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A rare stake

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Eric Fetters / Herald Writer
EVERETT -- From a cramped, darkened control room at Buse Timber & Sales Inc.'s sawmill, Steve Clark expertly controls saws that move quickly on the other side of a window.
With assistance from a laser and a computer, he determines where to make the first cuts as raw fir and hemlock logs enter the Smith Island mill on a conveyor system.
As the double-cut head sawyer, Clark is a critical employee in Buse Timber's operation. And he is part owner of the mill, as of two months ago..
Buse Timber, founded in 1946 by Delmer and Norm Buse, was purchased March 11 by its managers and workers through an employee stock ownership plan.
Ron Smith, president and general manager, said most employees welcomed their new participation in the ownership, which seems to be a rarity among sawmills.
"The attitude, morale and cooperation is really high now," Smith said. "They have a stake in its success."
Employee ownership, while found in nearly all industries, isn't the norm in the forest products sector.
"The idea is not new, but it's not a very common thing," said Paul Ehringer, an Oregon-based wood products analyst.
Employees have often formed ownership cooperatives at plywood mills, especially in the years following World War II. In addition to sharing ownership, employees often shared the managerial decisions.
However, only a few of the cooperative operations remain, Ehringer said.
Under employee stock ownership plans, commonly referred to as ESOPs, management of the business isn't necessarily shared.
Under Buse Timber's ownership plan, 80 percent of the stock in the private company is owned by the employees. Smith and four other managers own the remaining 20 percent. All the stock is in a trust that feeds into employees' 401(k) retirement plans.
Profits from the business can be invested in the trust or given back to employees in other forms. For example, Smith said, employees received their first quarterly bonus last week.
"It was fairly modest, because our main priority over the next few years is to get the debt down," Smith said, referring to the obligation the employees took on by purchasing the business from the Buse family.
While ESOP-owned companies can be found in nearly all industries, Smith and Ehringer said they haven't heard of other sawmills with such ownership.
Neither has J. Michael Keeling, president of the ESOP Association in Washington, D.C. His national organization represents more than 2,400 businesses that are at least partially employee-owned.
Approximately 95 percent of the association's members are like Buse Timber -- private, closely held companies that used to be family businesses.
The number of ESOP-owned companies in the United States doubled during the 1980s, according to the association's statistics, but has remained stable at around 10,000 since then. The number of ESOPs being created is still growing, Keeling said, but others disappear as companies are acquired, merge or go out of business.
Transferring companies to employee ownership plans can benefit the owners who are selling in addition to the employees, said Corey Rosen, executive director of the National Center for Employee Ownership. That's due to tax incentives associated with ESOPs.
"Owners can get a deal after taxes that's as good or better than a sale to another company or outside buyer," Rosen said. "This really is a way to keep a business going generation to generation."
Keeling said employee ownership plans work best for companies that are financially stable or growing. Despite that, employee ownership often is tried as a way to rescue ailing companies.
Buse has gone through ups and downs during its nearly six decades of existence, but the company of 129 employees is profitable, Smith said.
With annual sales of about $35 million, Buse Timber has found a niche in producing larger, premium-priced beams and boards. Those include large lumber used in mines, for roller-coaster tracks and in railroad bridges.
Last year, the mill just west of I-5 produced 82 million board feet of lumber. It's now cutting an average of 340,000 board feet of lumber a day.
"That's up a fair amount from last year, and that was a record production year," Smith said.
The past several years, David Buse ran the company his father and uncle started, but he and his family were ready to do something else.
While the family considered selling to an outside buyer, Buse said in March that selling to the employees was "the best course of action, protecting the character of the company and its commitment to the local community."
It also was a great relief to those whose livelihoods depend on the mill's future, Smith said.
"Everybody was concerned if an outsider bought it. Two or three looked at it over the years, but nothing ever came together," he said.
"This was a good fit," he added. "I think the family thought it was good, too."
Now that the ownership has transferred, Smith said some improvements are planned, including repainting and generally cleaning up the mill complex. An updated laser cutting system installed last year has helped improve efficiency, and there could be more improvements to help the mill produce more exposed beams suitable for building interiors.
Smith, the other managers and the employees also are trying to learn more about the ups and downs of employee ownership. That includes balancing the roles of the managers and hourly employees.
"With the ESOP, we're trying to give employees a lot of input and listen to them, but they don't have a final say in the management," Smith said.
While Smith was general manager of the Buse mill for a few years before the ownership changed, he's still getting use to the new responsibilities he and others at the company now carry.
"We can't blame the boss now. We are the boss," Smith said. "It's both scary and exciting."

Reporter Eric Fetters: 425-339-3453 or



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