AUGUSTA — Kennebec Technologies employees have known for a while that company President Charles “Wick” Johnson has been thinking about retiring.

“I had always expected I would put the company up for sale,” Johnson said.

With no clear succession path to pass the company on to a family member, he said he looked at the possibility of putting the company, a manufacturer of precision parts, on the market a year ago.

But last summer, Johnson started to consider a different option.

In recent years, an increasing number of companies in Maine, including GAC Chemical Corp. and Sargent Corp., have used employee stock ownership plans to establish succession.

On Monday, Johnson announced to Kennebec Technologies’ 65 employees that rather than selling to an outside entity, he is, in effect, selling it to them.

Johnson has been working with members of the company’s senior management on the conversion, which will take effect Jan. 1.

After the changeover, company operations should look essentially the same to both employees and customers. Johnson and his senior management will remain in place.

“If we pull this off, these shares could become quite valuable,” he said.

The employee stock ownership plan will cover 100 percent of the company’s shares and will allocate a portion of them to employees every year. On their retirement, employees can sell the shares back to the plan. This program enhances the existing retirement offering that includes a 401(k) plan.

“I expect this development will give our workforce a greater than ever sense of pride, investment and incentive to be productive, innovative and dedicated,” he said.

Kennebec Technologies makes parts for a company that produces flap actuators for airplanes.

“If you hear whirring when the flaps are deploying, some of our parts are what’s going around,” Johnson said.

The company also makes thrust reversers, which slow the engine down and brake the plane.

HISTORY OF HELPING

The company has a history of helping employees succeed by paying for a large portion of educational expenses and rewarding performance through quarterly bonuses. Johnson said those bonuses have been paid out without interruption every quarter for five years.

From an economic perspective, a manufacturing company like Kennebec Technologies is highly sought after.

“I like to think of us as a 100 percent exporter,” Johnson said, because all the parts the company makes are sent outside Maine and every dollar that comes as a result is, he said, “from away, and that circulates two or three times through the economy.”

Bart Haley, Kennebec Technologies’ vice president for sales and marketing, said if the company had been sold, the alternative could have been a new management team with a new set of goals for the company and its employees.

“In Maine, what you see happening sometimes is that a buyer acquires the book of business and the jobs go out of state,” Haley said.

But to Johnson, perhaps as important as the economic impact is the role in the community that a company like Kennebec Technologies and its employees can fill.

“If I sell to an investment bank or engage in a strategic buyout, the whole civic leadership piece goes away,” he said.

“Wick has had a tremendous sense of stewardship over the years,” Haley said.

He has served on the University of Maine System board of trustees, including time as its chairman. He has also been involved in a number of civic and business organizations, and has served as co-chairman of the Friends of the Lithgow fundraising campaign.

Patrick Mirza, communications director for the ESOP Association, said the conversion can be a complicated process, and one of the challenges is educating employees about their new role as owners. But the move has some benefits.

“If you do it well, you’ll find over time that as an employee, you are much more likely not to be laid off, and to keep your job longer,” he said, citing industry research.

FOUNDED IN 1972

Kennebec Technologies got its start as Kennebec Tool & Dye in 1972 in the garage of Ed Prendergast.

By 1980, the company had started making aerospace parts for the space shuttle fuel cells.

Johnson bought the company in 1984, and it moved to Church Hill Road in Augusta and expanded in the decade that followed.

The company continued to grow and invest in itself. In 2009, it became Kennebec Technologies.

In 2013, it was named Manufacturer of the Year by the Maine Manufacturing Extension Partnership.

Jessica Lowell can be contacted at 621-5632 or at:

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