Family-owned industry leader announces conversion to employee ownership
It grew from a single trophy shop to an industry leader — and now Sioux Falls-based JDS Industries will belong to its employees.
Second-generation owner and CEO Scott Sletten shared the news with his team today.
“It’s been a long time coming,” said Sletten, whose parents, Darwin and Jane, founded the business as JD’s House of Trophies in 1972.
“I like what it does for my employees. It moves more of the responsibility, but the benefits too, because the future success of the company will flow to the employees.”
JDS Industries was formed in 1990 as a separate corporation from JD’s House of Trophies. As a wholesale supplier of awards, recognition, personalization and signage products, it has grown to become the industry leader.
Customers generally purchase blank products and personalize them through printing or engraving.
As he considered a future transition, “If I looked to sell the company, you never know what’s going to happen,” Sletten said. “The beautiful part is … all these good jobs are going to stay in South Dakota, all our senior management team.”
Sletten made his team an integral part of the decision to become an ESOP.
“I was looking at a sale at first because that’s the easiest exit,” Sletten said. “And the more I looked at it, there were risk factors. We’re a very, very big company in a small industry. The impact to employees, to vendors, to customers if things didn’t go well with a new owner was too big of a risk factor. I was very open with my senior team, and they said: ‘We’re confident we can help run this company. Would you be open to alternative like an ESOP?'”
Sletten then took his 10-person leadership team to meet with several local businesses that had gone through an ESOP, including Sands Wall Systems, Schoeneman’s Building Materials Center and Showplace Cabinetry.
“All of them told good stories of how it went,” he said.
Longtime leader Mike May, who is adding president to his chief operating officer title, and the senior management team are staying in place.
“We have a lot of long-tenured roles and middle-management people where this truly is going to be life-changing,” May said.
Employees will qualify for the ESOP if they work 1,000 hours per year, so virtually all will qualify after their first year.
“The average person who works in my warehouse now owns part of the company … they didn’t have to pay for,” Sletten said. “It’s a weird concept to wrap your mind around, but over time you hope it helps with recruitment and retention and bonds people and makes our culture better and keeps people working as a team. Because we all succeed together.”
Milestone year
Along with converting to the ESOP in 2024, the year also brought the first acquisition in the company’s history.
New Jersey-based Tropar Manufacturing Corp. became part of JDS at the end of September.
The family-owned company was the creator of Airflyte products and held more than 30 design patents in the awards and promotional products industry.
“They didn’t have any more generations interested in the business, and they sought a buyer, and we started talking, and it turned out to be a great match,” Sletten said.
“It’s a very well-knowing corporate name, so we’ll continue to operate as that brand in the sales channel.”
The company specializes in corporate awards and had many clients in common with JDS, he said. The operations basically were absorbed into JDS, with some assembly work transitioning to Sioux Falls.
Companywide, JDS now has about 350 employees, including almost 200 in Sioux Falls, and sells to about 35,000 businesses nationwide and even around the world.
“We have a sign that says ‘Global Headquarters,’ and I think people drive down the street and wonder,” Sletten said. “But we sold merchandise to about 70 different countries around the world.”
The company has 1.3 million square feet of warehouse space nationwide, with 320,000 square feet in Sioux Falls.
Business has been steady the past couple of years — it’s up 30 percent in 2024 compared with 2019, Sletten said.
“Part of that is inflation and price increases, but part of that is volume growth as well,” he said. “We continue to innovate and bring out new product lines and vendor partners and continue to try and grow the company. (With the ESOP) we can make our own decisions and chart our own course.”
Sletten’s father, Darwin, has been retired for 15 years but still comes to the headquarters to have breakfast, walk the building, talk to the team and find out about new products.
Once Sletten explained how the ESOP would work “and what it means for me and the employees, he’s really excited. This whole thing grew out of a little trophy shop in South Dakota. He has a hard time believing what it’s really grown into.”
The Sioux Falls facility also changed hands as part of the ESOP — and ended up remaining in local hands, too, with a sale to Sioux Falls-based Elgethun Capital Management.
“They’re investing in Scott and Mike and the JDS business model and the opportunities that exist in front of them,” said Reggie Kuipers of Bender Commercial Real Estate Services, who brokered the building transaction. “There are so many operational efficiencies they have because of their model, and I think they’re just turning the faucet on to some of the opportunities in front of them. I feel like there’s a lot of growth coming in the business still.”
The building recently expanded, “so we’re good for now, but with the most recent acquisition, it’s filling up faster than we thought,” Sletten said.
With converting to the ESOP, Sletten will remain CEO, “but I’m also going to acquire a new title — chief cheerleader,” he said. “I now will be able to celebrate and support the success of the team going forward and will be just as excited about that as I was running the company.”
As seen in Sioux Falls Business and written by Jodi Schwan.