worker ownership anchors good, green, jobs & union membership

by

Attorney Deborah Groban Olson Executive Director, Center for Community Based Enterprise

and on behalf of the US Federation of Worker Co-ops Union Co-op Committee

“Good Jobs, Green Jobs” Blue Green Alliance Conference

Detroit Marriott Hotel May 10 - 11, 2012

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Unions, cooperatives, worker–owned & community-based companies share human/community empowerment values

Worker owned companies More successful at surviving & thrivingInnovate rather than laying off their workers

ownersSuccessful unionized examples

Global economy raises new job-creation question & role for unions

Detroit Community Cooperative (DCC) – community economy platform in Metro Detroit

Organizing local economic strength in global economy

Worker economic security strategiesLabor unionsCommunity- based enterprisesCooperatives Worker owned & controlled companies

Why so many terms? Worker co-op ESOP (employee stock ownership plan) Employee-owned, company ; Worker-owned company Community based enterprise

Community-based enterprise (CBE)DefinitionSustainableLocally rootedIntentionally structured to provide

community benefits; andCommitted to paying living wagesLegal form irrelevant

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Slows Bar BQ Courtyard

1940’s Detroit – union & co-op folks – same people• Studied working people’s economic problems together• UAW Locals 22 & 174 loaned milk drivers funds to start Twin Pines Dairy • Twin Pines became Co-op Services (CS) • CS worked w/ Unions creating

• Motor City Food Co-op with UAW Local 60• Co-op Optical with many unions

Source:-Virginia Thornthwaite (2005)

Types of cooperatives

Consumer (food, housing, electricity)

Producer (farmers)WorkerMulti-stakeholder

Co-op values & principlesVALUESSelf-helpSelf-responsibilityDemocracyEqualityEquitySolidarityHonestyOpennessSocial ResponsibilityCaring for Others

PRINCIPLESVoluntary, Open

MembershipDemocratic Member

ControlMember Economic

ParticipationAutonomy &

IndependenceEducation, Training &

InfoCooperation among co-

opsConcern for Community

30,000 U.S. Cooperatives30,000 U.S. Cooperatives73,000 Places of Business

Assets$ 3 Trillion

Revenues$ 654 Billion

Economic Impact Economic Impact of U.S. Co-ops:of U.S. Co-ops:

Wages & Benefits$ 75 Billion

2 Million Jobs 857,000 direct

Types of worker ownership

Traditional Corporate & LLC forms

Worker Cooperatives

Employee Stock Ownership Plans (ESOP)

Employee owned companies are 3 to 4 times less likely to lay off or lose workers

From 2010 General Social Survey – table used with permission from National Center for worker Ownership worker Ownership Report p. 6 March-April 2012

Ohio manufacturing job loss 2000-2008Ohio ESOP Survey – Kent State University

29% overall1% worker Owned Network

Reasons:Far less likely to outsourceHave avg. 2x higher rates of capital

investmentMore worker participation in making business

decisions

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Employee ownership trends

From NCEO analysis of US DOL data -used with permission from National Center for worker Ownership (NECO )worker Ownership Report p. 7 March-April 2012

Mondragon Cooperative Corporation “Humanity at Work”

Participative worker ownership = successful job creation & retention Mondragon: 50 years from 0 to 100,000 jobs and

assets of 38 billion euro

Emilia Romagna – 8,000 worker coops + family businesses = 7% of Italy’s population; 12% of exports, 30% of patents

EBO – diversification through active worker ownership – from mining equipment to recycling equipment & medical devices – tripled business in 5 years

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Ongoing support & resource sharing creates more successful start- upsWell funded & staffed support centers provide

ongoing assistance with accounting, legal, business plans

Much more support than US incubatorsSaiolan Start-up center at Mondragon University

Started in 1980’s89% of its start-ups are still in business 5 years later83% are still in business 10 years later

US system – 1 out of 5 start-ups is alive in 5 yearsDetroit Community Co-ops (DCC) - following

Mondragon model – users own support system

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Worker ownership makes people healthier & happier, not just wealthier

Attorney Deborah Groban Olsonwww.esoplaw.com

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 David Erdal’s 1999 PhD Thesis at St. Andrews “The Psychology of Sharing” provides preliminary evidence (not conclusive proof) that those living in a community with a large percentage of worker cooperatives are healthier, better educated, have less crime and more social participation than people in a comparable Italian town with fewer worker cooperatives.

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C2

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Co-operative town worse

Co-operative town better

Caption: the graph shows the differences on the following measures:

Crime: victimisation (C1), policing (C2), confidence (C3), feeling of security (C4), domestic violence (C5)

Education: level attained (E1), age leaving school (E2), truancy (E3), expected truancy (E4), post-school training (E5), perceived importance of education (E6)

Health: physical health (H1), emotional health (H2) (also measured: mortality)

Social Environment: perceived gap between rich and poor (SE1), helpfulness of authorities (SE2), supportiveness of social networks (SE3)

Social Participation: membership of clubs (SP) (also measured: voting, blood donation)

Worker owned companies perform better

Attorney Deborah Groban Olsonwww.esoplaw.com

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ESOP companies compared to comparables or themselves pre-ESOP

Increase sales growth 2.4% faster Increased employment 2.3% per year Increased sales per worker 2.4% Continue in operation longer

Source: 2001 Study by Dr. Douglas L. Kruse and Dr. Joseph R. Blasi, School of Management and Labor Relations at Rutgers University

Ongoing, successful, unionized worker owned company examples

Homeland Grocery Stores – UFCW

Maryland Brush Company – USW

AWG bought stores in 2002 bankruptcy2011 HAC created to sell 100% ownership of s 76

stores + expansion stores to workers thru ESOPEmployer sought to terminate UFCW’s defined benefit

planUFCW negotiated:

New defined benefit planESOP participation for union membersUnion seats on board of directorsCollective bargaining agreement covering any new stores

UFCW & HAC partnership to increase worker owned & unionized stores

Maryland Brush Company (MBC)

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•Started in 1851

•Part of PPG Industries since 1904

•1990 became 100% worker owned USW ESOP

Maryland Brush co-op values

Sees itself as long term community asset

Must retain competitive edge to continueMaintains cash reservesReinvests in companyBalances risk- protecting investment of older

workers & jobs needs of younger workerInvolve workers in all major decisions

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Maryland Brush: co-op governance structure in a 100% S corporation ESOP4 internal board members

MBC presidentLocal union president1 selected by salary group1 selected by wage group

3 external board members1 appointed by USW district director1 appointed by MBC president1 nominated by USW, affirmed by MBC

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Mature markets problem – Maryland Brush finds solar productSpecializes in custom designed power brushes

for:Steel industryNonferrous metals industryTruck Tire retread industryIndustrial distributor marketSpecial machinery marketWelding industry

By 2007 - Maryland Brush Company knew it needed to diversify outside of the brush industry

Finds new solar energy product

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2010 MBC bought Photensity

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Now called “Skylouver”

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Union role in MBC product diversification Maryland Brush needed funding to

build its “proof of concept” array - $750,000

Union helped Maryland Brush get funding from the State of Maryland and the US Department of Energy

U.S. union densityPercentage of US workforce Unionized as of 2010 ( Source = Wikipedia)

  ▪ Total: 12.4%  ▪ Public sector: 36.8%  ▪ Private sector: 7.6%

21st century challenges create union role in job creation

Job scarcityUnions

Not in job-creation businessCould use assets to

Create union members Help worker ownership

Increase political capital Benefit from focus on community-based

businesses

Challenges for worker co-ops Mostly smallInvestment capital hard to findNeed political clout to get resourcesNeed managers with

business sophisticationparticipatory values & skills

If co-ops want union involvement, they need to find ways to generate union membership

Proposal: co-op union membersContinue to organize & represent collective

bargaining membersCreate a new class of “Co-op Union Members”Provide different services for these members:

Access to business expertsPooled resources like insurance & purchasing co-

opsLobbyingConnections to labor friendly inventors &

entrepreneursBecome bidders for public & private outsourced

work

Mondragon in Detroit•Center for Community Based Enterprise (C2BE)

teaches co-op & community based enterprise best practices

•Ingenuity US, L3C seeks products & business opportunitiesfocused on rich local technical knowledge & resources

•Detroit Community Cooperative (DCC)•collaborative platform for individuals, businesses & non-profits•to implement cooperative practices for mutual self-help•incubate worker owned companies•business members own their support system

Detroit Community Cooperative (DCC)“Declaration of Interdependence”

• Statement of Values• Based on Mondragon & International Co-op Association principles • Seeking declarers & members• Attached

Detroit Community Co-op Mission• Encourage, enable & educate about collaborative action as a way to build a healthy, sustainable, and inclusive local economy; • Meet members’ needs - providing quality products & services at reduced prices

Detroit Community Co-op Membership•Members are businesses, organizations and individuals•Benefits: members provide each other quality business & consumer products, services & information

• at a discount• thru barter, work exchange or co-op hours•1 vote/ person• find collaborators in business/job creation

•Obligations:•volunteer 4 hrs/month to help co-op or other members• pay dues• business members share 2% of co-op generated revenue

Detroit Community Co-op (DCC) • Founding MembersBetter Detroit Youth Movement, Brightmoor Alliance, Center for Community Based Enterprise, Church of the Messiah, City Mission, Congressman Hansen Clarke, ConnectPay, Creative Community Pathways, Detroit Black Pages Newspaper, Fresh Corner Café, Highland Park Business Association, IngenuityUS,l3c, Michigan Alliance of TimeBanks, Michigan Urban Farming Initiative, Motor City Blight Busters, New Liberty Baptist Church, Pioneer Building, Project L.I.V.E., Sustainable Community Farms, Williams Acosta, PLLC, Gregory Hicks, Richard Hillier, Jacquise Purifoy, Esq., Salam Rida, Tom Stephens, Maria Martin-Thomas

• Seeking New Members

DCC Membership •Applications available•Next DCC potluck

-June 6, 2012, 6:00 p.m. at Motor City Java House, 17336 Lahser, Detroit 48219 – All Welcome

• Seeking opportunity to present to your organization• Contact (313) 331-7821, info@c2be.org or visit www.c2be.org

Unity builds local economic strengthUnions & worker owned companies are primary

protection for workers Good models of unionized worker ownership existShared resources can scale up community

economyTechnical support & cooperative platform, MCC, Italy,

Cleveland, Detroit Community Co-opExisting union technical and political assets can help

Unions can create new “co-op” memberships Source for new union members Inventors are potential allies in job protection

Workers & unions need to be proactive in job creation

For more information contact

www.esoplaw.com38

www.esoplaw.comdgo@esoplaw.com(313) 331-7821(313) 300-6517

Center for Community Based Enterprise, Inc. (C2BE)2795 E. Grand Blvd., Detroit, MI 48211(313) 331-7821 www.c2be.orginfo@c2be.orgdgolson@c2be.org

Additional Resourceswww.usworker.coop – US Federation of Worker Co-opshttp://unioncoops.wikispaces.com/ - USFWC Union Co-op Committeewww.ica.coop – International Cooperative Alliancewww.community-wealth.org – Democracy Collaborativewww.ncba.coop – National Cooperative Business Associationwww.nceo.org – National Center for Employee Ownershipwww.mcc.es – Mondragon Cooperative Corporationwww.circlepinescenter.org- Circle Pines Center