Vespoli Puts Workers At The Helm
by ALIYYA SWABY | Jul 6, 2016 8:06 am
In two months, Amanda Ward will have worked to sell Vespoli USA racing rowboats for a full year — meaning she will be an owner of the Fair Haven company.
Some of Ward’s coworkers already own the company.
That’s because company founder Michael Vespoli is planning to retire soon and last May established an employee stock ownership plan (ESOP), giving the company over to all full-time employees who have been there for at least a year.
With no heir to the company after almost 36 years, Vespoli, who is 69, decided he didn’t want his employees to be swallowed up by a larger suburban or foreign company and be fired at will. He trusted them to navigate its direction and continue building and selling high-quality carbon fiber racing shells to coaches around the world.
At the first “Owners’ Day” held behind the 385 Clinton Ave. property, Vespoli reiterated the new ethos of the company. He told each person present exactly how much money they could walk away with, given the current value of the company and the years they had devoted to it.
Vespoli USA sells and repairs one-, two-, four- and eight-person boats for high school and college coaches participating in regattas. Coaches generally buy up to three boats at a time. Three eight-person boats cost anywhere from $80,000 to $120,000, Ward said, depending on the thickness of the boat, layers of carbon fiber and any high-performance add-ons.
The ESOP gives employees stock ownership at no upfront cost. This is no socialist attempt to spread the wealth. “This is not Bernie Sanders talking. I am a capitalist,” Vespoli reassured the group who turned out to last Friday’s barbecue. The ESOP “will provide you with a financial future you never would have had in any other job.”
The process is complicated. Vespoli sold the company to a trust. Full-time employees who have been with with the company for at least a year gain ownership “not through capital investments, but through commitment of work,” he said. The Department of Labor and Internal Revenue Service did an independent valuation of the company, which Vespoli negotiated and finally agreed to the sale price.
He personally loaned all of the money to buy the company’s shares for the trust, and will get paid out only if the company does well.
Each year a percentage of shares in the trust are allocated to individual employee accounts, based on the annual number of hours employees spend working. The more years employees stay with the company, the more right they have to the shares in their account. An employee who stays for three years is 40 percent vested, meaning they can leave the company and receive 40 percent of their share value.
How many of you have been here for at least six years? Vespoli asked.
Several people raised their hands.
“You’re 100 percent vested,” he said.
The more valuable the company and its shares, the more that ownership is worth—encouraging people to work harder.
“We wouldn’t be doing our job if we didn’t drive up the value. When you’re ready to retire, you can have more money than you thought you were going to,” Vespoli said.
David Trond, vice president of sales and marketing, is fully vested; he’ll have worked at Vespoli USA for 25 years in September. The new plan “benefits everybody,” including hourly and salaried workers, he said.
“I always wondered what Mike was going to do” upon retirement, Trond said. “For us, this is the best option.”
Vespoli “wants to be able to give the company over to people who are going to care about the company as much as he did,” said Ward, who has worked in customer service for the last 10 months, two months short of having access to shares.
In the past year, Vespoli said, he has seen a financial upswing in the company. Instead of throwing out rolls of sandpaper after smoothing down a hull, employees save the materials to use for later.
In the first three months of 2016, the amount of money employees saved was the equivalent of the profit they would have made with two new boats—“but we didn’t have to build them,” he said.
Part of the challenge of the new plan is shifting employees from an “hourly” mentality to an “owner” mentality, he said. “That’s not an instant transformation.” He took 10 percent of the money saved in the first quarter to give everyone bonuses, as an incentive.
The next step is to change the culture of the workplace, from top-down to “middle-top”-down. Vespoli will no longer issue directives on the future of the company. He has a five-year contract with the ESOP and will continue on the company’s board of directors, but he plans to leave the operation in five years. The more senior employees will ultimately take on the duty of moving the company forward.
A list of five guiding principles hangs on the wall inside of the office, to remind the new owners of their responsibilities:
• “We are owners.
• “We are craftsmen.
• “We do our jobs.
• “We build each boat as if we are going to buy it.
• “We measure what we do, so we can improve it.”
The shift in ownership is conceptually difficult for some to understand, said Pete Smith, a composite engineer who started working with Vespoli 34 years ago, during the early years of building the company. But others immediately latched on to the idea, with more picking it up each week.
Smith was building some of the first carbon-fiber row boats in England in the 1970s for a company called Carbocraft. Vespoli began selling Carbocraft’s boats in the U.S., before realizing he should build his own. Smith joined Vespoli at the start of his second year in business.
Will Vespoli USA continue to do well and boost the value for the new owners? Yes, Smith said, in part because it continues to put out innovative designs. Its fifth redesign has resulted in a line of high-performance boats, which use a type of carbon fiber that allows racers to move faster through the water, with less resistance. At the same time, they’re sturdier than before, he said.
The company already put out a line of eight-person high-performance boats. In several months it will release the four-person high-performance line.
Going forward, “our fate is in our own hands,” Smith said.