EAST PROVIDENCE — U.S. Congressman David N. Cicilline (D-R.I., Dist. 1) continued his “Congress at Your Company” tour Wednesday afternoon, Aug. 7, at Gripnail Fastening Systems located on Dexter Road in East Providence.
Congressman Cicilline and members of his staff first met with Gripnail Chief Executive Officer and city native Chris Ryding for a brief overview of the company’s offerings and future plans. The congressman then toured the facility and met with employees, who are also proprietors of the business under an Employees Stock Ownership Plan (ESOP).
“This is a great example of a Rhode Island company that grew out of innovation and design of a product that was needed in the marketplace that is now producing it here in East Providence and selling it all over the world,” Congressman Cicilline said. “This is exactly the kind of company that we want to grow in Rhode Island. And what we have to continue to do is fight for polices in Washington that will help companies like Gripnail grow and add to the number of employees. And to get rid of policies in Washington that are undermining companies like this.
“This is a company that got through a very difficult recession and that’s growing now. This is the kind of great story of Rhode Island manufacturing that we need to continue to promote.”
Gripnail has its roots in the East Bay. The company was founded by Peter and Peggy Hallock in 1965 in Bristol, remaining there until it moved to East Providence and a different Dexter Road location in the early 1990s, according to Mr. Ryding. In 1996, Gripnail located to its current plant at the 97 Dexter address.
The company specializes in manufacturing pins for fastening materials to metal surfaces, doing much of its business with the heating, ventilation and air conditioning (HVAC) industry. Gripnail currently has 35 employees, including six from the city, and annual sales in excess of $6.5 million.
Gripnail is an ESOP, which provides a company’s workforce with an ownership stake. Employees have stock ownership, often at no up-front cost to them as was the case with Gripnail. ESOP shares are part of the employees’ compensation. The shares are allocated to employees based on service and are held in a trust until he or she retires or leaves the company. Those shares are then redistributed back to the remaining employees. It’s an incentivized way of doing business, which encourages employees to be more resourceful, Mr. Ryding said. Another key element of ESOPs, they don’t pay yearly Federal Income Taxes.
In 2000, Gripnail became an ESOP with its employees purchasing 30 percent of the company. In 2004, the employees bought the remaining 70 percent. In 2012, they were able to completely pay off their debt on the purchase. In five more years, according to Mr. Ryding, the employees will own outright the 97 Dexter Road building and have complete control of all company assets.
“What’s particularly exciting is that this is a company owned by its employees so as it grows and becomes more successful, so too do they,” Congressman Cicilline added. “It’s also a good reminder that manufacturing jobs both nationally and in Rhode Island pay above non manufacturing jobs. So these are good paying jobs that we have to continue to promote in our state.”
Mr. Ryding said Gripnail employees typically start at about $14 per hour. Under the ESOP, an employee who makes $20 per hour for 20 years will usually leave with in the neighborhood of $100,000 in dividends.
As with most businesses locally and nationally, Gripnail, according to Mr. Ryding, suffered when the most recent recession hit in 2008. A handful of employees were let go as the company took a 40 percent loss in revenue. Those remaining, top to bottom, accepted a 20 percent reduction in salary.
“We sell niche type fasteners to niche type markets,” Mr. Ryding explained. “When the recession hit, no builders were building, so they didn’t need ductwork or fasteners. But we’re slowly climbing our way back to where we were before. We’re not there yet, but it’s a little bit better.”
Some of the improvement to Gripnail’s bottom line comes from an aggressive sales strategy, which has seriously looked outside of the United States for the first time. In recent years, the company has pursued markets in Australia, China and the Middle East, selling both to native companies and U.S. brands doing business in those areas. Gripnail tapped into the International Marketing Program offered at in-state Bryant University for assistance.
“Ten years ago, our international sales represented about one percent of our total. Now, it’s up to 15 percent,” Mr. Ryding said.
With Congressman Cicilline on hand promoting his “Make it in America” package of bills focused on “helping rebuild American manufacturing,” the Gripnail CEO took the opportunity to lobby his representative on a couple of fronts. First, Mr. Ryding hoped the Congressman would seek to simplify the tax code. He also asked him to help maintain the tax deferment status of ESOPs and requested continued work on healthcare reform.
“Obviously the implementation of healthcare reform is on everybody’s mind,” Mr. Ryding said. “We don’t know what’s going to happen. We’re all waiting it out. But 55 percent paying for 100 percent isn’t sustainable. We all realize that. As a company with almost $7 million in sales our single biggest vendor is healthcare insurance. It’s bigger than the steel we buy. So we’re all hoping this healthcare reform and implementation works out.”
Mr. Ryding and Gripnail, however, aren’t letting any uncertainties stand in their path. The CEO said the company is soon planning to invest between $400,000 and $600,000 into a new product line. Gripnail is also putting more emphasis into the external pipe insulation market.
“We’re ready to go. We have the people in place. We have the equipment and capability to produce more product,” Mr. Ryding added. “We’re actually underutilizing some of the machines we have. I’d love to be able to hire seven or eight more people, but we’re not quite there yet. We’re just waiting for the economy to improve.”