June 9, 2019; VT Digger
“Vermont ranks third in the nation for the number of people working in companies with some form of worker ownership, including Employee Stock Ownership Plans, or ESOPs, and worker cooperatives,” reports Anne Wallace Allen for VT Digger.
These numbers come from Nancy Wiefek, research director of the National Center for Employee Ownership (NCEO) in Oakland, California. According to Wiefek, the only states with a greater percentage of employee ownership are North Dakota and Iowa.
Wiefek adds that the concept of employee ownership is gaining ground. “The ESOP structure is becoming more comfortable and familiar to bankers, so there are a lot of transactions happening now,” she said.
One reason for Vermont’s high rank is the statewide employee ownership nonprofit, the Vermont Employee Ownership Center (VEOC), which was founded in 2002 and which is holding its 17th annual conference today. Don Jamison, founding executive director of VEOC, says he expects 250 people to attend today’s conference, up from the normal attendance of 150–175. More than 40 Vermont companies with more than 3,000 workers are at least partly employee-owned, according to the VEOC.
“Vermont ESOPs,” notes Allen, “include the Proctor-based Carris Reels, one of the state’s largest manufacturers; Chroma Technology in Rockingham, and King Arthur Flour in Norwich.” Carris Reels has 125 workers in Vermont, 755 total, and sales of $140 million. Chroma employed 113 as of 2018 and is slated to expand and employ 25 more; its 2017 sales totaled $31.6 million.
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“This spring,” Allen says, “the Middlesex chocolate maker Nutty Steph’s became a co-op, with an equal share going to each of the four owners.”
King Arthur Flour and Gardener’s Supply are also prominent Vermont-based employee-owned companies. Gardener’s Supply was named in 2018 by the ESOP Association as ESOP company of the year; the first employs about 225 people. Two years earlier, King Arthur’s Flour, which employed at the time 341 people, was similarly honored. Vermont-based publisher Chelsea Green also became a 100-percent ESOP owned company earlier this year.
As NPQ has noted, according to the Oakland, California-based nonprofit Project Equity, baby boomers “own 2.34 million businesses, employ 24.7 million people, and have combined annual sales of $5.14 trillion. It is estimated that 80 percent of these businesses lack a plan for what they are going to do when their owner retires or, if misfortune falls, dies unexpectedly.”
Wiefek notes that, “a lot of owners, when they think about what they want to accomplish when they sell a company, it’s not only the financial benefit: they also want to feel good about what happens to the company afterwards.” Wiefek adds, “This year particularly has been a hot year for ESOPs just from talking to professionals on our network. Our (attendance) at national conferences has been record-breaking.”
As of 2015, through pension-financed ESOPs, 10.8 million employees own all or part of 6,669 companies nationwide. Last year, the federal government made it easier to convert existing family-owned businesses to employee ownership by passing the Main Street Employee Ownership Act, which has three central provisions:
- Update SBA’s lending practices to better serve employee-owned businesses.
- Empower the SBA to assist small business owners convert their companies to employee ownership through outreach and training programs.
- Direct the SBA to coordinate with funds licensed as SBA Small Business Investment Companies and its microloan program to consider employee ownership as an area for investment and lending.
At a conference he hosted two years ago, Jamison observed the importance of employee ownership in the effort to begin to reverse the nation’s wealth gap. “Many people now, they don’t have much wealth,” noted Jamison. “hey only have wage income. So, the aim is to increase the amount of people who actually have some wealth through shared ownership.”—Steve Dubb