Employee ownership helps Fraenkel succeed
Gary Evans, Senior editor -- Furniture Today, March 23, 2009
When Albert Fraenkel was honored recently by the Tupelo Furniture Market, some things went unsaid.
Like how Fraenkel and his wife Eleanor started the Fraenkel Co. 50 years ago with a $12,000 nest egg and $28,000 in borrowed money, and built it into a company that has sold well over $1 billion worth of products since its founding.
Headquartered in Baton Rouge, La., Fraenkel makes mattresses and upholstery. What makes the company different is that 16 years after incorporation, it started to transfer ownership to its employees through an Employee Stock Ownership Plan or ESOP.
Fraenkel converted its profit-sharing plan to employee ownership, embracing it as a way to reward employees who have worked to make the company a success.
Fraenkel is now 100% employee-owned with 995 stockholders. There are signs in the company that proclaim, “We don't just work here — we own this place!” and “I'm minding my own business.” Everyone becomes a stockholder after a year of continuous service with the company.
Of some 11,000 companies in the United States with ESOPs, only 4,000 are 100% employee-owned, putting Fraenkel in a select group.
Fraenkel provides a history of the company in a recent newsletter, from its first sale — $10.50 for a natural oak child's playpen — to reaching $1 million in sales in 1966 to how long it would take to count to a billion if you counted “one” every second, 24/7 — 31 years and 9 months. (Fraenkel reached $1 billion in 2002 with a sale to Fremin's Furniture of New Iberia, La.)
Other facts about its half century, printed in the company's newsletter:
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The stock value has increased 538% since its first independent appraisal.
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Forty-three employee owners have stakes exceeding $100,000.
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Minorities constitute two-thirds of the stockholders.
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The company has distributed more than $28 million to stockholders who have retired, died, or have left the company.
Now in its golden anniversary year, the company has seen its way through 10 presidents, from Dwight Eisenhower to George W. Bush. To exist that long, the company has been willing to change and to constantly reinvent its business model.
The future will see the company focusing on domestic production and a “Made in America” approach to the marketplace. The company's newsletter points out that by “making things,” the emphasis will be on creating new jobs and keeping the money at home.
The company says it has a strategy to succeed. Not only that, its owners are dedicated to making sure that it does.
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