Empowering Employees Drives Success
Astro Machine Works
Astro Machine Works is a manufacturer of custom machinery, automation equipment, machined parts, assemblies, and fabricated components for a diverse range of industries headquartered in Ephrata, Pennsylvania.
The company was established in 1984 to meet the custom machinery and precision parts needs of the area’s top regional and national companies. The founders purchased an existing machine shop and operated Astro from that facility for the first two years of its existence. By 1986, the business had achieved enough success that greater capacity was required, and the company expanded its manufacturing space by building a brand new facility that is still in operation today, housing the company’s machining and painting lines.
Since that time, Astro has continued on a growth trajectory. In 2009, the company built a second facility for large scale machining and welding operations, and in 2015 it added a third building to expand its machining capacity even further and to add an engineering department, an assembly shop and an electrical discharge machining department. Today, the company operates out of nearly 75,000 square feet of manufacturing space in Ephrata.
At the end of 2015, the company’s President, Eric Blow, made the Astro employee base aware that he was beginning to develop a succession plan. “We wanted to come up with a succession plan that rewarded the employees,” he says. “They’re the ones who got the company to where it is.” Leadership decided to begin implementing an Employee Stock Ownership Plan.
Prior to this, beginning in 2006, Astro began implementing an open book management program. Under this system, for more than a decade, the employees have had open access to the company’s financial data. This enabled Astro to build a strong culture of transparency and a highly engaged team of workers that are deeply invested in the success of the company.
The impact of the open book management program has been profound. In 2006 the company employed fifty people and earned seven million dollars in revenue. At the end of 2017 its staff had doubled to one hundred people, and its revenue had grown substantially to twenty-six million dollars. “That concept,” says Blow, “enabled us to double our workforce while quadrupling our sales.”
With the success of that program, when Blow began considering what the future would hold for the company after his retirement, at the advice of his private equity partners an Employee Stock Ownership Plan was the next logical step. Often, when a company’s leadership recognizes the advantages of an ESOP and decides to incorporate it into their company, they transition to it directly from a traditional ownership structure. Astro, on the other hand, had already laid important groundwork. The company’s workforce was already familiar with its financials as a result of open book management, and giving them an opportunity to have a more personal stake made sense. Blow realized that implementing an ESOP would be a perfect fit for a succession plan that put the people who best understand the business in charge of it, making the company perpetual after his departure.
An Employee Stock Ownership Plan is a benefit program that provides employees with an ownership stake in the company. While many ESOP programs allocate a percentage of the company’s ownership to its workers, Astro’s plan is a one hundred percent employee-owned model. The idea is that as a result of Astro giving one hundred percent of the ownership of the company to workers, those workers will benefit directly from the company’s success. This will motivate them toward efficiency and productivity, because these factors will directly impact the value of their own stock. Further, employees who own stock in a company are much less likely to leave it, reducing turnover. Retention is particularly important in an environment like Astro where workers are all highly skilled and very valuable.
“It really engages people on the shop floor to know they’re not just a number,” says Blow. “We’re not the kind of company that can just let twenty people go today and call a temp service to replace them tomorrow. These are skilled machinists, welders, mechanical and electrical technicians. These are the kinds of people you hire, nurture, coach, and hold on to for decades if you can.”
Further demonstrating Astro’s employee-centric culture, the company runs with a strict dedication to a vision, mission, and values statement that its employees were instrumental in creating. Astro’s vision is to create relationships that improve and protect the world; this represents the big picture for Astro employees. “It’s why we get up in the morning and come to work at Astro,” says Charissa Gift, Human Resources Manager. “We’re actually doing something that goes out into the world. People can take pride in what they do because of that vision.”
The company’s mission statement is made up of four important promises: first, to deliver excellence in service and workmanship, a commitment that has enabled Astro to build long-lasting relationships with customers and a reputation that instills confidence in its capacity to deliver on all projects. The company has achieved both ISO9001-2015 and an AS9100D certification.
Second is the creation of a safe and healthy work environment. Astro has an internal Safety Committee on staff to ensure that it is consistently following industry recognized best practices in terms of health and safety. This committee meets regularly to discuss policies and update protocols. It is also responsible for organizing a mandatory annual safety training session for employees.
The third component to the Astro mission statement is to promote a culture where everyone’s full potential can be achieved. Every aspect of the company’s leadership style and its plan for succession is a direct result of this principle. Empowering employees to succeed is a very effective driver for the ultimate success of the company. “We want to develop people to their full potential,” says Gift. “Get people into the right position and they surprise us.”
Finally is the importance of valuing relationships built on integrity with co-workers, customers, and community. One very important way in which Astro is contributing to the broader community is with its workforce development collaboration team. This is a group whose purpose is to help drive workforce development by interacting with the community in an attempt to communicate the value of pursuing a career in manufacturing and the skilled trades. Through this outreach, the team has been able to build key partnerships with high schools and colleges in the region that will help to drive the future of the area’s skilled trades community.
Workforce shortages have lately been a significant challenge for many manufacturing companies and other operations that are heavily dependent on skilled workers, and Astro has made a significant effort toward developing the workforce and driving recruitment and retention. “We take a proactive approach to find employees within our industry,” says Blow. “It’s not easy, but we’ve had success. We hire two or three entry level machinists every year just as a part of our continuation plan so that they can be developed.” This results in a fairly young average worker age, which is very advantageous in an industry where, for many of Astro’s competitors, much of the workforce could be retiring within the next five to ten years.
Beyond its vision and mission statements, the company’s employee base was also involved in the development of a set of eight core values. These describe the central tenets by which the company operates: quality, integrity, teamwork, innovation, commitment, respect, and compassion. “We’ve been working very hard for the last couple of years on our value-based culture,” says Gift. “It’s something that everyone was involved in at every level, rather than something that someone came up with in a meeting. Everybody contributed.”
These values are incorporated into all of the company’s communications, recruiting and coaching material, and they complement the ownership culture and the ESOP model. “It’s very important to us that it’s all integrated. It’s one very well-orchestrated and functioning team. Everything we do is all based on one team working side by side to create what we have here,” says Gift.
As a result of Astro’s unique managerial approach, the company continues to grow year over year, with 2017 marking another record in annual earnings. Astro believes that the implementation of an ESOP succession plan will further this trajectory. A new building was added at the beginning of this year, and the company is forecasting more sales and further growth going forward.
For more information please visit the Astro Machine Works website