The workers used an employee benefit plan that gives them ownership interest in the company for whom they work
As of Jan. 1, Loftness Specialized Equipment became 100 percent employee-owned.
Using an American financial tool called an Employee Stock Ownership Plan (ESOP), the 85 employees bought all Loftness shares.
Located in Hector, Minnesota, Loftness manufactures a big list of farm equipment. The ESOP they used is an employee benefit plan that gives workers ownership interest in company for whom they work.
The ESOP borrows money to buy existing shares. The vendor receives full payment for the value of the company from the ESOP loan.
From the employee's point of view, the ESOP actually is a 401(k) retirement savings plan, allowing workers to save and invest.
The purpose is to provide a retirement benefit package that doesn't break a company.
According to previous Loftness owner Dave Nelson, the ESOP was initiated by the company.
"Each staff member accrues stock according to a formula factoring in years of service and their wage. Response from the staff has been very positive," Nelson said.
"A lot of people didn't understand how it works. They figured that if they're buying the company, then their pay cheques would be smaller, but that's not how it works.
"Each person gains more stock as they work. Nobody pays into it. The guys who are going to be here 15 or 20 years, it's going to be pretty good for them.
"In addition to the retirement plan, it guarantees the company stays in Hector and doesn't get bought up by some bigger firm. We're a small manufacturing town and we've lost enough companies already. Our family is committed to keeping this plant here in Hector."
Meet the new owners of Loftness Specialized Equipment. As of Jan. 1, these 85 employees assumed ownership of the company using an American financial tool that creates a new 401K. | Loftness photo
Nelson grew up in the company. In 1979, his father, Marv Nelson, bought the company from founder Dick Loftness.
Marv Nelson expanded into other product lines including equipment for vegetation management, grain bagging, crop shredders, fertilizer and lime spreaders.
After Marv died, ownership of the company passed to family members.
Loftness Manufacturing was founded in 1956 by Dick Loftness, a farmer from Hector. He initially produced a line of snow blowers.
In 1979, he sold the company to local farmer Marv Nelson.
Today, Loftness manufactures the VMLogix line of vegetation management equipment, the GrainLogix line of grain bagging equipment, the FertiLogix line of fertilizer and lime spreaders, and the CropLogix line of crop shredders.
For more information visit www.loftness.com.
As seen in Producer.com.