S Corporation ESOP funded purchase and development of new, green, product line
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MBC Ventures, Inc. (formerly Maryland Brush Company) is located in a very old, large facility in Baltimore’s inner city which has been operating since 1851. In the early 1990s, Pittsburgh Plate & Glass divested Maryland Brush Company, Inc., (“MBC”), a full-service manufacturer of industrial and paint brushes for a variety of industries worldwide focusing on brush-critical, niche industries. Local management and the United Steel Workers Union members decided to purchase the company through an ESOP. With the continuing assistance of Atty. Deborah Groban Olson, corporate and ESOP counsel since 1998, MBC has been able to establish and maintain its place as a manufacturing leader, a desirable workplace and now a company developing an innovative solar energy technology. 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 the ESOP purchase in 1990 through 2008, the company’s stock consistently met or exceeded the earnings charted by the S&P, completely turning around MBC’s financial picture and its prospects going forward. The MBC ESOP provides one vote per person on shareholder issues and worker-owners participate in making decisions about the business on a regular basis.
As an S Corporation ESOP, MBC is uniquely positioned to compete in the current global economy. The S corporation ESOP tax savings provided MBC with the cash it needed to develop and market its new Skylouver product line. Since 2008, the maturing market for industrial brushes caused MBC to seek out new product lines. In 2010, MBC invested in a start-up company that makes skylights which are also solar collectors in exchange for manufacturing rights. It later decided to buy all the intellectual property rights to the technology, now called “Skylouver” in order to ensure successful management of the commercialization process. In September 2010, the US Department of Energy in conjunction the State of Maryland’s Clean Energy Initiative (CEEDI) grant program, provided $770,000 to Maryland Brush to retool an existing production line at its Baltimore facility to manufacture the innovative Skylouver solar thermal-power-and lighting modules. Maryland Brush Company estimates that this project will result in 10 jobs in Baltimore during the first year. On April 18, 2012, the MEA and DOE were pleased with their walk-through tour of the finished installation. Company data show that the energy generated exceeded what they promised in the grant application. The Skylouver sales effort is underway.