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One of the largest construction management firms in Indianapolis has transitioned its ownership structure to be 100% employee-owned.
The Skillman Corp. this month completed a shift from a traditional ownership structure to one based on an employee stock ownership plan, or ESOP. The move is intended to give Skillman’s 100-plus employees a more direct stake in the company’s success, including a share of profits; a voice in the direction of the firm; and a say in company operations.
The move “marks an important milestone for The Skillman Corporation and our employees,” Brad Skillman, president of The Skillman Corp., said in a media release. Skillman previously was sole owner of the firm.
”We believe the ESOP … is the best way to ensure our company’s long-term success and give our employees a sense of ownership and pride in their work. We are excited to see the future of The Skillman Corporation as an employee-owned company,” he said.
Skillman, the 11th-largest local construction contractor by 2022 billings, according to IBJ research, is among a handful of local construction companies to give employees a direct stake in operations and profits. Shiel Sexton Co. Inc. and Messer Construction Co. operate through ESOPs, while Bowen Engineering Corp. has a limited amount of employee stock.
Shiel Sexton made the shift in 2016 and had 330 employees at the time. It currently has 374 local full-time employees. It reported $423 million in billings from its local office in 2022, improving on $328 million in 2021.
Skillman was created in 1972 and works with clients across a variety of industries, although many of its projects focus on education, health and wellness, and civic facilities. The firm has regional offices in Merrillville, Indiana, and Portage, Michigan.
Skillman reported $225 million in billings from its local office in 2021 and then $226 million in 2022, according to IBJ’s list of the largest Indianapolis-area construction contractors.
Skillman said in a news release it is one of dozens of companies to lean into benefits found with ESOPs. One of the biggest advantages, experts have said, is that neither ESOP companies nor their individual shareholders pay income taxes on profits; instead taxes are deferred, generally until owners make qualified withdrawals in retirement decades later.
According to the Indiana Center for Employee Ownership, at least 185 companies across the state are employee-owned, covering more than 174,000 workers. At least 29 of those firms are in the construction industry.
Skillman representatives did not immediately make Brad Skillman available for comment early Tuesday. The terms of the ESOP transaction were not disclosed.
The firm’s current projects include a new branch for the Indianapolis Public Library at Fort Benjamin Harrison; a new headquarters for Damien Center; a new elementary school project for Franklin Township Community Schools Corp.; additions and renovations for North Central High School; and a high school natatorium for Carmel Clay Schools.
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This is not good for public projects which is what Skillman does. Since they work off a fee and fees initiate profits, will they be able to keep their clients best interests in mind all while trying to increase profitability?
Don’t all companies try to increase profitability – not just ESOP’s? This just spreads the profits to their employees as owners – which is a good thing.
Not when their clients ( public project/ tax payer money) is involved. They are responsible to be careful with their clients money, but now they are considered owners who are also trying to boost their OWN profitability
They still have to operate in a competitive environment and win bids just like any other company.
Cliff P. – Is your assumption that other contractors working on public projects and schools are not earning a fee or trying to make profits? All contractors need to make a profit or they will not stay in business. This is true whether they are building a project for a local school or a private owner like Lilly. Whether the contractor is owned by a single person, a couple of key people or all the employees it still needs to make a profit. Hopefully the ESOP ownership structure just incentivizes more people to provide additional effort to make sure the project is successful.
Public projects are still awarded to the lowest bidder. So, if their fee structure got outside of normal parameters they wouldn’t win public projects.
Everyone operates to make money. However, when you are simply a construction management company that passes costs onto the owner WHILE marking them up, what incentives do they now have to keep costs down? The more expensive the project is, the more fees they make. I get competitive bids to get the job, but once you HAVE the job, who controls change orders? If they operate on a 7% fee to simply pass paperwork through , what causes them to keep costs lower for their clients? They perform 0 work. Only a management company. Basically an extra layer of FAT that schools corporations pay to get projects built.