Using ESOPs for Economic Development at the State Level

Employee Ownership as a Model for Securing, Sustaining Business looks at employee ownership as a tool for economic development for the state of Minnesota:

Employee ownership in Ohio

The article uses Ohio as a model for implementing employee ownership models at the state level:

Regardless of the legal structure chosen, Ohio points to employee ownership as a key to industrial stability and sustainability.

The article discusses the involvement of the Ohio Employee Ownership Center (OEOC) and its findings:

Kent State's OEOC has worked with 566 Ohio companies and retiring owners in the past 20 years. A minority of those firms was successfully converted to ESOP ownership. A survey of 118 such companies, however, found that better than 80 percent were equal to or superior to competitive industry peers in profitability, rate of capital investment and growth in employment - important factors for all local and regional economic planners.

Indiana's ESOP Initiative (IEI)

The article references the recent efforts of Indiana's ESOP Initiative (IEI).

Business Information Flow and Academic Discussions

It also stresses the importance of exploring how business information flows from the state level to the local level and to the business community. It also stresses the importance of including ESOPs and other employee ownership in academic discussions:

"And business schools in Minnesota, which seems to be one of the last growth professions in the state, should make sure that students learn about ESOPs, cooperatives and other employee-owned business models."

Takeover Defense Mechanism?

The article mentions using ESOP's as a takeover defense strategy. While this strategy was more common in the 1980s, it is not utilized often today. If you are looking for more historical information, ESOPs in Merger and Acquisitions in Large Companies provides a good discussion of how some ESOPs were used in the 1980s to prevent hostile acquisitions or to save failing companies, often times with bad long-term results.

Other Local Initiatives

Here are some additional initiatives not discussed in the article:

• Vermont Employee Ownership Center (VEOC)
• Minnesota Employee Ownership Fund