Retirement plans can sometimes be tricky for workers at a successful collision repair shop. If the operation is successful enough, it could be a ticket to comfort for the owner, but what about the rank-and-file workers? If the coworkers had shares in the company, the situation looks different.
That’s the case for Shawn Moody and the Maine repair shops he owns—or in his case, owns 46 percent.
Where It Started
Moody’s Body Shop, the business’ original name, was started by Moody going into his senior year of high school. The company was different from the one today, and Moody’s journey changed how things ran for him in the future.
Moody started the shop in 1977, and after 10 years of running Moody’s Body Shop, the lot of land next to them opened up. It was a junkyard of about 35 acres. Originally stemming as an investment, Moody bought that land and fell in love with the auto recycling business. He went on to turn that junkyard into one of the leading recyclers in the whole country.
Moody says that in 1995, his company received the Automotive Recycler’s Association Gold Seal Award for environmental and operational excellence.
That success, sparked by embracing new technology and operating efficiently, was the catalyst for a successful sale of the auto recycling business. That sale would spark his idea for a coworker-owned business.
“In 1998, we had LKQ Corporation and Ford Motor Company kind of vying to buy our auto recycling business out here in Gorham, Maine,” Moody says. “Ultimately, we sold out to LKQ corporation and the result of that sale, obviously it was a financial win for myself, my family, but what I recognized after the sale was that the people who helped build that company to what it was, did a good job with LKQ, but they didn’t really get the financial benefits of the equity that we had built up over that 10-year run.”
A Fresh Idea
In 2001, Moody’s expanded to two locations, and Moody had in his mind that he wanted to reward his coworkers who were helping to build the shop.
This is where it started as the repair shop, which is now called Moody’s Coworker Owned Incorporated, went forward with its mission to reward its workers for their work and the success they helped cultivate.
The Employee Stock Ownership Plan (ESOP) started in 2003 for the company, and the company has grown an average of 18.4 percent per year, according to the Moody’s Collision Centers website.
Moody sees the plan as a win for employees and owners alike. He says it’s what coworkers in his company deserve and rewards their hard work with a solid plan for the future.
“There’s not that many companies anymore that offer any type of pension plan,” Moody says. “They’ll match a 401(k), but this is really almost like a pension plan where you’ve got coworkers now retiring in their early 60s with three or $400,000 tucked away in addition to the social security and the 401(k).”
How it works is that every coworker who works at Moody’s Coworker Owned Incorporated gets stock in a trust through the company, and at whatever point they decide to leave the company, Moody’s is obligated to buy that stock back. There are no out-of-pocket expenses for coworkers, and it’s all just a bonus for being dedicated workers.
There are some challenges with this system. Moody says that the system is very regulated, but it was a complex and expensive road to get to that point. Led by administrative challenges, Moody and his team worked hard to make the company a better place for its workers.
“You have to have a lot of administrative horsepower to manage the ESOP correctly,” Moody says.
With the company's success, the value of that stock goes up over the years, giving people who have worked there a good bonus when they want to retire. Moody says he thinks they’re the only coworker-owned company in the collision repair industry.
“If you invested $10,000 in the stock market back in 2003, you’d have about $40,000 in it right now,” Moody says. ”If you invested $10,000 in Moody’s stock in 2003, you’d have $140,000 right now. That’s just putting in a static $10,000 and letting it grow.”
The process is not something Moody had to do, especially with his success in his auto recycling business. That success could have given him all he and his family needed to continue being successful, but Moody wanted to share that success with the other people who deserved it as well.
“I think selling your company to the people that helped build it is not only a viable succession plan, but it’s also the right thing to do,” Moody says. “These are the folks that worked the long hours, that sacrificed so that we could all grow and benefit, and what better way to reward them than to give them equity in your organization.”
Moody’s today
About 19 years after the ESOP first was implemented, Moody’s has grown across the state of Maine. Moody now has 14 locations and 250 coworkers/owners.
Moody attributes the company's success to the coworker ownership philosophy. Moody says the questions of how you’re supposed to run a business, treat your customers, pay attention to quality control, recruit people, and retain people are all problems that have been helped by transparency and coworker ownership.
Moody says the lack of incentives for more experienced technicians to help teach inexperienced technicians the job can be a problem in the auto repair industry. He combats that at Moody’s today with profit sharing. Motivating and retaining coworkers helps not only the company owners but also the coworkers.
“We give them 10 percent of our after-tax profit back in the form of profit-sharing,” Moody says. “So that’s a cash incentive to operate well and also to help coach and teach the next generation of men and women that are the backbone of our company.”
Moody’s decision to operate this way was aided by a deal he made over 20 years ago. A deal that helped send him and his family down this path to becoming an organization that gives back to its workers for their hard work and dedication.
Going forward, aided by the coworkers that helped get him to this point, Moody will keep giving back to his coworkers as they own 54 percent of the company to his 46 percent. The groundwork laid 19 years ago has positively impacted longtime coworkers in his company.
“It’s really put in place so people can have a really good quality of life,” Moody says. “They worked hard their whole career and maintained that good quality of life.”
