Mayville Engineering’s employee stock ownership plan has done more than help its shareholders prosper — it has given them an extra incentive to help the company prosper, according to David Gill.
The story of Mayville Engineering Company, Inc., is a lesson on how an employee stock ownership plan (ESOP) can also benefit a company’s customers. ESOPs, of course, give the firm’s employees a stake in the company’s ownership. In the case of Mayville Engineering, which formed its ESOP in 1985, that stake has moved beyond ownership into a full-fledged commitment to quality products and customer service.
Mayville Engineering’s employees own more than 90 percent of its shares, with no individual owning more than 1 percent of the equity. The current plan projects that the employees will own all of the company’s shares by 2003. Every employee understands that quality, customer service and controlling costs are the key ingredients in the profitability of their company. This translates into an increase in the value of their shares.
That employee commitment has fueled Mayville Engineering’s drive to become a premier provider of contract-manufactured products. With more than 500,000 square feet of manufacturing floor space in Southeastern Wisconsin, the company supplies a wide range of metal fabricated components to original-equipment manufacturers in the agriculture, communications, computer, construction and marine industries. It also produces a standard line of shot-shell reloaders; in fact, Mayville Engineering has been the top manufacturer in this product category since it introduced its first reloader in 1955.
Regarding the company’s employees, Tim Clark, Mayville Engineering’s president and chief executive officer, says, “The future of the company is their future. The quality of our products, our cost-effectiveness and our customer relationships are important to all the employees as co-owners, not just to me and the other managers.
“There is an added focus for every employee to do it right when you know that you are the owner of the business,” explains Clark. “There is a real incentive to meeting customer expectations for quality, cost and delivery. But there is also an incentive to meeting community expectations, to being a good corporate citizen and to meeting family expectations for providing a safe, environmentally friendly atmosphere in which to build a stable future.”
Mayville Engineering has the technical resources to assist with the design process or use the customer’s design for individual parts or complete assemblies. “Design, tool manufacturing, material selection and specification, packaging, logistics — we are prepared to assist customers in any way possible,” Clark notes.
“We’re focused on being known as a one-stop shop,” he adds. “Many of our markets are served by companies that specialize in one or two phases of the metal fabrication process. Today, we provide a broad range of capabilities and we continue to invest in expanding those capabilities to meet the need of those customers looking to consolidate their supply base.”
In addition to its Reloader Division, Mayville Engineering has two other divisions organized around customer groups. The MAC division serves the marine, agriculture and construction markets. The COM division specializes in computers, data communications, networking and other high-tech segments.
Rick Torn, vice president and general manager of the company’s MAC division, describes Mayville’s contract capabilities in this way: “We do everything from designing new components to prototyping, full welding, spot welding, fastening and assembly. Our equipment includes NC punch press, laser cutting, press brake, 10-ton to 800-ton punch press, CNC turning, milling machines and a large number of drilling and tapping machines.”
“The COM division’s customers select Mayville Engineering for its decades of experience in the high-tech industry, its leadership in sheet-metal technology and its comprehensive set of services,” says Mary May, vice president and general manager of the COM division. “We offer a broad range of services and manufacturing capabilities — from product and tool design to build management, prototyping, new product introduction, material procurement, fabrication, assembly and finished-goods hubbing.”
Supporting the contract work are a number of state-of-the-art systems such as demand flow, electronic data interchange, computer-aided design and manufacturing, quality systems and electronic order tracking. The latter follows work through the company’s ISO 9000-certified manufacturing facilities.
Assessing Mayville Engineering’s future growth opportunities, Clark regards the high-tech market as a particularly promising one for the contract-manufacturing sector. “High-tech markets have been a source of significant growth for us, but with shorter and shorter product life cycles, these markets can change quickly,” Clark observes. “High quality, low cost and flexible delivery are a given. We believe that our design and prototyping capabilities provide an added advantage to our customers in reducing their product development cycles.
“The ESOP allows us to take a long-term view of our markets. We’re sensitive to changes in our markets. Once we have established a new priority, we can maintain our commitment. We aren’t subject to taking short-term actions to meet the expectation of industry analysts. Our employees are the ultimate judges of our strategy and implementation.
“We also make decisions that focus on long-term relationships with our customers and the long-term well-being of our employees,” Clark explains. “I think our customers know they picked a good partner in Mayville Engineering. Many of our relationships go back over 10 years. Some go back over 25 years. We look forward to building many more of these win-win partnerships with our customers.”