MBC Ventures, Inc.- Full Case Study

MBC Ventures, Inc. (formerly “Maryland Brush Company”)
A 100% employee owned old industrial company develops new green tech product with money saved as an S corporation ESOP.Maryland Brush Company, Inc. (MBC) located in inner city Baltimore, is now a one-vote-per-person, unionized, 100% employee-owned company.After Pittsburgh Plate & Glass divested Maryland Brush Company, Inc. (MBC) in 1990, management and the United Steelworkers members bought the company through an ESOP.Through the continuing assistance of Attorney Deborah Groban Olson, corporate, and ESOP counsel since 1998, MBC has been able to establish and maintain its place as a worldwide manufacturing leader as well as a desirable, democratic, workplace. MBC is a full-service manufacturer of industrial brushes and paint brushes. The employees have one vote per person on shareholder issues, as in a co-op, and regularly participate in making company decisions.As an ESOP, MBC is uniquely positioned to compete in the global economy, establishing the company as one of the most progressive employers in the industry, the majority of whom do not offer similar programs.In 2000, the tenth year of the ESOP, MBC had experienced increased sales for the five preceding years and its stock value had increased by 133% since becoming an ESOP. From inception of the ESOP in 1990 through 2008, the company’s stock has consistently met or exceeded the earnings charted by the S&P, completely turning around MBC’s financial picture and its prospects going forward.In 2007, after paying off its stock acquisition debt, MBC elected Subchapter S status. As a 100% ESOP owned company, it was thereafter exempt from paying federal corporate income tax. These savings have enabled it to invest over $1,000,000 in the purchase and product development of its new Skylouver™ product.Since 2008, the maturing market for industrial brushes caused MBC to seek new product lines.In 2010, MBC invested in a start-up company making the SkyLouver™ technology (a combination skylight and solar thermal power collector) in exchange for manufacturing rights.MBC later decided to buy all the intellectual property rights to SkyLouver ™ to ensure successful management of the commercialization process.The new SkyLouver™ product line, launched in 2013, is expected to increase employment, employee ownership and profits. MBC will have shifted its product focus from a mature shrinking market to a dynamic growing one.In September 2010, the US Department of Energy in conjunction with the State of Maryland’s Clean Energy Economic Development Initiative (CEEDI) grant program, provided $770,000 to MBC to retool a production line at its Baltimore facility to manufacture SkyLouver™ products.MBC estimates that this project will result in 10 jobs in Baltimore during the first year. MBC has gone first to the Steelworkers to make the initial manufacturing worker hires for SkyLouver™. To accommodate its new product and market expansion, the company’s name is now MBC Ventures, Inc.