure equipment all kinds of um farm equipment um and uh things like that around the world uh we also have locations in the United States in the state of Washington Minnesota and New York but again our headquarters and by far our largest location is in New Hampshire our town has 8,000 people in it uh the town next door to us has 12,000 people and our Associates are coming from four counties in our area both in Vermont and New Hampshire because we're right on the border and together those are about 220,000 people that live in those four counties across a very large swath of land so rural yes we are we're the third largest employer in our region um and I think that actually is very connected to the fact that we're in ESOP the largest is a hospital system Dartmouth Health the second is Dartmouth College and then believe it or not the third is hyperm again with 2,000 people um so we um we became an ESOP in 2001 partial ESOP about 30% and then we became 100% ESOP in 2013 and we also have some International associ who are in kind of a mirrored system to that as well amazing um as you can see we have a diversity of different kinds of businesses uh practicing this kind of model and so that's why it's kind of really exciting to get all these uh different viewpoints um next I I want us to get into a conversation about the meaning of this this business model for workers and especially for workers who live in rural areas um and so maybe uh Daniel we can start with you and and can you tell us just from a from from an employee owner perspective um who someone who lives in a rural area how does that um how does that work sure um so of course there's the ancillary effect on other businesses in the area the tax space and all that but I'm not going to get into that um what's really important is the opportunity that presents because we've all seen that there's this drive of uh sort of immigration from the rural community to the urban communities and a lot of that based on need need of opportunity and what these companies I'm going to use the lifeline emergency vehicles as an example so 180 employees in a town of 2100 in all in lifeline and actually in all of fances uh businesses and I'm pretty sure I was thinking through all the other companies I'm on the boards of there are multiple generations of families that work for these esops that's really meaningful so you have sons and daughters of mothers and fathers that have economic opportuni so you're you're affecting multiple Generations it's also giving um the opportunity there are a lot of people that aren't going to go through either two or four year uh University and this gives an opportunity to learn skills whether it's on site whether they've gone through vocational uh programs beforehand and then to continue developing those skills so at Lifeline emergency vehicles Randy Smith is President he started I think 38 years ago is an engineering intern um that's the kind of opportunities that you see across a lot of employee owned companies people that start at very low-level uh jobs and are able to develop and work their way uh through those uh opportunities also those uh technical skills um I was talking with somebody earlier about industry 4.0 and then investment that's been made Iowa has been very Progressive in that as well and at Lifeline uh they were able to get uh an industry 4.0 Grant through arpa funds that were distributed through the governor's office to put in robotic sanding cells so if you think about an ambulance with a big metal side to it um you know everybody thinks that an ambulance is for saving lives is actually for looking really good when it goes down Main Street under a sunny day on a parade and there's a lot of cure and and that gets into preparing those sides it's a very manually intensive uh I or work which means repetitive injury soft tissue injury that affects safety esops invest in safety quality one of those things was getting in those robotic sanding cells that's upskilling uh laborers so that they're understanding how to use technology robots um other things so there there are just so many ways that it allows manufacturing to be cool which uh can get people involved but i' I'd go back to the most uh important value that I've seen is those multiple Generations I'll just leave it with this at the Cedar Rapids Gazette the sports writer has been writing about Caitlyn Clark has been writing for the uh newspaper for 45 years his father was employed by the newspaper for 45 years it wasn't linear so 90 uh years uh end to end but that's just two people of one family and one of the companies I'm representing and I think what you're saying is really an important point to emphasize which is the sense of rootedness that can can can be generated by this kind of um model and so I I want to I want to direct that question um over to you Molly as well can you speak to that sense of rootedness and in in in the the the place where you work sure and what we often talk about is building an ecosystem so um and where a lot of us are talking about manufacturing which is a lot of rural communities are doing and Manufacturing is very important it tends to have a multiplier effect of three for every job you create in manufacturing you're creating three other jobs that are impacted in the supply chain so it's very important economically that manufacturing can stay rooted in in rural communities so in terms of an ecosystem I think it's really interesting to look at our ecosystem so um the second largest employer in our community is a weaving Mill valy Weavers I think it's the second um largest ESOP in the state of North Carolina um they have been there for 115 years started by Italian immigrants they have been there for Generations people have you know for Generations have have worked with them but what we're starting also are these smaller companies that can rely on them use their mentorship and create a whole ecosystem of a company of 50 workers like ours which is a Cooperative of 50 employee owned you know 50 employee owners to up to 900 workers that are in these value the the weaving Mill so you start to see truly the fabric of communities that can start to weave together pardon my textile puns they're just Rife when you're talking about ecosystems but that they come together and can really build generationally over time one of the things we do too is a lot of emphasis on a younger generation so we are also doing apprenticeship programs we're also looking at um a high number of what we have which are called opportunity youth these are disinvested youth these are youths between the ages of 18 and 24 they're not in school they're not enrolled in um they're not in the workforce and almost one in five students are young people in our community are one of these disinvested or opportunity youth so we are really working hard to encourage those folks to move into employee ownership in these models because it is very incentivizing and that is really hugely helpful as an incentive to get young people in the door I want to follow up on that um so how is that experience for the younger workers how is that different from working at say like a retail chain or Big Box store so we don't necessarily talk about hey you're walking into employ and Company we that's not our that's not our Banner headline that's not what we sell we sell this is a great place to work you're going to have flexibility in your schedule you're going to be able to have training you're going to see a really cool robotic because that's going to do a you know a really neat process that you're going to understand so it's really about trying to build that Agency for that younger person in order to really engage them to be able to stay in that workplace and so we see really employee ownership as that through line that creates the culture where the next generation of employees and the Next Generation particularly of manufacturing workers wants to be amazing Michael and Jenny I kind of want um to to open it up a little bit um could you both just help us understand the the the kind of um wealth building power of of esops and the way in which sort of resource and the way that they're allocated you know affect the the the people who work there you want we go first sure uh I think it's one of the the most powerful things about the model as we've we've talked a lot about today and just the generational kind of wealth impact um that's created with the ESOP and employee ownership model when it's done well uh since 2014 uh when we became 100% ESOP we have paid out over a billion dollars of value to people who don't look work for black and& Beach anymore who work their career so a billion dollars over almost 8,000 people and that doesn't include the people that are currently working that are going to get that value paid out pretty remarkable when you think about the value uh that's getting paid out and as studies would show many many of you know um the value of retirement for working for an ESOP you know would say it's more than double um what it is for working for a non- ESOP and the same holds true at black and Beach when we know how much funds are in our retirement program and how much funds are tied up in our ESOP uh it's about double um so that that really Rings true for us and that that uh connection uh the generational impact that that creates in in the connection that that brings all of our employees together um we have many employees that celebrate 40 45 we had two that hit 55 years with black and Beach uh still passionate about the company and uh we have a lot of generations um where where people continue to come and their their sons um grandkids even uh are working for black and Beach and it's a a truly special thing to be part of and be able to share that wealth uh with that many people amazing for us I think and for most our goal is that people can retire with 10 to 11x their final salary um as part of their retirement Target uh and we encourage them to have a 401k which we also have is kind of a key parallel to this is also um with that we see people doing exactly that in a way that people have not seen ever in their family generation their wealth is often connected to Shared resources farming resources is very common in our history in our area um shared resources that you share with your community and your extended family in terms of extending to help each other during emergencies you suddenly then have someone in that system that is retiring with a million dollars $800,000 and a number that is unseen in ever in their entire family history so that has tremendous impact it has impact upon retirement so we had someone her name was Peggy when she retired she ordered a stretch limo and she had a tiara and she got picked up on her last day and went through the um the sunroof and waved everybody and they did circles around the entire building Peggy had never been in a limo uh she would just that was her vision of retirement and that's what it meant to her and then they drove her back to her small town where she lives and she was just the queen for the day and that's how she celebrated her retirement but more I think is the stability along the way that I think probably we see in a much bigger kind of more enduring way which is that we have a no layoff philosophy that is very unusual especially in rural areas profit sharing is super common so we all have that as well but those stories are more impactful where someone uh we one associate Jesse who said that in his high school the sheriff came twice to Fort to his parents to kick them out of their house because of foreclosures and then his son just went off to college and he's able to pay for that first year in a half he's got that lined up for his son and he's going to figure that up out so that those stories I think of that sense of Pride that sense of connection that sense of stability yes that's wealth but I think there's a lot more to it than that as well for Rural communities for sure yeah I think that's a great Point uh I I think that connection and Brad bigger purpose that we all have being a part of an employee ownership company transcends itself into the communities in which we work so a big part of our mission is how do we really build a world of difference and do that and Empower our employee owners to go do that in their local communities and find causes that they're passionate about and we have a foundation where we will match donations that Pro our employee owners make to Charities and Community organizations that are that they're passionate about so that's a big part of of what we do and and having a lot of efforts to go and and have wherever our employee owners are Empower them to come up with their own causes and go serve the community and give back uh is also a big part of our mission I want to open up open it up to all four of you are there any particular anecdotes or stories from workers that made you think oh wow like this is working yeah I mean I'm sure we all probably have a laundry list of them but um let's do a lightning a quick lightning round maybe each of you if you have any um par particular stories you wanted to share I mean one that immediately comes to mind uh I I think in how our employee owners really act as a family to support each other um back in 2022 when we had the hurricane Ian that went through Florida and we have a lot of professionals kind of all around the State of Florida um but we had over a dozen of our employee owners that baned together that were not in the path of Destruction they went Pann together and they drove all around the State of Florida to every single employee owner that was had impacted by this and brought them supplies gave them support um and really were there for them with the cleanup efforts and they did that on their own uh doing uh and to me that that really speaks a lot to the employee ownership culture and the the buyin the ownership that they have not only in the long-term success of the company that they're an owner of but also their fellow employee owners and how they really want to invest in them and seeing their success as well that to me is uh the mark of why that culture is so different than any other company Molly and Daniel any uh share I'll share I'll share the story of Walter who was um is the manager of the company that I started opportunity threads was working three jobs until he came to be able to be at Opportunity threads he has now successfully run what is now the largest upcycling facility if we get to talk about the circular economy we'll talk a little bit about that he sent his daughter to college and now out of this Cooperative there's now a high school fund that other workers can now apply to to be sure that their children many of them did not get to go to college will be able to achieve a two or foure degree so that idea of passing it on that idea of not just ownership but stewardship I think is something that we're all really speaking to here yeah um I'll share Ken's story um every year when I do a road show to do the annual share reveal I'd bring along somebody who's non-management because nobody really wants to hear to the about from the CEO they want to hear from one of their own so um it was Ken's 40th year working for the company and he said well why do you want me to go along I said because Ken you've been here for 40 years I think people are going to have something you know they want to hear what you have to say half of our people weren't even born when you started working here and so he what was great about inviting these non-management people is that they'd come up with things that would teach me an incredible amount so we've heard today already that one of the things that is a problem is that young people they don't really care about retirement so how do you get them interested in this and so while Ken is probably never going to retire but is heading towards retirement he came up with something brilliant which I had never thought about and he showed some pictures of his family and going on vacations and following his son to baseball and all that and he said sure it's great that we've got this retirement benefit that we're acing but what I realize is I wouldn't have been able to do all these things every year this year because I need that retirement fund and if I had to take that out of my paycheck I wouldn't have the money that I'd have to take care of my family in the current year and it really resonated with the younger employees because they were getting it oh okay so that's actually a benefit that I'm getting today and while that's not as as as great as supporting all the others I just wanted to share uh that that that is a very powerful story because it allows people to have better family lives and and so that's really an example of how employee ownership Works quickly for us I mean during the recession and 0809 we were probably about 1,00 people at that time and our production models had about 110 extra people that we quote didn't need for the volumes that we got where we're getting our sales dropped in over in half in in one quarter um and what does ownership look like it is people then mowing the Lawns doing the their own our own custodial cleaning doing all of our painting we have a lot of skill sets coming from again rural backgrounds Plumbing doing everything that was needed so we pulled back on our contracts and no one complained people were ecstatic to be just in their job with their benefits producing whatever they could to help the company and offset our costs and basically allow us to endure through that crisis which we did and when the volumes came back they came back faster than they left we had everybody employed and they were able to start work on Monday there was no retraining there was no put the signs back up beg people to come back we were fully ready to take advantage of the upswing better than our competitors so our lead times were like this we were meeting needs in the market in a way that other people couldn't because again our no layoff philosophy allowed us to endure through that and Jenny I want to follow up on that because um I I want to want us to now zoom out and and talk about and understand how get a little bit more macro and understand how these um these kinds of businesses affect the community not just workers but um sometimes that is through workers right and I want to understand you know the the policies that you all have put in place uh such as the no layoff policy um and and other kinds of job flexibility policies how has that affected the workers but also the the the texture of their communities and their relationships to each other and to the you know their neighbors and their their their schools and their PTA overlords uh I think one way that we've done that is through um so for example you talked as well about volunteering so we have a paid volunteering uh benefit of 40 hours for everybody and so we serve 33,000 hours in our community that is a tremendous amount of free work out especially in rural communities people can choose how they do that when and how they want to do that so that is little league coaching that is delivering meals on wheels which I love to do uh that is painting uh houses for low-income homeowners it looks completely like our 2,000 Associates because everyone has a different way they want to serve or a different skill set they want to bring our rural community is greatly B bolstered by 33,000 hours of Labor that's coming out into the community and those nonprofits we similarly have a foundation that we're supporting again nonprofits in those areas we also host stem tours for our rural school districts so in a single school year we'll host a thousand students in our doors where we want them to see what it looks like to be an advanced manufacturer what the robots look like what does Six Sigma look like what does lean manufacturing look like what does that job path and career path look like and we we see that really having a big impact and can I ask why do you do that like who is making that decision and how how is this are those decisions made to to do those kinds of Investments it's a good question when you're employee owned you have 2,000 people with needs and insights that they bring to their work and all decisions our leaders are also owners so you're you're all working together and you really realize that a company is only as strong as its community and the community is only as strong as the company can be in it and so how we treat people in our community has a huge impact as I mentioned in my opening we're the third largest employer there are many other employers that could be larger than us but in downturns what happens is they move job categories elsewhere um in downturns or in new ownership transitions the next thing you know the entire building in Claremont is gone everyone in it is no longer working there but when you're so it's that I think that connectedness it's both R rural living um but also ownership and being a worker and we have empowerment to how to make those decisions as well yeah I want to ask the same question of um of you Michael because I feel like um the scale of your companies is humongous right which are also dispersed among all these different communities so help us understand how this works on on a bigger scale as well yeah it it certainly brings uh different challenges right uh we can't get our whole company together in one room um but we have not only the broader culture of our organization that we have but we have a Ambassador network of employee owners that have their own culture locally that create that sort of family environment and are part of something bigger part of a larger organization but also are part of something where they you know fellow employee owners that they're working with each and every every day uh so we try to we try to really double down on that we also really invest in bringing um the work that we do that people don't have a chance to go out in the field and see what we do we try to bring that to them um in a lot of ways to really kind of again help fuel this this broader purpose of what are we doing and why what's the impact that we're making not only in our local communities but in the broader world as well um so it it's something we spend a lot of time a lot of energy communication is critical C crating successes together transparency in in uh how we're doing what's going well what's not going well um really talking giving testimonies about you know a lot of conversation about what does it mean to think and act like an owner um so we spent a lot of time as well talking about that um people sharing their stories of uh you know how it's really the collective choices of thousands of people that really Drive our results together and how how have you noticed that uh changing the Rel relationship between the the the company and uh it's all the different cities where it operates how's that different from you know a company that isn't employee owned yeah I mean I think we we play on a big team we have a large family of owners um and I think uh even people that they've never met maybe face to face still feel like they're part of a family and they're willing to help out and support and a lot of the teams that we are our employee owners are working on they're working with people all across the United States and even the world in many cases um but there's one thing that binds everybody together and that's that every single one of us owns a piece of the company and we all have a shared uh a shared ownership in their in our mutual success together um and that is a common bond that brings everybody together um and that that I think is special in how people invest back in the company how they invest in developing Talent how they invest in building relationships how they help each other out um you know when people need help other people run to help them um we have a a saying in our company of run to the fire um and if there's something going on you know that's the culture we want of hey we're all owners here how can I help and and that's something that you see day in and day out in our culture uh Molly I want to turn to you so we're going to take a trip to North Carolina now um help us understand I want to congratulate you um I think you all got a pretty significant Grant uh recently so so tell us a little bit more about that and your relationship uh the impact of of of the work that you do and the work that your workers do in their local communities sure happy to talk about that and I know there's a panel coming up on supply chain so I won't try to dip my toe into Supply chains but that is so important when you are in manufacturing and you're looking at localized production so many of your efficiencies come from supply chain so we were very honored to be selected as a national Science Foundation engine this is money that's coming out of the chips and science act to put forth these Regional hubs that are really driving Innovation and there were 10 engines Chosen and we are the region that is the North Carolina textile Innovation and sustainability engine um the first allocation is for $15 million but it's up to 160 over 10 years which is to really build out um in our region sustainability and Innovation and particularly circul it for the us as a model for textile circularity for the US so it's a huge opportunity because um at the end of the day we have to be sure that even though our companies are strong and their cultures are great it is all about the markets in which they can be competitive textiles has always really struggled in the US as things have been offshore that was kind of the what I live through as a child growing up in my community so there's this opportunity for really Greening the textile industry and creating sustainable jobs that are good jobs and so it's really interesting that the companies that are the anchor for the textile Innovation engine are these employee-owned companies because they're able to see The Innovation they're able to work collaboratively they're able to be nimble so I don't think it's um there's certainly a coraly there between who's leading Innovation and who's leading Workforce Development and the intersection of those things in order to really bring money in and then also Drive Innovation out and so so what we're looking at seeing is the marriage of the Innovation the market potential and the ability of the workforce to be responsive through so employee ownership is a real through line on the Innovation engine that we are developing along with the National Science Foundation I want to follow up on that because you know there's this thing that economists like to talk about it's called learning by doing and one of the arguments for reshoring right is that there's a lot of innovation that happens on the factory floor that when you send it overseas is you don't get you don't get to reap the benefits of that your competitors do or your your subcontractors do and so can you can you tell us a little bit more about how you know the the the the the work that people are doing how that is contributing to Innovation for you know not just your own um company but for I guess the the industry as a whole yes so I do think you know we've we've talked about the pandemic a little bit and all we needed to see is like how unprepared we were we were all trying to figure out how you make masks and gowns interestingly enough it was a lot of the work in North Carolina that was able to be responsive um in order to create testing that could come onto the market quickly so the interesting idea with the National Science Foundation and we really applaud them for thinking about this differently is not just funding research that will stick in universities but being able to pull that down to the factory floor and the the workers that are most um ready to take that on are these workers that have been in a c culture of agency that is often promoted by employee ownership so I want to create that direct line between Innovation and employee ownership and Workforce Development because that is really how we will build resiliency in an economy like ours that has often struggled and that we can be quick um you were talking Jenny about how quickly you were able to respond to the market once you once you were able to get back you didn't have to put the signs out and put things on indeed the workers were ready to come back and so when ever there's Innovation we need to be able to move quickly and the challenge is moving quickly in complicated Supply chains and so that's what we're looking to do with the Innovation engine is to really marry research and development and Workforce Development and then move that through commercialization through through our plants you don't have any sort of textile Trade Secrets you want to share I'm sure we could keep it a secret no I I have to turn something in between I well that's an interesting idea between like IP and Collective knowledge and we're going to be we're going to be trying to figure that out like what do you share so that the businesses can succeed and then what do you collectively own as a group and as as an engine and as a region as you try to create this identity around sustainability so we're going to be working on that I'll let you know if we get it figured out um Daniel I want to turn to you the the the as you were describing right the work that you have been involved in it made me think about how communities have nucleuses or many different nucleuses nuclei anyway um right and and those are very important and the more of those that you have the stronger stronger a community becomes and it made me think of you know newspapers are a nucleus for a community that a community can form around ambulances the people who save your lives is also a nucleus around which Community can form right so can you can you tell us more about that um just help me out and Riff on that idea for for a bit um yeah absolutely at sort of the highest level the macro level each of the companies has a purpose so the media companies it's informing uh communities and so for example um Cedar rap is likes uh double calamities so in 2008 there's also this massive flood in 2020 besides Co we also had a dero which just devastated the community and the newspaper immediately responded by getting homework and other um information out because there was no broadcast um media people didn't have electricity they didn't have internet um and so that's one way they they get out into the community we've heard about cor um very uh generous corporate giving to uh Charities and philanthropy and um also giving of time that's building Community U the the purpose of uh ambulance obviously saving people's lives of the Trailer Company it's creating family memories but again I I want to bring it down to sort of the the individual level because what I heard from a lot of uh during Co is that the companies were probably the safest place where the uh workers were in their lives with all the uncertainty that was out in in their community and uh their uh life and there's also the personal growth that the employee owners go through which does spill out into the community because then they bring that as better parents better Partners better leaders in the community I'll share one quick story um it was Employee at our Oklahoma trailer manufacturing plant who said that he had got an offer in Oklahoma city that was uh1 or2 dollars more and they sat down and walked through okay how much is your transportation cost how much time are you going to be away from your family what's the benefit of the employee ownership which you haven't calculated into this and at the end he was sort of deflated and said okay yeah I get it it's it's it's better economically but I'm just not doing what I want to be doing here I want to be advancing and B the president pres looked at his attendance policy and said you're not showing up every day and he went home and he came back the next day and he went to Ben and said could I talk to you he said I looked myself in the mirror and I said I need to be a better version of myself so I'm going to make that commitment to do that he's now a lead he's going to be a supervisor soon he's said that he's become a better husband better father and don't overlook those things because most people in rural communities are are not getting that kind of development and they are gain that in esops because esops do care about developing their employees so that's a really important connection as well uh that was an amazing story um so thank you for sharing that with us um I want to make sure we have uh time for questions at the end for this uh illustrious group to to to Pepper you with follow-ups um but before we get to that um this is DC so we have to talk policy at some point can't can't just be anecdotes even though I'd love to live in that World um so I want us to why don't we go down the um go down the row and in 60 seconds or less could you all give me a sense of what are concrete policy solutions that can you know that that would benefit this kind of model just drawing on your experiences yeah I think uh first and foremost um I think continued preservation and protection of the escorp ESOP model um I think is one of the most important things to do and uh all the benefits that that brings uh ESOP companies I think is very critical to the sustainability long-term of esops being able to exist into perpetuity and continue to create this generational flywheel of wealth so um that's an important one and in all of the legislation that may inadvertently uh sweep in um escorp esops I think is important to to keep that top of mind so I think that's definitely one that we have to keep educating um and spreading the message um and then just like we've said earlier just awareness and education on what the model is how it works uh its viability and being a um really really uh valuable ownership structure and a way for uh owners to transition that ownership that may want to leave and I think the more we can do to make that easy uh make that um really enticing for those looking to transition for ownership the easier we can make that I think that the more of these you'll see and the more successful the model can become how about you Jenny I am not a policy expert but I will say that um the thing I wish for the most is that this remains a nonpartisan bipartisan panp partisan non everything uh issue there is no one that can disagree with stability in communities there's no one that can disagree with again every worker is an owner they are voting sure but they are completely individual and they're trying to do great work together um you just cannot argue with that sustainable growth that sustainable investment in communities yes rural communities great but also urban communities any Community um and that is inherently nonpartisan that's how we lead as well and think about it um so just that criticality that this does not get pulled apart in One Direction or another that's the most important thing in my mind I uh caution to stay from the new and shiny and so I would often challenge the economic development authorities in my community when you attract a new business all you're doing is you're stealing our employees and so please stop doing that what you need to do is give the economic incentives to gain and maintain competitiveness of existing businesses 180 employees working for 39 years in a town of 2100 is worth preserving and they need that assistance the industry for .0 assistance because otherwise they're not going to be able to compete with the larger uh companies so that and I also want to touch back inide that Carrie mentioned because I know it's something that's near and dear to my heart and Leslie's and some others which is if we could get esops to be recognized with the same preferred status as minority women-owned businesses it's locally owned it's addressing income and wealth uh inequality it is addressing a lot of issues that we just need to get ESA to have better recognition as that preferred spend so I would agree with everything that's been said and also the nonpartisan sense of this I come from North Carolina is a very purple State um and so it's very important that particularly catalytic that's funding that has come down like the NSF engine funding continues that is only good until it's there's funding and reallocation that comes forth again we can really make our region transformational over a 10e swath with this resource ources coming in but we need that money to be allocated again and again that will allow communities like ours that have been persistent poverty communities really hopefully have an opportunity to get out of these boom and bus cycles and so I think continually continuing the funding for many of these programs that we're seeing get traction that have you know employee ownership models and lines through them but also resiliency climate resiliency models and I am really thankful for our Republican senator Tom Tillis who has supported us through all of that we need to keep it nonpartisan and for the funding that has worked we need to keep it flowing into our communities amazing well thank you all so much I feel like it's time for questions um we have about 15 minutes before we release you all to get your calories um your delicious calories um so we can uh maybe start with a question from our virtual audience since we haven't gone there yet fantastic um sometimes there's this narrative out there that um esops create this tradeoff between um contributions to the ESOP and raising wages so I wonder if any folks uh for the ESOP could help dispel that myth a little bit I can speak to it a little bit but I should let the CFO get to this um I think one thing that we go through when we're educating for example external directors on our board um and community members even new Associates is an ESOP is an enclosed system when you have eliminated an external internal shareholder your owners are your workers and then the other people in the equation are your customers who is who are you doing business with and suppliers too but at the most fundamental level customer owner worker and if those two are the same the owner and the worker the same it really clarifies things in a really important way with that said yes you can increase wages but then that shifts your profit profile it also shifts your security through shocks and downturns um if you increase is that's a major cost driver so then you think about the valuation of the business for the ESOP then you think about what's left for capex then you think so it's you it's a zero it's an enclosed system and so we want to optimize that entire closed system at all times which is how as a management team we're constantly struggling not struggling working through that I should say and think keeping that all in Balance because the owner there's not an owner that says I need a new yacht to go by that that doesn't exist it's the people who work there as well and they have the shortterm in mind the medium-term and the longterm and wages need to kind of work in that type of horizon well said I don't think I could top that but um you know I think it's a it's interesting balance and same thing I mean it all has to work in in a circle um and we are we are a people business our only asset is our people and our talent um and we live in an environment where Talent there's a massive shortage of the talent that we need so um we have to be competitive in our wages to attract Talent um we're not going to be the highest probably but we're not going to be the lowest we've got to be competitive but also educate new Talent um on the power of why coming to work for an ESOP is so important um because and what is the wealth that you're going to create working your career at an ESOP um what are all the diverse career opportunities you're going to have by working and what's the difference a differentiator in our culture are the things that really draw and attract people here it's not just the wages but um certainly it all is impactful because the cost of wages impacts you know the price we have to charge our customers who are also constrained on their Capital uh that they have to put out there but also impacts profitability which drives the value of all of our ownership accounts so it all has to work in concert um but you know certainly we aim to be competitive in the in the labor market that we have thank you all so much I have uh maybe one and a half comments um I and and questions um one of the issues that came up in this panel more so than others was the role of community and so it's not just like the individual you're also contributing to the community and I think that that's such a helpful message especially for this broader Coalition building because many of the challenges that we're facing especially with the emergence of gen and the concerns about technological displacement of workers is ones that communities will have to deal with there could be National strategy but communities will ultimately have to reconcile here's where my labor force is here here's where we need to go and so I wonder if you could comment a little bit about um how you uh like Building Bridges with other communities Beyond it being um I mean income inequality is a big enough issue already to build a coalition around but then you also I think have tons of allies in the social capital space Congress before had the jec on the social capital project that Mike Lee was running and so um I I'm just curious have you already been thinking about alliances with um that side of the uh like I guess the Social Capital Community Building facet of the research and policy communities um I mean maybe um so for me I think sectorally like I think about the sector that we're in and so for us it's really thinking about how do we build a strong sector and that has a lot of tentacles from the businesses themselves to the private sector to the public sector to the governor down to the you know the manufacturing networks to the alliances this is why the language around ecosystem fits so much better for me um and so the thing the first thing that I was thinking about when I was listening to your question is like what I think is so important about esops and cooperatives is this idea of governance that you we are relearning democracy in our work places I think you said that we're relearning being in school we're relearning what it means to train it we're relearning what that means in our work in our workplaces and that's what we ultimately have is we learn how to be on a board we learn how to have our voice heard we learn how to have our voice heard and then not get what we want which is more important you know particularly in places right now so I think there's something about the Deep level of participation in the companies that we're building and the ecosystems that we're building and their cross communication is that was what really where the strength of Social Capital comes from and I like again just the e system words and this is really the work that we did early on with the Aspen Institute about the multiple forms of wealth so really seeing Social Capital as a form of wealth that we need to hold deeply and map out and understand and pass on within our ecosystems and when you have the generational of wealth then you start to have the generational also of those social those social ecosystems and that Social Capital as well so that's my shot at it but we'll see I'll I'll add again bring it down to the personal level um something that follows on from what you said Molly so the Learning and Development that uh we offered at folience a lot of it is um just around simple communication and so giving positive feedback detailed feedback um appreciative inquiry uh open-ended questions things like this in manufacturing it's just there there are more men than women so there are more men that go through this and we were doing this two-day session to start it off and so um part of the homework was use some of this well what were you going to use it you're going to go home and so every time we get these stories of these guys would go home and start asking open-ended questions or giving good communication back to their wives and their wives saying who are you and and so it's funny but it's also it's developing different traits that are brought out into the community and so um I think all of us encourage that Community activity I would encourage our Executives to take board positions whether it's on nonprofit or for-profit companies to get more executive development you see esops always out in the community doing community cleanups supporting Charities matching donations all of that so it it does become a fabric of the community I'll maybe add one very small quick example um to gets to the Social Capital part we are we found that we needed to be and we're committed to being a recovery friendly workplace and that's because we had an associate die from overdose we have so many grandparents raising grandchildren due to losing their children to substance misuse and that I think at a fundamental level is a company recognizing that you need to change your contract with workers and you need to change how you think about where people have been and what they're bringing to you and then also how to manage uh you were talking about absences earlier you know well why are you absent what does your lad act say how do we work through this where are you in your recovery joury Journey so that you are very aware again no surprise new New Hampshire and Vermont uh we have a major opioid misuse crisis um and unfortunately it's on the rise again but I think a company you you need to think about that in your social contract as well it's not just an extraction mindset it's a partnership as you say kind of a building shared value and Social Capital it's it's just one example of that as you were asking that great question um hi um so not all esops are created equal there are obviously different percentages of ownerships within uh various ESOP structures do you find that there are differences in um the way they operate depending on that percentage of ownership do they act feel um uh react similarly or differently if it's 20% or if it's 100% from your experiences um so I I have been with companies that have been uh partial esops that have made the transition to 100% ESOP and I say that it really comes down to the education and not the percentage and um one of the biggest issues coming back to it's sort of Mantra of mine it's about shared value not shared control it's getting people to understand the difference between shared ownership and being the owner and whether that's at 20% 30% 50% or 100% is really the same and how they can use their licensed act to affect uh the what what happens every day um certainly when it's 100% it it's a more credible um sort of thesis to say you are the only owner and not that you're sharing it with somebody else and not getting into the mechanics of s distributions and dividends and other things that that sort of mess up the calculation so it it makes it a clearer picture but I think it really just comes down to that education and the communication with the employee as employee owners and what it means to be an employee owner I think we have time for another question hey Julie Mentor at transform Finance um I so in the previous panel we were talking about how do we grow this field and I'm struck that a few of you at least operate more conglomerates or it was interesting to hear about the media company acquiring an ambulance company um I'm curious how you think about existing employee owned companies acquiring other companies as a way to transition them uh in terms of helping with the the culture change and and kind of maybe the financing if that's easier so curious if that's the strategy that you all think about and if it's something that you think should be uh adopted more broadly I'd love to jump into this one because so when when we were looking at the trailer company the the owners wanted it to be employee owned but they were very concerned that um the management would be distracted by learning how to run an ESOP which is not a small thing and so they really like the idea of plugging into a holding company structure and we are not the only ones Chris you're going to hear from later today they're doing the same thing um there there is an advantage to being bu being bought by an employee owned company to become employee owned as opposed to going through that Journey on your own and you see a lot more employee-owned holding companies and a lot of m&a that's happening I'll also say now that I'm no longer involved with falland so it's not self- serving that I think there's going to be more consolidation in the ESOP space because smaller esops have a great onus on them not just to worry about their business and succession of their business but succession of compliance issues knowledge of the ESOP and sustainability and if esops get together I think that there is an economy of scale and this is not the PE economy of scale with a carve out it's a multiplier effect that we've seen and again you'll hear from Chris and others uh later so I do think that there is going to be more of this um happening in the ESOP space yeah I think it's a great strategy it's a great model um I think it's one that's going to be necessary to sustain the ESOP model recky said smaller esops um but finding the right fit is probably the biggest challenge right of finding um that company that the the cultures really will Jive or someone that you know depending on what their ownership structure looks like and what their their challenge is how does that fit in the context of making two ESOP come together and so uh there's complexities there that I think people shy away from in terms of how do we merge two valuations how do we deal with the trustees there's those sort of things um so the more we can get better at how do we make that more seamless I think the more um that's a really good strategy to sustain this flywheel of employee ownership because I think um it would not do the model any favors if we kept having a lot of ESOP sell out completely um you might get short-term wealth for the people who are currently a part of that ESOP but you're losing the future flywheel effect of that wealth that gets created by having that ESOP continue into perpetuity so uh I think it's a great strategy and one I think collectively um as a uh community of ESOP um uh practitioners and professionals how we can continue to make that easier it's good is it like the Borg from Star Trek assimilate join the collective is that how it works we we'll work on the marketing for that I I think we are out of time um thank you all for joining us um don't want to stand between you all and um our lunch here um and thank you again if we could get a a round of applause for our our wonderful guests