Hansen Plastics Corp. (Elgin, IL)
Elgin plastics company's ESOP breaks the mold discusses Elgin, IL based Hansen Plastics Corp., a 100% ESOP-owned plastic moldings company with 60 employees. Their employee averages 10 years of employment and they have a low turnover rate:
The company Hansen currently has 60 employee-owners who have an average of 10 years employment with low turnover, a characteristic that's not uncommon for an ESOP, according to Michael Keeling, president of The ESOP Association.
The company uses employee ownership as a way to distinguish them from their competition:
"When we do a sales pitch, usually what this potential customer wants to know is, why to go with us," said Roy Lilly, president and CEO, "We have a completely different, positive attitude. These employees have stock in the company."
The company is run by a three-person Board of Directors and an ESOP Committee and the company uses Open-Book Management, which increases quality and productivity:
When employees are a company's owners, they have a vested interest in the company's bottom line, which increases quality and productivity, explains Vice President of Operations Tim Bayer. "No one is departmentalized," he said. Employees have open access to the company's statements of profits and losses.
The company also credits part of its growth and success to the input of the employees:
Hansen's growth and success is also based on internal changes and advancements, due in large part to the input to management provided by the employee-owners, according to Lilly.
Outside his office door, which is directly adjacent to the manufacturing area, sits a stack of bright pink "Continuous Improvement" forms, filled with workers' suggestions, each of which Lilly carefully considers. Throughout the work area, Lilly can point out machinery that once took one person per machine to operate, but through employee input has increased efficiencies that require only one person for four or five machines.
UPDATE 4/29/08:
Breaking the mold: Hansen Plastics competes globally provides a company profile, discusses how they compete globally, and how the ESOP was setup to reward long-term employees and serve as a morale builder:
Before stepping down, Watermann sought to reward Hansen's longtime employees who helped fuel the company's steady growth, according to Lilly.
"He found this ESOP (employee stock ownership plan) option and decided to sell the business to us," Lilly said.
He said the nice thing about ESOP is that employees need not purchase the company out of their own pocket. "You buy it from company profits -- so it didn't cost employees any money," Lilly said.
He described ESOP as a morale builder as well, "because when an employee makes a bad part -- it gets them right where it hurts -- in their wallet."