When asked why she chose to “give away” a quarter of her precision-machining company to employees, Acutec Precision Aerospace President and CEO Elisabeth Smith has a simple, commonsense answer: “Having an appetite for growth is a lot easier if you’re the beneficiary of it.”
Skin in the game: In August, Acutec, the largest industrial employer in its northwestern Pennsylvania county, went from privately held to worker-owned through an employee stock ownership plan. The shares, which have a value of $5.5 million, will be given out to current and future employees over the next decade—at no cost to them.
- Said the 40-year-old Smith: “I have a long career ahead of me, but I want the employees to be on that journey with me. … Why not give a stake to the person who’s working their butt off?”
Bringing in applicants: The woman-owned business, founded in 1988 by Smith’s father, Rob Smith, has always had an “empowered, participatory” workforce, but in recent years, it struggled with attracting and retaining the right people, Smith said. Since the ESOP, that’s turned around.
- “It’s made a difference in attracting talent,” she said.
- With more than 400 employees spread across its three Pennsylvania facilities and one South Carolina operation, Acutec is in growth mode and still looking to fill open positions.
The retirement incentive: The firm’s new ownership structure will help provide for employees in their golden years.
- Under the ESOP, when an employee leaves or retires, the company buys them out, and they can place that money into a retirement account.
- “There have been other ESOPs in the community, and some people have seen employees [of other companies] retire with quite a lot of money, so they have an idea of what it looks like,” Smith said.
The productivity effect: Now that employees are part owners of Acutec, Smith sees more interest in cost-consciousness and ROI.
- “We’re hearing things like, ‘Can we save on tooling?’” Smith said. “There are some costs the employees control themselves. The idea now is that they are custodians in charge of some of those profit drivers. They want to look at return on investment.”
The last word: Perhaps the best development to come from the restructuring is the change in team morale.
- “Before, people were kind of burned out, coming out of the pandemic,” Smith said. “How do you inspire people to do more? This is how.”