WATERLOO -- VGM's expansion cannot be finished soon enough.

Jim Walsh, a minority stakeholder in VGM, said the company has been growing rapidly, even to the point where former meeting rooms have been fitted with cubicles to accomodate the growth.

"That's increasing this year and by Christmas time, I expect people will be sitting on each other's laps," Walsh said.

Work is continuing on the company's 60,000-square-foot expansion, with notable progress being made at the site. "We expect to be able to move into that next spring if all goes well," Walsh said.

Moving into the new building would be welcomed by employees who are getting cramped for space. Walsh said the expansion would also allow the company to put the public areas back to the way it intended them to be.

"So a lot of that's going to be just putting air back in the balloon and getting everybody back the way they belong," Walsh said.

The cost of the building is now more than $9 million, up from its original budget of $7.5 million. "I think that's a reflection of what's going on in construction costs in general," Walsh said.

When completed, the new building will house the company's Homelink division, which is currently spread out in different locations on campus. "We're trying to make the Homelink division more efficient by centralizing it in the second floor," Walsh said.

Homelink will also occupy the third floor of the building. On the first floor, one side will house VGM's insurance division and the other side will remain unoccupied.

"We're doing something similar to what Community (National) Bank has announced they're doing," Walsh said.

Community National Bank is adding two floors to its previously announced expansion at its main bank at West Park Avenue and Commercial Street in downtown Waterloo. The upper floor is being built out as a shell for future expansion.

Future growth is also the reason behind VGM creating a shell space. Walsh said the company simply wanted to take care of such considerations at one time. "It's a lot more efficient and less disruptive to build that space now and finish it when you need it," Walsh said.

VGM currently employs about 420. Walsh said the company should add about 140 jobs within a year or two after the expansion is complete.

"Everything depends, of course, on how business goes," Walsh said. "It's going good right now, but you don't know how things are going to change in the next year or two."

The flow of business doesn't just dictate how quickly new hires will take place. It also dictates how fast ownership of the company will be transferred to the employees.

Last year, VGM announced it was starting an employee stock ownership program. The goal was to transfer 100 percent of the ownership of the company from Walsh, local auto dealer John Deery Jr. and founder and majority owner Van G. Miller.

"It still is and we've started down that path," Walsh said. "Again, depending on business conditions, that could be accomplished in as little as five years."

VGM employees received their first participation statements this spring. A few weeks ago, Mike Mallaro, VGM's chief financial officer, met with individual groups to review the plan, the statements and how the program is expected to work. These meetings explained the more detailed aspects of the plan as opposed to the general meetings held in the fall soon after the program was announced.

Previous to the ESOP being administered, VGM was composed of several companies, but that is no longer the case.

"As part of the ESOP transaction, we reorganized the corporations so there's only one," Walsh said. "There's one called VGM Groups Inc. That's the consolidated company. All the other companies were consolidated down to that one."

The consolidation was finalized Dec. 31.

Walsh said the current focus is on getting the share value to a point where everybody involved is comfortable. "Once we know what that value is, we can do the balance of the company at that point," Walsh said.

Another current focus is getting the employees to take on more of an ownership mentality. Walsh said while employees don't get to run the company individually, their decisions greatly affect the value of the company and thus the value of their shares.

"We've been getting a lot more suggestions, I might add," Walsh said. "The old suggestion box is overflowing, and that was the idea. That's what we wanted."

Contact RC Balaban at (319) 291-1418 or rc.balaban@wcfcourier.com.