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Gordon Lankton, Nypro’s chairman of the board, in a conference room at the plant. ‘‘I always felt if you didn’t grow, you would lose your good people,’’ he says.
Gordon Lankton, Nypro’s chairman of the board, in a conference room at the plant. ‘‘I always felt if you didn’t grow, you would lose your good people,’’ he says. (Ellen Harasimowicz for the Boston Globe)

From worker to owner

Mass. firm boosts foreign employees

CLINTON -- Nypro Inc., a plastics company owned by its US workers, has operated offshore for three decades, building dozens of plants in 17 foreign countries. Now, the firm is taking globalization a step further by making its foreign workers owners, too.

Headquartered in Clinton and employing about 1,000 in the Central Massachusetts town, Nypro is rolling out a plan to extend ownership rights to 10,000 foreign employees spread from Latin America to Asia. Already, workers in Ireland, Singapore, and China are eligible for the benefit, scheduled to be extended across Nypro's majority-owned foreign subsidiaries over the next few years.

This unusual and, in some aspects, unique program represents a different face of globalization, often equated with exploiting foreign workers. Nypro's overseas employees always have participated in the company profit-sharing plan, and now, executives said, it's time to give them a share of the equity they help build.

''The motivation is our philosophy that employees, by their effort, commitment, innovation, and ideas, create the value of our company," said chief executive Brian S. Jones. ''And that applies overseas."

Nypro is a contract manufacturer that makes everything from pens to packaging to medical devices. It has prospered by building plants near its customers' factories, beginning in the 1970s when it followed Gillette Co. to Puerto Rico, and continuing today in China, where it makes components for clients such as Dell Computer Corp. and cellphone giant Nokia Corp.

Global success also has meant investment in Clinton, where Nypro has completed about $20 million in expansions in recent years, while providing another local benefit: Stock appreciation. Since employees bought the company in 1998, Nypro's stock value quintupled, allowing more than 40 longtime workers to retire as millionaires, according to the company.

Certainly, Nypro's aggressive overseas expansion has created job worries in Clinton, admitted Tony Butkus, 54, a Nypro middle manager for nine years. But, he said, most local workers realize the company has to follow its customers and ''we all benefit by keeping it under the Nypro umbrella."

Butkus added that extending ownership rights to foreign workers will likely produce more benefits for Nypro and its employee shareholders.

''I see it as a motivating force," he said, ''I've worked at other places, and I appreciated the paycheck. But I take real pride in taking people around and saying, 'This is my company.' "

US employees bought the company from former owner Gordon Lankton through an employee stock ownership plan, or ESOP. Today, with annual revenue reaching about $1 billion, Nypro is the nation's sixth-largest majority employee-owned firm, according to the National Center for Employee Ownership.

Nearly all ESOP firms, including Nypro, are closely held, meaning their shares aren't traded on stock exchanges. Instead, stock is held by employees, who accumulate shares based on factors such as salary and length of service, and can only sell them back to the company when they leave or retire. Independent auditors determine the stock price annually, based on revenue, profits, and the share value of similar publicly traded firms.

Nypro executives said they long have wanted to extend ownership to foreign workers, but, because ESOPs are unique to the United States, they couldn't just distribute stock. They had to find a way to provide benefits similar to the US plan, while conforming with different laws in different countries.

They settled on granting stock-appreciation rights, which give employees a stake in the company's growth without issuing stock. Essentially, foreign workers will own the increases in the value of Nypro stock during their tenure at the company, which they will be able to cash in when they leave or retire, much as US employees sell back shares.

No similar US company has offered ownership to overseas employees at such a scale and extent, according to the ESOP Association, a trade group representing companies owned through employee stock ownership plans.

''This type of ownership is unusual in itself," said Fritz Foley, a professor at Harvard Business School. ''What is especially unique is extending it to foreign workers. This is a case where these folks are getting a piece of the upside."

Nypro pays prevailing local wages at its foreign subsidiaries, according to company officials. The average annual wage at the Singapore plant, for example, is about $24,000, similar to the Singapore average. On top of wages, Nypro's Singapore workers also earn an average of more than $2,000 a year in profit-sharing.

Singapore workers are greeting their ownership rights enthusiastically. In interviews conducted through a Nypro spokeswoman there, they expressed pride in becoming owners, and hope it would lead to better futures for their families.

Wong Chang Choy, 36, a technician, said he'll worry less about how his wife and two children would get along if something happened to him. Iereen Sadasivan, 42, a supervisor and single mother, said it eases her concerns about paying for the education of her 5-year-old son.

Gan Boon Heong, 27, an inspector packer, said he hopes to give his four children the opportunity to take piano and singing lessons. ''I'm very happy to be considered as a boss of Nypro," Gan said.

Nypro has long embraced the idea of giving employees a stake in its success. Shortly after Lankton bought out founder Fred Kirk in 1969, he put into place a profit-sharing plan. He distributed the quarterly proceeds in silver dollars.

As the company grew, lugging bags of silver dollars became impractical, so Lankton switched to crisp, new $1 bills. That became impractical, too, as executives soon were traveling with thousands in $1 bills. Lankton, who still serves as Nypro chairman, had to settle for issuing checks.

Lankton, 74, recalled Kirk, his old partner, believed Nypro needed to stay small, and sold out when he believed it had grown too big. At the time, Nypro generated $4 million in annual revenues. When Lankton sold to employees, revenue topped $400 million.

''I always felt if you didn't grow, you would lose your good people," Lankton said. ''Really, the only reason for growing is to give your people better jobs so they'll stay with you."

Robert Gavin can be reached at rgavin@globe.com.

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