One of the country’s longest running car dealerships said it plans to sell the company to its employees.
After 115 years, Eich Motor Company in St. Cloud has become employee owned through an employee stock ownership plan (ESOP).
Founded in 1898, Eich Motor got its start selling farm implement equipment, buggies and wagons. The company sold its first Studebaker on March 13, 1910 for $1,413.
In began selling Volkswagens in 1960 and Mazdas in 1975.
(Photo: Officials at Eich Motor Company in St. Cloud say this is the first VW Beetle sold.)
Company president Linda Eich DesJardins, said all of the company’s 75 employees will remain and the company’s management will state in place.
“It was my desire to share ownership and future potential with the employees who have helped build this company,” DesJardins in a statement. “Employee ownership maintains current jobs and improves retirement outcomes for all of our employees.”
Eich is not alone in selling to its employees.
In December, MPR’s Tom Robertson reported
that after 46-years Luekem’s Village Food grocery stores in Bemidji and Wahpeton, North Dakota, were sold to its 400 employees.
Robertson writes that “there are some 11,000 employee stock ownership programs in the United States. Another regional grocer, St. Cloud-based Coburn’s, was sold in 2006 to an employee stock ownership plan. Scheels sporting goods stores based in Fargo are another example.”
Employee ownership comes in many forms. But in general, it appears selling companies to employees is good business, not only for the companies, but for employees as well.
According to the National Center for Employee Ownership, closely held companies grow “about two to three percent faster per year after they set up an ESOP than they had been growing relative to the same companies before the ESOP.” But data for publicly held companies isn’t conclusive, according to the center. Some studies show a positive effect, while others show just the opposite.
Regardless of the size, companies owned by employees, provide more wealth to their workers, according to NCEO.
“ESOP participants have about three times the retirement assets of comparable employees in comparable companies, and about the same amount of diversified retirement assets,” NCEO writes on its website. “They also make about 5% to 11% more per year in base pay.”
Here’s a link to the 100 largest employee-owned companies in the United States.
(Photo: Eich Motor Company in 1958 in St. Cloud, Minn.)