Building A Stronger Fabrication Company Through An Employee Stock Ownership Plan

By Tom Adams 

Images courtesy of FabArc Steel Supply.  

For steel fabricators, success depends on a range of important decisions, from investing in equipment and production capacity to planning for the next project on schedule. Just as important are the decisions about people: How do you attract skilled employees? How do you retain experience? And how do you create a culture where employees are genuinely invested in the company’s success? 

At FabArc Steel Supply, those questions have been approached through employee ownership. 

Employee ownership has been part of FabArc Steel Supply’s story since 2017. In 2024, FabArc Steel Supply became 100% employee-owned through an Employee Stock Ownership Plan (ESOP), giving eligible employees the opportunity to become beneficial owners of the company without purchasing the shares allocated to their ESOP accounts. This transition has offered a chance to rethink what it means to build a company for the long term. It has also provided lessons that may be useful for other fabricators considering an employee ownership model. 

Why Become 100% Employee-owned?  

FabArc Steel Supply’s success has always depended on the people behind the work. Steel fabrication requires skilled employees who understand the importance of precision, quality, safety, and customer service. Recognizing employees’ role in the company’s success also means giving them an opportunity to share in the value they help create over time.   

Becoming 100% employee-owned through an ESOP provided a way to make that opportunity a reality.  

Eligible employees can become beneficial owners through their ESOP accounts without having to purchase the shares allocated to them. As the company creates value over the long term, employees can share in that value. The ESOP also provides an important retirement benefit, along with the opportunity for employees to share in company profits through semi-annual bonuses. 

That combination was important to the company because it connects FabArc Steel Supply’s success with the people who make that success possible. Rather than viewing employee ownership simply as a change in corporate structure, it represents an investment in FabArc Steel Supply’s workforce and long-term future. 

How Ownership is Influencing Company Culture, Quality and Accountability 

An ESOP alone does not create a strong employee-owned culture. Leadership has to communicate what ownership means and show employees how their individual contributions affect the organization. When employees understand that they have a stake in the company, everyday decisions can take on greater significance. Quality is no longer just the responsibility of a quality-control team, accountability is not limited to managers, and every employee has an opportunity to influence the company’s reputation and performance.  

Employee ownership does not eliminate mistakes or guarantee that every decision will be the right one. Instead, it creates an environment where employees have another reason to speak up, solve problems, and take pride in getting the job done correctly. 

For leadership, the responsibility is to reinforce that mindset through communication, transparency and accountability. Employees need to understand how the business is performing and how their work contributes to that performance. Ownership works best when employees do not simply know that they are owners, but understand what being an owner means. 

The Role of an ESOP in Recruiting and Retaining Skilled Workers  

Workforce development is one of the biggest challenges facing manufacturing and fabrication companies today. Skilled employees are essential but experienced workers can be difficult to find and even harder to replace. An ESOP can give fabricators another tool for attracting and retaining that talent. 

From a recruiting perspective, employee ownership gives prospective employees an opportunity that extends beyond traditional wages and benefits. They can join a company where they have the potential to build long-term value through the success of the organization.   

Retention is especially important in fabrication because experience has tremendous value. Skilled employees bring technical knowledge, familiarity with processes, and an understanding of customer expectations that cannot be replaced overnight. When those employees remain with the company, they also have the opportunity to pass that knowledge on to newer team members. 

Employee ownership is not a replacement for competitive compensation, strong leadership, professional development, or a positive workplace. But it can complement those efforts by giving employees a tangible connection to the company’s long-term success.  

Lessons for Fabricators Considering an ESOP 

For companies considering an ESOP, the biggest recommendation is to recognize that the transition is about much more than the financial or legal structure. 

• The first lesson is communication: Employees need to understand what an ESOP is, why the company chose it, and what it means for them. Leadership should be prepared to answer questions and communicate consistently throughout the transition. 
• The second lesson is education: Employee ownership is most effective when employees understand the business behind the ownership. They should have opportunities to learn how the company operates, how decisions affect performance, and how their individual roles contribute to the larger organization. 
• The third lesson is culture: Companies should not expect an ESOP to instantly transform their workplace. Becoming employee-owned creates the framework for an ownership culture but leadership has to reinforce that culture every day. That means recognizing employee contributions, encouraging accountability, and giving people opportunities to participate in the company’s success. 
• Finally, companies should think about the ESOP as a long-term commitment, not a one-time transaction. The transition itself may have a defined completion date but building an employee-owned company is an ongoing process. Leadership must continue communicating, educating, and finding ways to make ownership meaningful to employees.  

Before pursuing an ESOP, fabricators should ask themselves whether they are prepared for that commitment. Are they willing to be transparent with employees? Are they prepared to educate their workforce about the business? Can they create an environment where employees feel comfortable taking responsibility and sharing ideas? Those considerations are just as important as determining whether an ESOP makes financial sense. 

Today, the ESOP gives eligible employees an opportunity to share in the long-term value they help create, while providing an important retirement benefit and the opportunity to share in company profits through semi-annual bonuses. 

But the value of employee ownership extends beyond those benefits.  It creates a connection between the company’s success and the people behind that success. Employees gain a stake in the future they are helping build and gives leadership another tool for creating a culture centered on quality, accountability and long-term thinking. 

For other fabricators considering an ESOP, there is no one-size-fits-all solution. Every company has different goals, employees and circumstances. FabArc Steel Supply’s ESOP has shown that when employee ownership is supported by strong communication, education, and leadership, it becomes much more than an ownership structure. It becomes a competitive advantage.  

In an industry where skilled people are the foundation of success, giving those people a meaningful stake in the future may be one of the most valuable investments a company can make. 

fabarc.com

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