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Our View: ‘The churn’

One possible solution for local businesses

Durango is full of people with great ideas capable of building businesses. But while it’s one thing to build a successful business in Durango, as it turns out, it’s another to keep it here.

Entrepreneurs in Durango – especially those in manufacturing – soon find out that transportation costs are expensive here in the outback of Southwest Colorado. Another problem is that land and construction of facilities is much more expensive here than in large cities. Finally, skilled labor and professionals are at a premium in Durango – and if you hire from elsewhere, there’s a good chance the incoming workers won’t be able to find affordable housing.

Many small-business owners reach a decision point at which, in order to keep growing, they’ve got to move elsewhere or sell to a larger business – which usually wants to move part or all of the Durango firm to wherever their larger business is located, for obvious efficiencies. Workers who want to stay with the company often have to leave Durango; otherwise, they’re left behind without jobs and may eventually have to leave anyway to find good work.

One local business expert called the process “the churn.” Mercury Payment Systems, Zuke’s, GitPrime, Redfield, Columbia Coatings, Yeti, Freenotes Harmony Park, Monarch Iron: All are companies that started here and eventually sold or left for other reasons.

We can’t fault successful entrepreneurs for selling their businesses after putting in the blood, sweat and tears it took to build them. The sale of their businesses may also make them wealthy enough to remain in Durango, perhaps even to start another business or philanthropic efforts if they’re so inclined. Marc Katz, who created Mercury Payment Systems, sold his company when the opportunity arose; with help from the city and county, his foundation is now creating Durango Mesa Park, a multiuse recreational facility that will eventually provide jobs and activities for Durangoans and visitors. We’re grateful for his vision and what it will bring to the community.

But in general, the departures of businesses that have incubated in Durango destabilize the local workforce and often reduce taxes generated for local government.

Durango is growing more and more successful businesses; that’s a trend that’s unlikely to end. But then, neither is the likelihood those successful businesses will eventually be sold.

One business that hasn’t sold out but could have is StoneAge, maker of high-pressure water blast tools for industrial cleaning. Founded by Jerry Zink and John Wolgamott in 1979, the company now has 160 employees in Durango, Texas, Louisiana, Ohio, Great Britain and the Netherlands, plus individual employees stationed in additional countries.

StoneAge is still in Durango only because Zink and Wolgamott are committed to keeping it here – so committed, in fact, that in 2015 they began an Employee Stock Ownership Plan, which transfers ownership over time from the founders to the employees.

Making employees into owners changes everything, they say.

“Owners make the best workers,” Wolgamott says. “People who are creating value should earn something from it, more than just a paycheck.”

Zink adds that their employees “think like owners; they manage themselves. The ESOP creates a better workforce and more longevity.”

StoneAge and its ESOP were featured in a video recently created by the Colorado Office of Economic Development and International Trade to encourage creation of employee-owned businesses. The documentary, called “Own It: A Colorado Story” can be streamed on YouTube.

ESOPs won’t work for all companies, say Zink and Wolgamott, but they could help keep some Durango-grown businesses in Durango. And there are other forms of employee ownership participation that could be explored by local entrepreneurs facing difficult decisions about the futures of their companies.

In the long run, sharing the wealth with employees may make more of it, and sharing the responsibilities of ownership just might make life easier for business owners.