March 18, 2024

This paid piece is sponsored by the Sioux Falls Development Foundation/Forward Sioux Falls.

What began as a home-based business has grown into a regional leader and now will be sold to its employees.

Sioux Falls-based Midwestern Mechanical now is 100 percent employee-owned through an employee stock ownership program, which began at the start of 2024.

“I’ve always believed if you take care of the company, the company will take care of you, and the ESOP is just another example of that philosophy in action,” founder Dwayne Klarenbeek said.

Klarenbeek started the business out of his home in Larchwood, Iowa, in 1983.

“He had a chicken coop full of material and an office in his farmhouse, and he came from there up to where we are today,” president and CEO Ken Amundson said.

Today, Midwestern Mechanical is a 330-person, four-office company recognized as a regional leader in plumbing, fire protection and HVAC service, supporting residential and commercial projects across South Dakota, Iowa, Minnesota and Nebraska.

Klarenbeek remains board chair. The ESOP was completed in partnership with Paralign Capital Partners.

“We have always been a family business, and an ESOP allows us to continue that legacy in a way that will continue to provide for our team, their families and our communities for years to come,” Klarenbeek said.

“Our employees are the lifeblood of Midwestern Mechanical, and I could think of no better steward for the future of this business than them.”

Midwestern Mechanical has taken an engaged, intentional approach to meeting its workforce needs. Since 2012, the company has grown one of the largest apprenticeship programs in South Dakota.

“We felt our apprentices needed more robust education and developed a program and hired someone to help build it,” Amundson said.

Now, there are programs in plumbing, HVCA and fire protection certified by the U.S. Department of Labor. Midwestern Mechanical apprentices work while gaining their on-site education and in four years have both the classroom and work time needed to test for their state license and receive a journeyman’s card.

“I always say it’s our future because it is,” Amundson said. “We take people who maybe have a little construction experience – those typically are the most successful – but we’ve also taken people who have worked at McDonald’s, and one worked in a bowling alley before he came to us, and now he’s running an HVAC division in Spencer, Iowa. It’s helped a lot.”

The employees learned recently that they would become owners at a quarterly business meeting.

“Dwayne got up and said he’d always dreamed of the employees running it and it continuing on, and this was the way to do it, and he told them they’ve got a bright future ahead of them,” Amundson said. “There was quite a bit of excitement from the employees.”

It was deserved, Klarenbeek said.

“Their loyalty, dedicated service and sacrifice have been absolutely critical to our success,” he said. “They have earned the right to call themselves owners and reap the rewards of our future shared prosperity.”

Midwestern Mechanical’s decision to transition to an ESOP is a win for the Sioux Falls business community, said Bob Mundt, president and CEO of the Sioux Falls Development Foundation.

“This is really a powerful local success story,” he said. “To go from a one-person, home-based business to a company employing hundreds of people who now will enjoy the benefit of ownership is a testament to the positive business climate and community-minded nature of Sioux Falls. Midwestern Mechanical is a model in workforce development, and this is the latest significant way this company is investing in its team.”

Midwestern Mechanical’s business has grown along with the Sioux Falls-area community, Amundson said. Current work has included all the new Kwik Star locations, the Sanford Virtual Care Center and several projects for the Sioux Falls School District. In Rapid City, the company worked on The Monument, the community’s new event center.

Midwestern Mechanical is invested in Forward Sioux Falls as a way to support the area’s continued growth and illuminate the opportunities that exist to work in the trades.

“People think about working in the plumbing industry and completely misunderstand what we do,” Amundson said. “We take people and show them the big boilers and pumps and medical gas systems that we work on, and it’s not what they expected. Very seldom do we touch a pipe that’s not brand-new.”

The company recently finished a 9,000-square-foot expansion of its location at 4105 N. Lewis Ave. and plans to build on its work in fabrication and manufacturing as a way to improve overall efficiency and complete more work in-house.

This summer, employees will celebrate the ESOP and receive statements showing how many shares they have and their corresponding value.

“And as the company continues to be successful, they will see their accounts going up,” Amundson said. “Once you see something with your name on it, then it starts clicking.”

Forward Sioux Falls is a joint venture between the Greater Sioux Falls Chamber of Commerce and the Sioux Falls Development Foundation and is widely respected as the premier economic driver for the Sioux Falls region. To learn more and connect, click here.