Ward Lumber completes historic transition to employee ownership

JAY | In what could become a model for the North Country or even the nation, employees at Ward Lumber Co. in Jay and Malone have purchased the company, which had been family-owned since 1890. The transition, which was facilitated under the federal 2018 Main Street Employee Ownership Act, comes as an increasing number of company owners seek to step back from daily operations, while simultaneously protecting their legacy. But the move is also seen as empowering workers and, perhaps, as a fundamental shift in the corporate power structure. It was something company owner Jay Ward had been thinking about for a long time, from a lot of different angles. "I first thought about this 25 years ago, but was told it couldn't be done," said Ward, fourth-generation owner of the lumber and hardware company, which has about 50 employees. "I wanted to transition ownership and keep Ward Lumber operating into the future, but I didn't have any idea how to make that happen." Ward will remain with the restructured company as chief executive officer. The typical options for owners have been either liquidation or sale to a new owner who may not share the departing family's values. "And when that business goes away, it's probably not going to be replaced," Ward said. An alternative is for the employees to effectively buy out the owner — in this case with the help of a state grant — sharing in profits and responsibilities and keeping the store open for the benefit of the community. Ward said this is a satisfactory outcome, both financially and philosophically. "It's a lot of the 1% that runs the world," he said. "This is my pushback for the democratization of business." The path forward began in May 2018, when Ward met with U.S. Sen. Kirsten Gillibrand (D-NY) at an event hosted by the Adirondack North Country Association (ANCA) at its Saranac Lake offices. According to ANCA, the senator met with local business owners and economic development leaders to promote the Main Street Employee Ownership Act, which was designed to improve access to capital and supply technical assistance to businesses interested in employee ownership. "Ward Lumber's successful transition is a great example of how we envisioned the Main Street Employee Ownership Act would work for businesses across the nation," Gillibrand said in a statement. "Cooperative ownership models improve business productivity, increase wages and boost employee retirement savings. All this while creating greater stability and resilience for businesses, workers and local communities." Ward said that meeting generated a three-year process that has taken a lot of hard work and a lot of explaining. "People would look at me and say, 'you're going to do what?' It was a cross of puzzlement and disbelief," he said. "It was a very unique concept and it was foreign to a lot of people; it made sense to me, but it was not a typical transaction." Ward Pine Mill, the manufacturing division of the Ward Lumber family enterprise, is operated by Jay's brother Jeff Ward. Ward Pine Mill became an independent business in 2017 and is not included in the employee ownership transaction. According to ANCA, 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. According to ANCA, 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, along with a $250,000 grant from Empire State Development (ESD) awarded through New York State's Regional Economic Development Council initiative. Those who helped complete the deal said its significance could reverberate through the North Country and beyond. "It has been an honor to support Ward Lumber along their path to worker ownership," said ANCA Executive Director Kate Fish. "We believe that a diversity of business ownership models strengthens our regional economy and expands opportunities for aspiring entrepreneurs — particularly as we face tens of thousands of business closures across the region due to retirement." Along with the family legacy, Ward said he was also concerned about his employees, many of whom had spent years with the company. And at a time when local companies are having trouble finding help, Ward said studies show that an ownership share helps with both recruitment and retention. "This is a hard place to make a living," Ward said. "We're losing businesses all the time, and small business is really the backbone of the community. And being fourth generation, I didn't want to be the one to end the legacy."

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Ward Lumber completes historic transition to employee ownership

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