Watch the Video!
A Historical Transition
The employees of Ward Lumber made history recently when they purchased the 130-year-old business as a worker cooperative. The transaction marks the first employee ownership contract of its kind in the North Country region of New York State.
The lumber products and hardware store, which has locations in Jay and Malone, N.Y. and employs 50 local people, has been in Jay Ward’s family for four generations. Ward, who will continue his leadership role as the company’s chief executive officer, signed a contract with his employee team that makes Ward Lumber the largest worker-owned cooperative in the region.
“Every business is going to go through a transition, whether that is by design or default,” said Ward. “Rather than choose liquidation or selling to some other business that would change the culture, I wanted to look at employee ownership. Employee ownership vests the control of the company in the hands of the people that work it every day, who live in the communities that we serve, and have that vested interest in ownership. I really wanted to empower the employee team to make decisions on their behalf for their benefit.” – Jay Ward
Ward Lumber has been a business pillar in the community since 1890, providing local jobs, supporting the region’s farm and construction industries, and having direct and indirect economic impacts on area businesses and communities.
“This co-op is more than a change in ownership. It’s an opportunity to shape a future for Ward Lumber that is best for the business, our staff and the community. It’s an amazing way for people like me to help carry Ward Lumber into the next generation.” – Alex Pond, board member and new employee owner
The Journey to Employee Ownership
Ward Lumber’s journey to employee ownership began in 2018, when Jay met with U.S. Senator Kirsten Gillibrand at ANCA’s offices in Saranac Lake to learn about the Main Street Employee Ownership Act, which the Senator sponsored. The federal legislation, which passed with bipartisan support in 2018, was designed to improve access to capital and supply technical assistance to businesses interested in pursuing employee ownership transitions.
Ward and his staff have worked closely with Rob Brown, director of CDI’s Business Ownership Solutions, to provide intensive support and training on the business transition process. Brown helped guide the team through the worker ownership transition — from initial inquiry to financial and business analysis to legal structuring and financing of the buyout.
“It’s been amazing to watch these workers develop the leadership and business skills needed to take over. By solidifying the local ownership of the business and jobs, these workers can now chart their own future and the future of the enterprise and build wealth through ownership.” Rob Brown – Director, Business Ownership Solutions
Ward’s flexible succession plan and successful buyout were also supported through training, business plan development and grant writing assistance provided by the SUNY Canton Small Business Development Center (SBDC) at Clinton Community College (CCC), financing from Cooperative Fund of New England (CFNE) and Capital Impact Partners, and a $250,000 grant from Empire State Development (ESD) awarded through New York State’s Regional Economic Development Council initiative.
Smart Succession Avoids Job Losses Due to Business Closure
Ward Lumber’s transition to worker ownership comes at a time when local businesses face significant challenges, exacerbated by the COVID-19 crisis. In New York State alone, even before the pandemic, an estimated 3,700 businesses closed each year due to owner retirement, leading to a loss of 13,260 jobs annually. Surveys indicate 79% of business owners want to retire in the next ten years, 57% in less than five years, and 33% in less than three years. Fewer than one in five owners have a credible succession plan, and most do not understand business transition options or processes.
As New York’s North Country contends with these odds, its rural communities face widespread business closures and job losses that would have detrimental impacts on the regional economy. Employee ownership models such as worker cooperatives offer a viable solution that can help sustain businesses and jobs. Worker-owned businesses tend to maintain above average retention rates of talent, weather economic stressors better than traditional business models and keep wealth in local communities.
Business owners interested in transitioning their companies to a worker ownership model are invited to contact the Center for Businesses in Transition at transitions@adirondack.org or the Cooperative Development Institute at rbrown@cdi.coop.
