By Hazel Corcoran, June 3, 2014
The US FWC National Conference 2014, held in Chicago was the largest worker co-op conference to date in the United States, with 470 participants. My sense is that about half of the participants were from existing worker co-ops, with the remainder being developers, people starting new worker co-ops, academics, lawyers, funders, representatives from the labour movement, non-profits, foundations, faith communities, etc. There is a mushrooming interest in worker co-operatives in the US as the shattered economy leaves millions of people searching for an alternative economic model, and also leaves foundations, churches, etc. seeking for ways to help marginalized people.
My first stop was: a day-long intensive session entitled “Should You Sell Your Business to Your Employees? Succession Planning Through Worker Cooperative Conversion.” After a brief orientation on the process for conversion to a worker co-op (not at all linear), we heard from some former owners or current worker-owners of small businesses which had converted to a worker co-op – from between 3 years to 26 years ago. One was South Mountain Worker Co-op (a building/ solar co-op in Massachusetts); another was Namasté Solar (Colorado), and finally A Yard & a Half (landscaping co-op, also in Massachusetts).
The two former owners, both of whom still worked for the co-op businesses, explicitly stated that they believed that the worker co-op model worked so well for them that they took it as part of their mandate to share their story. Here is one: http://www.theguardian.com/sustainable-business/south-mountain-worker-co-op-employee-owned . They explicitly saw themselves as “part of a bigger story.”
Some of the positive factors around converting to a worker co-op which were given by the co-CEO of the Landscaping Co-op:
-9 out of 15 businesses in the US are owned by baby boomers; comparable in other developed countries.
-Employees at worker-owned companies earn 5-12% more than others in the same industry.
-Employee-owned companies are four times less likely to lay off employees in a recession.
Some lessons learned from the conversions:
1) An independent valuation is essential.
2) Even if the owner intends to retire, structure the deal as a gradual buy-out.
3) Train everyone on democratic decision-making, early on.
4) Focus on the soft skills: democratic participation, assertiveness, communication, etc.
5) Even if your business has been operating successfully for years, do a new business plan based on the co-op’s goals & capacity.
6) Do cash flow projections, not only a budget.
7) Get professional help. This should include good lawyers on both sides who are committed to help preserve the buyer/seller relationship, if that is what is desired.
Each conversion to a worker co-op is different. As the session’s facilitator, Joe Rinehart, stated, “If you’ve seen one worker co-op conversion, you’ve seen one worker co-op conversion.” No two conversions are alike.
This was noted to be a “special session for local small business owners,” but unfortunately there were not all that many small business owners present. Nonetheless, the participants (developers, lawyers, etc.) seemed to find the session quite valuable.
The first full evening of the Conference was focused on Chicago, including brief presentations from a variety of different local co-ops (several of which were quite new, and including New Era Windows, the high-profile worker takeover of Republic Windows). It also included a presentation from a local county councilor who is very supportive of the worker co-op model and who works closely with Chicago-based Center for Workplace Democracy.
Day 2 launched with a presentation by US FWC President Rebecca Kemble. She eloquently made the point that since people are looking for new economic solutions right now, it’s vitally important that we build a strong movement to be able to have resources to share with them. “Our competitive edge is in our relationships and solidarity with each other; the ability to have each other’s backs when the going gets rough.”
The first keynote was by Dan Swinney. Swinney, originally a labour organizer who helped launch (in the 1980’s) and has worked since with Manufacturing Renaissance spoke of the importance of worker ownership in the area of manufacturing. Every manufacturing job creates multiple spin-off jobs; this is not true in service or retail jobs. Further, manufacturing is the only sector with significant margins. He told the story of Austin Polytechnic, which he helped to launch: a high school in a Chicago inner-city neightbourhood which is modeled on the Mondragon Polytechnic. The school trains high students about co-operative values and business practices, while at the same time training them to be machinists. President Obama has pointed to this school as a model, and indeed it is inspiring replications in other cities. Several students, aged 15-18, from the school attended the conference & made presentations.
He stated that “I believe that we have the best opportunity to dramatically grow the worker co-op movement right now than we’ve had at any point in the last 100 years. However the window to do this will likely last no more than 10-15 years, after which we may no longer have the resources to do it.”
Another keynote, Roberta Trovarelli from the Legacoop in Italy presented on the Italian and Emilia Romagna co-ops. She presented the highly supportive policy environment in Italy as well as the impressive size and scale of the worker and social co-op movements.
There were workshops on topics as diverse as:
-Worker Co-op (WC) Financial Literacy 101
-Making Meeting Awesome for Everyone: Dynamic anti-oppressive facilitation
-Union Co-operatives: how do they work?
-Success Factors for Worker Co-op Development in low-income communities
-Local and Regional Co-op Development Models
-Managing Growth and Scaling Values: Growing our Co-operative Economy through Business expansion
-What Can We Learn from Failure?
-Policy Wonk 101
-Blueprint for Increasing Worker Ownership: a local systems change approach
-Sector-specific Conversions: e.g., home care, transport, restaurants, cleaning, solar
-Before You Talk to a Lawyer: 28 questions for the founders
-New Research in Worker Ownership
-Popular economics: demystifying the economy
-Quirky is fine; neurotic is not: Relationship vitality & power play in WCs.
-Building Tools for Financial Training
-Incubator-driven Co-operative Development (e.g.,WAGES).
-The Employee Ownership Family: Meet our cousin, the ESOP
-Legal Structure for Worker Co-operatives
-Participatory Decision-Making: taking the “Man” out of management
-Smorgasbord of Boards
-Business Strategy: Essential Tools for Success
-Our Co-ops, Our Future: Youth & student perspectives on the co-op movement
-Policy on the Ground: Creating a worker co-op policy agenda
-The Role of Philanthropy in our Eco-system
-Building Grassroots Coalitions around Worker Ownership
-Raising Capital for your Co-op
There were even a few more, plus a series of Open Space possibilities! Brief summaries of some that I attended are as follows.
UNION CO-OPS: we heard from New Era Windows (a United Electrical Workers unionized co-op in Chicago); from the Cincinnati Union Co-op Initiative (Our Harvest Co-op: a worker co-op urban farm/ CSA project with UFCW), the USW-Mondragon Collaboration which has possible projects in 10 cities, and briefly about the US FWC’s Union –Coops Committee. There is a lot of interest and activity, mostly of unionized worker co-ops in an embryonic stage. It is not yet clear how many worker co-ops will be built, but there is promise in this.
BLUEPRINT FOR INCREASING WORKER OWNERSHIP: A LOCAL SYSTEMS CHANGE APPROACH
In this workshop, we discussed ways to find the local “low-hanging fruit”: low effort-high impact stakeholders who could be supporters to worker co-op development in one’s local area, by making clear to them how worker co-ops can help them identify the benefits of worker co-ops which could help them meet their own mandates. These benefits include higher quality jobs, higher survival rates for businesses, higher civic engagement, etc.
In NEW RESEARCH ON WORKER OWNERSHIP, we heard from 4 professors researching worker ownership about a variety of topics. These included: a case study of an urban agriculture co-op among refugees; lessons that worker co-ops might draw from Employee Stock-Ownership Plan companies, and barriers to worker co-op development. The last speaker, on barriers, ended up concluding that the movement could grow much more effectively through conversions than through new start-ups.
THE ROLE OF PHILANTHROPY IN OUR ECO-SYSTEM
Although the legal context in the US makes it easier for an entity supporting worker co-op development to obtain charitable status than in Canada, there were some ideas coming out of this session which will be worth following up in Canada.
I also attended the AGM of the US FWC. The Federation continues to have low resources (well under $100,000 in annual revenues projected this year). However it has spun off a charitable entity called the Democracy at Work Institute (DAWI), which works closely with the Democracy at Work Network. DAWI has received both a Rural Co-op Development Grant from the US Dept. of Agriculture, and a multi-year grant from the Catholic Campaign for Human Development to develop WC’s in immigrant communities. Prospects are bright for DAWI which soon will have 5 staff members, however the Federation will need to figure out how to fund its own activities, focused around member services.
There were two keynotes on the last day as well. First, Jessica Gordon-Nembhard spoke about her long-anticipated and ground-breaking new book, Collective Courage: A History of African American Co-operative Economic Thought and Practice. The book “chronicles African American co-operative business ownership and its place in the movements for Black civil rights and economic equality.”
She quoted W.E.B. DuBois as having stated, “If leading the way as intelligent cooperators, we rid ourselves of the ideas of a price system and become pioneer servants of the common good, we can enter the new city as men and not mules.”
On p. 25 of Collective Courage, we read,, “In researching this book, I learned that almost all African American leaders were engaged in the practice of cooperative ownership, particularly in their early careers or as part of their vision for a prosperous future without discrimination. In many ways, this cooperative history is also a retelling of African American history in general….”
After Gordon Nembhard gave some highlights of her book in 20 short minutes, the Conference participants gave her two standing ovations, and available copies of the book quickly sold out. The book can be ordered at: www.psupress.org/books/titles/978-0-271-06216-7.html .
The closing keynote, was by Ed Whitfield, Co-founder and Co-Manager of the Fund for Democratic Communities: He stated, in summary:
“We must develop the spirit, art, science, and habits of democracy. One of the incredible things about worker co-ops in particular is that the democracy comes to the fore. Other co-ops have a democratic basis as well, but members of most large consumer co-ops don’t spend much time or energy thinking about democracy. We have a responsibility to bring out the whole aspect of democracy.
The labour & co-op movements both started on the basis of class solidarity;– and early on, they were even connected to each other. But both drifted – labour to craft protection; the co-op movement to elitism, or counter-culturalism. Both movements need to work more on class solidarity, by (labour) working with the unemployed, and the co-op movement – to focus more on WC’s.
Because of the crushing way the current economic system treats people, we need to develop our full humanity through democratic worker ownership.
Power can crush you, but it can also help you. You need to look at power also as something that we have. We talk a lot about speaking truth to power, but we need to be true to ourselves.
We should talk about making the community a better place than the way we found it, by getting back to the indivisible reserve in co-operatives– not individual wealth. Why is the WC movement not growing faster? It’s not in the interest of any single WC to grow itself dramatically & risk what it has built. It’s only in our collective interest – we have to do this thru unity – by building the movement.
Principles 6 & 7 must be lived principles.
If you want to help people, help them – and start by asking them what they need.
We need to build inclusive democratic entrepreneurship. We need to unleash our creativity toward doing things for the common good. We must find creative ways to build this movement.”
This Conference showed that the US FWC and the Democracy at Work Institute are effectively getting the message out about the potential of worker co-ops to create better jobs and more sustainable businesses, including through the significant amount of academic research / writing and press coverage the model is attracting in the US. However, it was noted that even with a high estimate, worker co-ops currently represent only about .03% of all businesses in the US. I hope that DAWI and the US FWC, in collaboration with their many partners and supporters, will be able to effectively start scaling up the worker co-op movement in the US to meet the many and daunting challenges in their economy.
(To see the Twitter feed about this conference with lots of great photos, search: #WCNC2014.)