Ownership that works

Ownership that works: how employee-owned manufacturers are strengthening Minnesota

Ownership is helping manufacturers keep jobs local, build wealth, and plan for long-term stability.

By Kirsten Kennedy, Executive Director, Minnesota Center for Employee Ownership, as seen in CMMA Tour of Manufacturing Magazine 2025 Year in Review

Manufacturing has long powered central Minnesota's economy. From the Brainerd Lakes to St. Cloud and surrounding communities, manufacturing plants provide steady jobs, support local tax bases, and help families build lasting livelihoods.

But today's manufacturing environment is more complex than ever. Inflation, tariffs, and supply-chain disruptions have tightened margins. At the same time, many long-time owners are approaching retirement, raising a critical question for locally owned manufacturers: What happens to the business next?

For a growing number of companies, the answer is employee ownership. What is Employee Ownership?

Employee Ownership is a broad term for business models that give workers a meaningful, long-term stake in the company where they work.

In manufacturing, the most common structure is an Employee Stock Ownership Plan (ESOP). ESOPs allow employees to earn company shares over time as part of their retirement benefits - typically at no out-of-pocket costs.

Other models are gaining attention as well:

Employee Ownership Trusts (EOTs) place company ownership into a trust that operates for the benefit of employees, often providing shared profits and long-term stability without individual stock accounts.

Worker-Owned Cooperatives offer a more direct structure with employees owning and helping govern the business, often sharing profits based on hours worked or role.

While the structures differ, the principle is the same: when employees have a real ownership stake, companies tend to perform better.

"When employees think like owners, better decisions follow - on the shop floor and in the boardroom."

Why It Matters for Central Minnesota Manufacturing

Minnesota is already a national leader in employee ownership. An estimated 248 ESOP companies operate statewide - up from 240 a year ago - with manufacturing accounting for 28% of all ESOP companies.

The economic impact is substantial:

Minnesota-based ESOP companies hold nearly $99 billion in total plan assets

The average employee-owner account balance is about $117,000

Employee-owned companies are more productive, more resilient, and more likely to survive economic downturns than non-employee-owned firms

Research from the National Center for Employee Ownership also shows that employee-owned companies are less likely to rely on layoffs during recessions, which is a critical advantage for regional economies like central Minnesota's.

Well-known Minnesota companies such as Andersen Corp., Marvin, and American Engineering Testing show that employee ownership works at scale, supporting innovation and competitiveness over decades.

Local Manufacturers Leading the Way

Closer to home, central Minnesota manufacturers are putting employee ownership into practice every day.

Companies such as Bondhus Corp., Plastic Products Co., DCI Inc., Wilkie Sanderson, and Hi-Lo Manufacturing span a wide range of manufacturing specialties - from precision tools and plastics to machining and fabrication. What they share is a commitment to keeping jobs local and investing in their workforce.

Many employee-owned manufacturers report stronger engagement, lower turnover, and a culture in which employees understand how quality, efficiency, and innovation directly affect the company's long-term success- and their own future.

"Employee ownership aligns business performance with employee well-being -especially during uncertain economic times."

A Smart Succession Strategy

Employee ownership is also emerging as a powerful succession planning tool.

As manufacturer owners approach retirement, selling to an external buyer can lead to layoffs, relocation, or even closure. Transitioning ownership to employees - whether through an ESOP, EOT, or Cooperative - helps preserve legacy, retain institutional knowledge, and keep businesses rooted in the communities that built them.

At MNCEO, we help manufacturers across central Minnesota explore employee ownership options anddetermine which model best fits their goals, culture, and timeline.

MNCEO also provides education, technical assistance, and connections to trusted advisors for business owners, employees, and community partners.