At the 22nd annual Ohio Employee Owner ship Conference in April, Carbo Forge Inc. was recognized for 20 years of success with its Employee Stock Ownership Plan. The conference — keyed to the theme of Employee Ownership in the Global Economy — was organized by the Ohio Employee Ownership Center at Kent State University.
The 44-employee steel forger in Fremont, OH, is 100% ESOP-owned. According to company managers, founder Myron “Mike” Kraak liked the idea of employee ownership as a retirement strategy. He created an ESOP in 1988 with an initial stock contribution, so that by 1992 the company was 43% employee owned through the ESOP trust. Kraak’s vision was eventually to take the company to 100% employee owned.
“Mike did not have any children of his own,” explains Carbo president and CEO Jeff Woitha. “All of us were his family.” But, declining health did not allow him to complete his ESOP dream and in 2001 he sold his shares in the company to three senior managers, including Woitha. “It was always our intention to follow through with Mike’s dream of becoming 100% employee owned,” says Woitha, “and in 2003, our executive management team began the journey to 100% employee ownership.”
| Recent Developments at Carbo Forge |
“As a company, we were not ready to be 100% employee owned back in 2001. First, we needed to understand more about ESOPs and how they function. We also needed to develop a culture that would allow an ESOP to flourish.”
Carbo Forge (www.carboforge.com) became a member of Ohio’s Employee-Owned Network and took part in the CEO and CFO dinners, roundtables, and annual conferences. “After three years of planning we learned how to administer our plan better, formulate our game plan, and assemble our team,” says Woitha, “and in June of 2006 we became 100% employee-owned.”
Woitha credits the OEOC and the achievement of becoming registered to the new TS:16949 automotive standard for helping them to develop systems for long-term success. As he explained: “An ESOP will not automatically make your company successful. It is not a magic wand. Our recipe for success focuses more on safety, quality, and efficiency, and not as much on the ESOP. The ESOP is a vehicle that will allow our employees to participate in the beneficial relationship that we share with the company if we continue to be successful and competitive. Through the ESOP, we will all retire as owners — so we all need to help the company grow in wealth.”
Woitha attributes Carbo’s success to the employees. “It’s the people that make the difference. You can have all the technology in the world behind you but, if you don’t have the people, you will not be successful.”
Carbo operates in 90,000 ft2 of manufacturing space on 32 acres. In addition to two press forging lines, it operates hammers rated from 1000 to 3000 lb, four of which are equipped with induction heating and material handling equipment. The company also uses three shot blast machines and five coining presses for finishing operations. (See “Carbo Forge: A Quality Standard Pioneer,” Forging May/June 2003.)
Carbo Forge manufactures steel forgings for several markets, including ordnance, heavy truck, light truck, automotive, aftermarket, material handling, agriculture and firearms. The company is certified to the new TS16949:2002 automotive standard as well as 1509001:2000.
Reaching Out to Employee-Owners
The Ohio Employee Ownership Center (OEOC) is a non-profit, university-based program established in 1987 to provide outreach, information, and preliminary technical assistance to Ohio employees and business owners interested in exploring employee ownership. The OEOC provides ownership training on a single and multi-company basis, and is funded by grants from the Ohio Department of Development, private foundations, dues from firms belonging to Ohio’s Employee-Owned Network, income from training contracts and donations.
The OEOC evolved from in a series of research projects conducted between 1984 and 1986 by Dr. John Logue of Kent State University’s Political Science Dept., explored the impact of employee ownership on Ohio’s economy and concluded that it has a positive effect on the local economy. However, it was also found that the utilization of employee ownership was limited, especially in cases where job loss was threatened by the lack of timely and accurate information about how to pursue an employee buyout.
Today, The OEOC’s information and outreach activities promote possible uses of employee ownership under a variety of circumstances, ranging from succession planning to employee buyouts. The OEOC provides free preliminary technical assistance to companies and unions that are interested in exploring the possibility of employee ownership. Although the Center does not provide professional legal, accounting, or valuation services, it maintains a database of lawyers, investment bankers, valuators and other professionals who specialize in providing ESOP services.
The OEOC provides advice to individual companies on structuring employee participation systems and conducts ownership education programs on a single and multi-company basis. The OEOC also provides specially tailored training programs to employee-owned companies on a feefor- service basis.
Ohio’s Employee Owned Network: this is a forum for workers at employee-owned companies to learn from each other how to make employee ownership work more effectively at their firms. Coordinated by the OEOC since 1989, the Network facilitates communication among employee-owners to help them climb the learning curve about how to run an employee-owned company. A second goal is to assist individuals and companies to experience the cultural change from conventional to employee ownership, where everyone feels the risk of ownership as well as sharing in the profits. With joint planning and financial support of member companies, the Network sponsors roundtables, forums, and training workshops that address the unique challenges of ESOPs. Learn more about the Ohio Employee Ownership Center at www.kent.edu/oeoc