As Hannibal prepared to adapt ESOP and give its employees complete shared ownership in the company, it didn’t want to reinvent the wheel when it came to implementing the complex plan. Instead, it turned to one of its dedicated customers, Pacific Steel & Recycling, already an established ESOP firm, for advice. To get a closer look at the process, we caught up with Tyson Hendrickson, Pacific Steel’s manager of training and development.
The Bundle – First, can you tell us about Pacific Steel, its business and its markets?
TH — Before we were Pacific Steel & Recycling, we were actually Pacific Hide & Fur back in the late 1880’s. We started out in hide and fur, got into scrap metal recycling during World War I, and then expanded into the new steel business in the 1950s. As of today, our family consists of 800 employee-owners and 46 facilities scattered across the Northwest.
The Bundle – How did Pacific Steel become an ESOP company?
TH — It was the wish of our founder Joe Thiebes Sr. and his sons before their retirement to leave Pacific Steel & Recycling to its people. They had already started giving some ownership back in the form of profit sharing back in the 1970’s and then the transition to ESOP started back in 1988. We’ve been 100 percent employee-owned since 1998.
The Bundle – How and why did Pacific Steel help Hannibal transition to an ESOP?
TH– Employee-ownership sounds great, but there’s a lot of complexity involved with setting one up and it’s always nice to talk to someone who’s gone through the process before. Given the strong relationship we have with Hannibal and our firm belief that the ESOP structure is the best business model in America, we were happy to help them navigate through the process. The more ESOP companies in the world the better!
The Bundle — What advice did you give Hannibal about the benefits of ESOP?
TH — Don’t just do it for the tax-advantages. Do it because you believe giving ownership to your people is the right thing to do. If you still look at your people as employees and treat them like employees after setting up your ESOP, you won’t see the competitive advantage that can come from it. The financial benefits of the ESOP, like any other savings or retirement plan, are for future security. That is why it is important to emphasize the benefits of ownership during employee working years.
The Bundle — So what is the greatest challenge facing companies considering the ESOP model?
TH — The challenge for any ESOP company is to build a culture where their people truly feel like employee-owners. The workforce of the future won’t stay with you just because you have an ESOP, but they’ll stay if they walk into work every day feeling like an owner.
The Bundle — What is Pacific Steel doing to celebrate national ESOP month?
TH — This is the first year we’ve decided to celebrate the month, and we’re doing it by devoting each week of ESOP month to a different theme. For example, the first week consisted of a trivia challenge built around our company’s history and our ESOP. The second week is built around a “rep your ownership” t-shirt fundraising campaign where our people have an opportunity to purchase a shirt that promotes employee-ownership and the profits raised go to a non-profit. The third week is in partnership with the ESOP Association. We are giving our people an opportunity to recognize a coworker by nominating them for “Employee-Owner of the Year.”