A national engineering company will now be owned by the Baton Rouge Area Foundation, preserving the company’s operations and tacking on a $1 billion asset to the foundation.
More than a decade ago, Newton Thomas, the founder of the industrial engineering company, set up plans that ensured the company would maintain its workers and charitable operations after his death. Thomas died last year. The Newtron Group was donated to BRAF under no financial terms, effective on March 17.
With annual revenues of $1 billion, The Newtron Group is a nationally prominent industrial engineering contractor that works on projects from residential electrical work to data centers. The company is headquartered in Baton Rouge and has offices in Westlake, Texas, Nevada and California, with more than 4,500 total employees.
The Newton B. Thomas Supporting Foundation, a public charity housed under BRAF, will facilitate the transition. The nonprofit was created about 15 years ago as the group’s charitable arm, distributing funds to charities using donations from the company.
The Newtron Group’s staff, leadership and day-to-day operations will remain the same.
“We are self-managed and that’s how we’ll continue to operate,” said John Schempf, president and CEO of The Newtron Group.
Such transactions, referred to as business purpose trusts, are uncommon, but slowly rising in popularity. Yvon Chouinard, founder of outdoor clothing brand Patagonia, and his family transferred ownership of the multi-billion dollar company to a nonprofit and a trust under the company name in 2022 to funnel profits toward combating climate change.
“Newton was really ahead of his time,” BRAF CEO Chris Meyer said.
Meyer said Thomas’ donation of his company to BRAF was a way to preserve the company he built and maintain its contributions to causes that were dear to him, like early education. Since The Newtron Group and BRAF had finalized how the transaction would play out in the last five to ten years, the relationship between the two groups will largely remain the same.
“Instead of talking about the plan, we’ll be living out the plan,” Meyer said.
Long time in the making
Thomas had worked on plans to maintain the company after his death for about 25 years. He thought very highly of John W. Barton Sr., one of the founders of BRAF, and the two forged a relationship that would be key to The Newtron Group’s ownership transfer. Thomas also worked closely with former BRAF CEO John Davies to plan the donation of the company, Schempf said.
A strongly held belief of Thomas was profit sharing with employees, who as a whole can receive between 40% to 60% of The Newtron Group’s pre-tax profits.
Under BRAF’s ownership, an additional percentage would go toward the Newton B. Thomas Support Foundation, which has more than $20 million, and about 5% each year goes to charity. The company’s stock is now housed under the support foundation as well.
“Basically, it takes the place of the owner,” Schempf said. “So instead of it going to an owner, it ultimately gives BRAF who is the owner, into the support foundation, and then we have annuitized giving out of that nest egg.”
The Newtron Group has participated in BRAF projects in the past, and Schempf said it’s possible to that the two may work on more projects together in the future, though it’s not set in stone. As a result of BRAF ownership’s of the company, The Newtron Group’s earnings will appear as an additional asset on BRAF’s balance sheet.
Ultimately, the new ownership serves as a way to for the company to keep benefitting its workers and community.
“He didn’t feel like he wanted to leave his children with that burden of having this company to deal with, and so his way to preserve it, for it to continue on and continue to operate as we have for the last 52 years, was to was to do this transaction and put it in a safe place,” Schempf said. “And BRAF is a safe place.”
