FARMINGTON HILLS, MI—Recent history has shown that, while recessions can be broad and deep, recoveries don’t happen all at once. Certain sectors of the economy fare better than others, and some companies survive tough times only to emerge in an even better competitive position. How do they do it? 

 

One way is to get better at what you do. Regardless of economic conditions, customers respond to suppliers that offer new ideas, better systems or expanded capabilities.  

 

Lately, one Detroit area company has managed to do all three, and there may be one good reason why. Five years ago, the owners of Electro-Matic Products Inc, a Farmington-Hills industrial automation firm, announced the formation of an Employee Stock Ownership Plan (ESOP), in which shares of the company are purchased from the current owners and held in trust, with employees as the beneficiaries of that trust. For Electro-Matic, the purchase period recently ended, and on September 29, 2012 the company was officially one-hundred percent employee-owned.  That day, president and CEO, Jim Baker, told employees: “From this point on, it is up to all of us, each and every day, to grow and improve the products and services we deliver to our customers.” 

 

 

Electro-Matic, with around 160 employees and over $100 million in sales, joins a growing list of companies that utilize some form of employee stock ownership as a means of rewarding companywide performance and providing retirement benefits. Back in 2007, Electro-Matic owners Ray Persia, Tom Moore and Jim Baker also felt that an ESOP was an appropriate succession plan. What better way to insure the long-term future of the company than to place it squarely in the hands of those responsible for over 40 years of success?

 

Proponents of ESOP claim there is no greater path to long term growth and financial stability than employee ownership. They may be right. According to the National Center for Employee Ownership, independent research from at least three different university studies indicates corporations that are employee-owned grew well over 2 percent more per year on average than those that are publicly or privately owned. What’s more, when combined with participative management practices, which is often the case with ESOP companies, the growth differential increased to around 10 percent per year! Electro-Matic does not publicize sales data, but company officials confirm double-digit average annual growth since the ESOP inception. 

 

 

Like many distributors that grew up in this part of the world, Electro-Matic cut its teeth on the U. S. automotive industry. Unlike most of them, Electro-Matic was a technology company from the start, founded in 1969 to usher in the first wave of manufacturing automation with solid state proximity sensors, quick disconnect cord sets and other high tech (for the time) components that helped increase productivity on production lines. As welding, forming and assembly stations grew more complex and control-driven, Electro-Matic engineers pioneered the design and manufacture of connector cable assemblies that drastically reduced the time it took to install and startup assembly lines. Later, as both machines and operators grew to depend more on data input and communication, Electro-Matic was there, perfecting the control and display interface that enabled production and supply chain, diagnostic, and machine fault information to flow directly to the manufacturing floor in real time. These products and solutions helped enable revolutionary Just-In-Time manufacturing processes in the 1990s. Over the past fifteen years, Electro-Matic has also diversified into commercial LED applications, leveraging its experience in industrial controls and LED packaging to develop its own electronic message centers, digital billboards and indoor and outdoor area lighting products. 

 

Today, Electro-Matic is organized appropriately into three groups: Automation, Connectivity and Visual Products. Automation is essentially the distributor business, representing key automation component manufacturers, including such global industrial technology giants as Siemens. The Connectivity Group produces servo motor power and drive cable assemblies, along with customized cable carrier solutions and services. Both Connectivity and Visual Products manufacture and market their own branded products.

 

 

According to company president Jim Baker, the key to being nimble in the mature manufacturing and assembly market is the creativity and motivation of Electro-Matic employees. 

 

“With the ESOP, everyone here knows very well how to create value for themselves. And that’s by creating value for the company, whether it’s maximizing cash flow or doing whatever it takes to make a customer happy,” says Baker. “This company has always had an entrepreneurial feel to it… we were always trying different things, working with new technologies, and being rewarded for the results of our efforts.  Now every employee knows that feeling. And it’s become a powerful force for growing the business and delivering value to the customer every day.” 

 

This helps explain how a highly regarded distributor of industrial automation components and technology got into LED displays and LED lighting in the first place. The company saw a way to improve industrial ‘display boards’ by using flexible LED messaging to communicate production line information in real time. From there, it was a quick move to develop programmable LED message centers for commercial and retail customers. 

 

“What you typically hear about ‘innovation’ is how new and different something is,” says vice president of sales and marketing, Dave Scaglione. “To be worth anything, it also has to be better. And that usually involves the additional step of turning it into something that saves money, time, energy or space.” Scaglione also points out that all of their Automation and Connectivity customers have buildings and parking lots that need to be lit, and that means a ready market for LED Lighting products.

 

 

A motivated workforce with a pipeline full of innovation and a reputation for quality and integrity. It’s the sort of thing customers like to hear. And what better place to learn more about it than at the annual Electro-Matic Technology Tip-Off event, entitled “Manufacturing in America,” at Ford Field on March 20-21, presented by Electro-Matic and Siemens. Over one thousand executives, technology leaders and innovators in the manufacturing industry will be in attendance for two days of demonstrations, seminars and vendor displays. 

 

For more information about Electro-Matic Products, or to register to attend the 2013 Technology Tip-Off, please contact Amy Sorkin or visit the Technology Tip Off event page!