Sidney “Jay” Ward III shifted from owner of Ward Lumber’s retail operations to general manager, answering to a board chosen by the new employee owners. (Provided photo — Naj Wikoff)

Jay Ward, longtime president of Ward Lumber Company of Jay, has been thinking about transitioning his 130-year family business for over two decades. In consultation with his wife and daughters, and brother Jeff who runs the mill, he decided to turn over ownership to the company’s employees.

According to the United States Small Business Administration, less than 30% of small businesses have a succession plan. Many owners have in mind that they will sell their business or pass it on to their children one day. Still, as time goes by, either they don’t have children, their children decide on a different career path, or selling it, no matter how successful they may have been, is not so easy.

Selling is especially hard in a rural area like the Adirondacks. More and more young people are leaving to pursue jobs elsewhere, or those moving here are of retirement age and not looking to take on a new business. If Ward Lumber was put up for sale and a chain bought it, the company’s character would change. The business would no longer be about caring for the customers, community and employees, but the bottom line.

“Without a transition plan in place, many of our region’s businesses are in danger of closing, depriving their communities of employers as well as the vibrancy that helps our towns and villages thrive,” said Kate Fish, executive director of the Adirondack North Country Association. ANCA launched the North Country Center for Businesses in Transition in 2018 to help with this succession issue.

Based on the earliest paper record, Ward Lumber was founded in 1890 by Harvey M. Ward, who used portable and water-powered mills to cut logs owned by farmers and landowners into construction lumber. His base mill was located in a bow of the East Branch of the AuSable River, just down the road from the company’s current Jay location.

Chief Financial Officer Debbi Straight and IT manager Kevin Kennedy have worked for Ward Lumber for 40 and 25 years, respectively. (Provided photo — Naj Wikoff)

Ward’s five sons — Amos, Harry, Ralph, Harvey and Sidney — later ran the business as Ward Brothers. In 1944, Sidney became the owner of the company. During his tenure, he purchased over 5,000 acres of land, added a retail store and began buying logs as a means of expanding the amount of lumber they could cut and sell.

His son, Sidney “Sid” Jr., eventually took over the business and in the 1970s built the current, all-electric mill. When his sons Sidney III “Jay” and Jeffery joined the company, they became the fourth-generation owners. In time, it made the most economic sense to establish two divisions: Building Materials, which Jay leads, and Lumbering Manufacturing which Jeffery manages. In 2017 these two divisions became separate businesses, though continuing to work closely together.

Today Ward Lumber has two retail outlets: the historic center in Jay and a branch in Malone with a combined staff of nearly 60 jobs.

“Twenty-five years ago, I thought about and proposed employee ownership,” said Jay Ward. “I was told, ‘Can’t do it. Too expensive. Too complicated,’ so I let it go. But it seemed like such a natural thing to me. The employee team of any business, and certainly this business, is what makes it go. I’ve long shared profits with the employee team through bonuses. When we’ve had good years, we’ve paid them, always. So it’s a natural philosophy to include everyone in the business.”

Ward believes that their employees have owned the business in their hearts for a long time, a belief based on so many counting their years worked in decades, the extra mile of service many give to ensure customers are welcomed and satisfied, and by customer feedback.

Tricia Whitton, general manager at Ward Lumber’s Jay location, has been with the company for just a year. (Provided photo — Naj Wikoff)

Four years ago, the brothers spun off the mill as a separate business that Jeff Ward owns and leads. Doing so caused Jay Ward to reconsider what the future should be for the building materials side of the company. With those thoughts in his head, he attended an event hosted by ANCA in May 2018. The featured speaker, Sen. Kirsten Gillibrand, was promoting the Main Street Ownership Act, an initiative established to encourage employee ownership. Ward saw a path forward.

“The worker co-op model clicked,” said Ward. “It’s less complicated, less expensive and offers the employees more direct control than an ESOP, an employee stock ownership plan that gives workers ownership interest in the company. ESOPs are administered by a trustee(s) and require an appraisal every year. As it’s a retirement plan, it’s regulated by ERISA (Employee Retirement Income Security Act), a federal law that sets minimum standards for investment plans in private industry. As a consequence, ESOPs are very expensive to operate.”

Even though the employees are direct beneficiaries in an ESOP, the fact that they are not direct owners was a turnoff for Ward. What he liked about the worker cooperative model is that everyone has an equal vote.

“From the entry-level to the CEO, each has one vote, an equal share and an equal say,” said Ward. “They have direct ownership and direct control. The employee team can make choices. The employees elect a board of directors. That board oversees the big picture of the business. I report to that board now. If there is a big decision, such as an acquisition or a dissolution, each employee gets to vote on that decision.”

In the new model, Jay Ward is still the general manager; the difference is that now he reports to a board of directors. Getting to this point took a lot of hard work, much assistance provided by ANCA and consultants, increased training for the employees, and finding a mission-based lender experienced and comfortable working with an employee-cooperative model. The first step was Jay seeing if his wife and daughters were comfortable with the plan, and, as they were, then pitching it to the employees.

R.J. Tromblee handles professional sales and has worked for Ward Lumber for 24 years. (Provided photo — Naj Wikoff)

“I was intrigued but skeptical when Jay first floated the idea three years ago,” said Kevin Kennedy, IT manager, a 25-year employee. “It’s been a family business for a long, long time. I always envisioned it being one.”

“This sounded like a lot, and it was big; it would take a lot of people and a lot of effort,” said Debbi Straight, chief financial officer, a 40-year employee. “Jay’s always had a vision and come up with things that seemed impossible at first, but we did it. It was a huge team effort, and it worked out.”

In effect, the employees are buying the company, increasing Ward’s debt load. Yet the timing proved perfect. The pandemic resulted in increased profits as people began investing in their homes and others, relocating to the North Country, needed new homes built. Kennedy learned that people working together can take on monumental tasks in a step-by-step manner. Both feel the employee-cooperative is an excellent model for businesses in rural areas as it keeps jobs and provides growth opportunities for young families.

“All of us at Ward Lumber who were involved in the planning process can help other businesses interested in taking on this model,” said Straight.

“While it’s a big change, it doesn’t change the business,” said Kennedy. “People will still get the same great service.”

Tricia Whitton, general manager at the Jay location, has been with Ward Lumber for just a year. Coming from the North Country Food Co-op in Plattsburgh, she’d seen the worker-owned model work well, so Ward’s was an exciting opportunity for her. Both she and R.J. Tromblee (24 years, pro sales) like that employees have a voice; they have a shared invested interest in the business’s success.

“We all take care of it as if it’s our own, which it is,” said Whitton.

“I’ve been here 20-plus years, and now I have a stake in it,” said Tromblee.