The ESOP program has been drawing attention from local, state and federal officials, including representatives from the Southampton area and the Philadelphia region, as well as from Pennsylvania State Sen. Stewart Greenleaf and most recently, U.S. Rep. Mike Fitzpatrick.
“Ken Baker is proactive with that. He's on some committees that promote ESOPs,” Phy said.
“He's been to Washington a couple of times. He's not just ... sitting back waiting for somebody to contact him to see how it's going. He proactively gets his name out there and the company name and tries to make NewAge an example on how well it's working.”
Fitzpatrick, who serves Pennsylvania's 8th congressional district in the southeastern part of the state, wanted to hear how the ESOP company works directly from its employee-owners. He participated in a town hall-style meeting to discuss the benefits of an ESOP.
“Retirement security is a big issue,” Fitzpatrick said during his visit. “We're living longer, and health care is getting more expensive. If you're trying to retire on Social Security alone, it's going to be difficult. Very few companies offer pensions today, and that's another reason why ESOPs are an important option,” he said.
Jeff Johnson, director of software solutions and a 23-year employee, told Fitzpatrick that the ESOP has given NewAge's employees a new view on retirement.
“Many of us have talked about how the balances in our ESOP retirement accounts have outpaced our 401(k)s. And the 401(k) plan has been around for over 20 years. The ESOP is only 8 years old.”
NewAge's employee-owners believe ESOP retirement plans can be a good option for Pennsylvania businesses, the company said. When previously employed at other companies, some current NewAge team members experienced the sale and subsequent dissolution of those companies. Other current employee-owners worked with companies where the owners were aging, and there's concern that leadership teams of those companies simply haven't considered an ESOP as a viable business transition.
“The owners of many small companies are unaware that they have this opportunity to receive money from the sale of their company while keeping the company intact,” said Cathy Wallace, New Age's director of purchasing and materials. She has been with the company for 25 years.
She noted if an owner wants to sell his company to a competitor, venture capitalist or multinational firm, that could put the company's employees and American jobs at risk.
“The best way to take care of a company's employees during a sale is to make sure the employees themselves own the business, not somebody else,” Fitzpatrick said. “There's a real opportunity to use NewAge as an example and say, "Look how well it's working, and it can work for you, too.' Let's make it easier for ESOPs to be created and beneficial to transition ownership to employees.”
NewAge Industries announced earlier this year it acquired 40,000 square feet of additional space to expand its manufacturing capacity at its Southampton facility.
The company initially wanted to have the new space operational by the end of 2014, but Phy said that is unlikely to happen as the space currently is being used for storage.