On June 21, 2014, Construction Equipment Guide published:
Sharrow Lifting Products of New Brighton, Minn., has come a long way since its inception in 1952 to the successful company that is it now.
The company was originally named C.C. Sharrow Company after founder Clarence Charles “Shorty” Sharrow. Over the course of the next three decades, Sharrow’s sons, Clarence, Larry and Bob, joined the business before eventually taking ownership in the early 1970s. Under family ownership, the company maintained as a solid but stable business operation for the next 20 years.
With an eye towards retirement, the Sharrow brothers began developing an ownership transition strategy in the early 1990s that involved an Employee Stock Ownership Plan (ESOP). With the plan set into motion, the ownership and management transition went smoothly as employees quickly gained equity in the company.
Under a new management team staffed by employees with extensive experience and an intimate knowledge of the company’s operations, Sharrow Lifting Products has grown three-fold since 1994. Within that time, the company has added new lines of business and two additional branch locations.
“We are not much for singling out any specific employees, but I would be quick to say that our employee base, as a whole, is the best group of people we have had in our long company history and the largest reason for our success and optimism for the future,” said current president Bob Downs.
Sharrow Lifting Products’s current lines include a range of heavy duty lifting products, such as custom made slings and associated rigging hardware and fixtures.
The company also has a crane and hoist line where it designs, installs, inspects and services all brands of overhead cranes and all brands of electric and manual hoists. Sharrow also has a training division offering classes for customers based on many industry related topics.
In addition, Sharrow rents a full line of electric and manual hoists, trolleys and a line of hydraulic equipment. “Our largest sale was a few years back when we landed the order for the cable assemblies that operate the retractable roof at the Arizona Cardinal stadium in Phoenix. This was our most famous job to date,” said Downs.
The New Brighton facility has 31,000 sq. ft. (2,880 sq m) under roof including a full sized training room. The Hibbing, Minn., facility has 4,500 sq. ft. (418 sq m).
Sharrows sales staff and technicians receive ongoing specialized training from both vendors and industry specialists. Sharrow also offers a wide variety of industry specific training courses for its customer base. In addition, there are standard classes and also customizable classes offered year round.
Sharrow products have no specific life span, as it is a function of the care and use they are subjected to. Sharrow is a job shop, so some common slings and rigging hardware are always available for walk-in customers, but most slings are custom built as ordered and turned around in either hours or a few days depending on the workload.
After 62 years in business, the future for Sharrow still looks very bright. The employee owners are committed to increasing both their size and efficiency. As they fine tune their processes, it will give Sharrow the proper basis to continue to open additional branches across the area and beyond, according to Downs.
“The largest challenge in the past and into the future has always been finding quality people that ‘get it,’ Downs added. “We seek employees that are committed to the goal of many — knowing that their commitment to the whole will in turn give them what they need for themselves and their families. That, in essence, is what employee ownership is all about, and what our success is based on.”
Region: Midwest Edition | StoryID: 23047 | Published On: 6/21/2014
Binary economist Louis Kelso was the architect and pioneer of the Employee Stock Ownership Plan (ESOP), which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield––on the promise of the capital investment’s future income.
The ESOP provides access by employees to capital credit to buy company stock and pay for it in pre-tax dollars out of what the assets underneath that stock yield. Bank loans are made to the ESOP trust that represents employees, instead of to the company (current owners). The trust gives the lender a note and with the borrowed monies makes the investment in the company stock. The company then issues stock to the ESOP trust. The company now has the money, which otherwise could have been borrowed directly without the ESOP (benefiting current owners), to make the planned investment and repay the loan from pre-tax forecasted future capital earnings. The company promises the bank to make pre-tax full-dividend payments to the ESOP trust to enable the trust to replay the lender. Assuming that it would take five years for that capital investment to pay for itself, at the end of five years the employees now own the full stock value in the expanded company.
Companies can use the ESOP as the credit mechanism to create employee ownership in ratios up to a 100 percent leverage buyout. Nothing has been taken away from the existing owners. However, using the ESOP, the existing owners will surrender the exclusive right to acquire more ownership in the company and have a smaller percentage of ownership in the total company, but they have not been prevented from making a fair rate of return on their thus-far accumulated ownership shares because the company earns a rate of return throughout the process. After the loan has been paid off with pre-tax earnings, the employees will have more earnings from capital and they will have more consumer power to purchase products and services. Multiply this by tens of thousands of employee-owned companies and the economy revs up to grow dramatically.
There are now over 11,000 profitable ESOP companies, of which 1,500 of those companies are worker majority owned, with workers paying for their stock shares out of future corporate profits, not by reducing their take-home labor worker incomes.
