With more than 400 employees between facilities in Meadville and Saegertown, Acutec Precision Aerospace is Crawford County's largest industrial employer.

The volume of sales and the number of clients aren't the only things that have changed since Rob Smith, a former tire salesman co-founded the precision machining company in 1988.

The client list has grown, the work more precise and the number of aircraft that use Acutec parts has never been longer.

More:Now that employees own the company, the new culture at Erie's Onex: 'leading with grit and grace'

And just recently, the ownership structure of what had been a closely-held private company has become decidedly more complicated.

At the end of August, CEO Elizabeth Smith, daughter of Rob Smith, sold 25% of the company to its employees, essentially creating more than 400 owners through an Employee Stock Ownership Plan or ESOP. The shares will be distributed over the next 10 years to current and future employees. Upon retirement or leaving the company, the company buys the employee out for the market value of the shares, which can be moved into an individual retirement account.

A new structure

Elisabeth Smith said she's excited about the process of employees becoming owners.

“A lot of owners use ESOPs to transition ownership to their employees at the end of their careers,” said Smith, 40. "I want it to be a journey that our employees and I take together. They’ll be in for the long haul with me on what’s been built here for the last 32 years and the legacies we'll continue to build in our community.”

Smith said she's worked with companies that have won investments from private equity funds to fund expansion. She wanted something different for Acutec as the company grows.

More:Acutec CEO honored during Greater Meadville Day

"This has been a long-time vision of mine," Smith said. "I have a very collaborative leadership style. A lot of people have made Acutec what it is today. We want people to own their own processes like they are a business owner."

The company, which makes precision parts for their aerospace, defense and power generation industries, is growing again after a slowdown related to COVID-19.

"We could hire 20 machinists today," she said.

Still, Smith said she feels like employees who will deposit shares of the company into their retirement plans over the next 10 years will be buying low with the possibility for a lot more growth.

As much as anything, Smith said she feels like the ESOP formalizes a relationship that already exists.

"When I am out on the shop floor it's more of a peer-to-peer relationship. Their talent and their work now is really irreplaceable. They should be proud."

Smith, who worked on mergers and acquisitions at a consulting firm earlier in her career, said she wanted a different kind of future for the closely held company.

"I didn't like the callousness and lack of attention paid to employees. That was really jarring to me," Smith said. "I take things personally. I see (people) as fellow community members and not numbers and pawns."

The ESOP difference

What will this mean to the company's employees, who will own a larger stake in the company with each passing year?

Chris Wagner, 48, Acutec's tool grind lead, has some insight after working at an employee-owned company in Idaho.

Wagner said he loves his job at Acutec, but witnessed from a distance the benefits of an ESOP, when a friend from his old employer had $1.2 million in his retirement account when the company was purchased.

"I kick myself thinking about it," he said.

Now, Wagner said he's eager to see the benefits of employee ownership begin to accrue for himself and his fellow employees at Acutec.

For employee-owners of a company, and there are a number of them locally, including Onex in Erie and C&J Industries and Voodoo Brewery, both in Meadville, the biggest difference comes from a change in mindset when employees become emotionally and financially invested in the success of the company, Wagner said.

But that change might take time.

"I don't see it making a huge difference in the day-to-day until people realize that you have a stake in it," Wagner said.

More:Voodoo Brewery to open in Erie's former Boston Store

'Skin in the game'

Zach Smith, who is CFO of Acutec — no relation to Elisabeth Smith — sees the new structure as a big benefit.

"With 25 percent of the company going to employees, that distinguishes us from companies in our sector selling to private equity," he said. "We all have a little skin in the game and once everyone understands that, it will be really powerful.

Dan Zugell, a director at Pittsburgh-based Business Transition Advisors, which has worked to transition 46 companies across the country, including Onex and now Acutec, into employee-owned entities, said studies demonstrate the benefits to employee-owners.

The average employee who has money in an ESOP has 2.5 times as much money in his or her account on retirement as compared to an employee who has a traditional 401(k), he said.

Zugell said he thinks more companies should consider the benefits of being at least partly employee-owned.

"I would say it's a lack of understanding and a lack of knowledge," he said.

What is it that people don't understand?

The process, by which a company establishes an ESOP trust and then contributes cash or borrows money to buy shares of stock can be a complicated one, he said.

"There are some misconceptions that the owner doesn't get fair market value, which they do," Zugell said. "But the employees aren't paying a nickel. They are being given the shares that the ESOP puts out over a period of years."

Jim Martin can be reached at jmartin@timesnews.com.

This article originally appeared on Erie Times-News: Crawford County's Acutec employees are now owners under ESOP plan