Employee Ownership Entrepreneur Creates Owners Out of Prisoners

One of the most remarkable people in the employee ownership community is Fred Braun. Braun has bought four companies over the last 17 years, three of which were in bankruptcy. He sets up an ESOP as soon as the companies start making a profit, then sells entirely to the ESOP when he decides to buy another business. Each company he has bought has grown to over $10 million in sales, and they have collectively added hundreds of jobs. Once the companies are earning solid profits again, he sells out entirely to the ESOP. Employees voted to sell the first company he bought, Atkinson Products, after five years of the ESOP. The sale generated an average payout of $80,000 per worker.

Even more remarkable, however, is that three of the companies (Zephyr Products, Heatron, and Henke Manufacturing, his current company) have a program to employ prisoners on work release. At Heatron, a manufacturing of heating equipment, about 40% of the work force comes from this program. Work release employees come from Leavenworth Prison and typically stay 18 to 26 months. They have an accelerated ESOP vesting schedule that fully vests in three years and partially vests along the way. The companies pay $5 to $6 per hour to the workers, who return to the prison after work. They also train them and help them find new jobs when their prison terms are over. There are no government subsidies. Braun is now heading a national effort to replicate the work release program elsewhere.