Archive for April, 2013

Can Co-ops Save Unions? | In These Times

Labor-cooperative partnerships may herald a new strategy for labor–if they can get off the ground.

What has 18 owners, no bosses and high hopes for fostering workplace democracy in America? New Era Windows LLC, a worker-owned cooperative formed last year by members of United Electrical Workers (UE) Local 1110.

After occupying their factory to save their jobs—twice—workers at a closing Chicago windows plant decided last year to try a new tack: running the business themselves. They purchased equipment from their former bosses and are now setting up a new factory they believe will create good jobs in the city’s depressed economy.

New Era is one of a growing number of union-backed cooperatives nationwide that could herald a new strategy for labor. In his survey of existing cooperatives, economist Gar Alperovitz has calculated that the number of workers in partly or wholly employee-owned companies now exceeds those who belong to private-sector unions—a statistic that speaks both to the perilous state of the labor movement and the promise of reviving it through new structures.

In the case of New Era, the decision to form a cooperative was the result of a long battle with management. In 2008, upon being told that their factory would be closed and they would be fired immediately without severance pay, workers staged a six-day occupation of the Republic Windows and Doors factory and emerged victorious. Their stand, coming at the height of the financial crisis, was celebrated nationwide. It also emboldened them to occupy once again in February 2012, when new owner Serious Energy announced that it, too, would be closing the plant. The workers’ journey from occupiers to owners was paved in part by UE’s tradition of militancy, which some progressives hoped would inspire other unions fighting mass layoffs.

The labor movement at large hasn’t reprised the 1930s-era tactic of occupying factories in order to regain a foothold in existing workplaces. But a growing number of unions, led by the United Steelworkers (USW), are exploring creation of new worker-owned cooperatives as a strategy for contending with the offshoring of U.S. jobs. Like the workers who formed New Era Windows, USW began experimenting with cooperatives partly out of necessity—as job losses mounted amidst the financial crisis, “there seemed to be an opening to consider how we might create a better model, because everything was falling apart,” says Rob Witherell, USW’s cooperative strategist. USW decided to partner with Mondragon, Spain’s famous group of cooperatives, to create a template for union co-ops.

Now, USW is helping launch several pilot projects, including a green laundry in Pittsburgh that could replace some of the 100-plus jobs lost when an industrial laundry in the area closed several years ago. Members of United Food and Commercial Workers are currently employed in an urban farming cooperative in Cincinnati, with more projects planned under the behest of the Cincinnati Union Cooperative Initiative.

Read the whole article from In These Times.

Learn more about the union co-op model from the United Steelworkers.

Interview With Rob Witherell: Representative, United Steelworkers (USW) | Truthout

By Steve Dubb

Rob Witherell works for the United Steelworkers union at its headquarters in Pittsburgh, Pennsylvania. In addition to working on contract negotiations, benefits analysis, research and organizing, Rob has also led the United Steelworkers’ efforts on developing union co-ops and is the union’s lead liaison with the Mondragón Cooperative Corporation.

Could you tell us a bit about your history in labor organizing and what has led you to dedicate your career to the labor movement?

When I was an undergrad at the University of Massachusetts, our tuition and fees doubled in the years I was there, and so I got involved in student organizing and student government. That experience led me into politics and working on political campaigns, which eventually led to the opportunity to earn my Master’s degree in Labor Studies. As a graduate research assistant, I was a UAW member and our union contract allowed me to attend grad school full time with full health insurance for a whopping $300 per semester, and earning the best pay rate I had ever had. Since my undergrad degree is a Bachelor’s in Business Administration. I am probably one of very few people around who has both a business and a labor degree.

Could you discuss what put co-op organizing on the Steelworker agenda, given that employee-owned cooperatives are not exactly the typical way unions today go about organizing new members?

In the late eighties and early nineties we put a lot of efforts into ESOPs [employee stock ownership plan-owned companies] as a way to rescue troubled companies. In some cases, that meant complete worker ownership. For most of them, it meant minority worker ownership.

And what we found is that where things didn’t change at all, the ESOP wasn’t successful. Where we had some success — and where the ESOPs still exist — the companies are typically 100% employee-owned. A key to these successes was that there was a change in the culture of the workplace, so that the ownership of the company means more to the workers than the value of their shares.

Could you elaborate on the differences between the successful and unsuccessful ESOPs?

In a lot of the cases, we were dealing with cash-strapped companies. Doing these buyouts were a way of exchanging shares for concessions. So the business stayed open, but nothing really changed in terms of the product, market, business structure or business plan. Eventually those shares got bought out. So while it save those companies in a lot of cases, our members didn’t feel any sense of ownership.

So the ones that have been able to survive as employee-owned companies are the ones that started functioning more like a cooperative — that is, they were companies which had an active union and a company management that listened to its workers. In these companies, there was more of an emphasis on having a partnership with the union and in talking and listening to employees and respecting employees as owners.

How did the Steelworkers become aware of Mondragón?

In 2008, I was in Bilbao at an economic development meeting there to convince or help convince suppliers of one of our employers here in Pennsylvania to expand their supply operations into the United States. And while I was there, thanks to Michael Peck, who is Mondragon’s North American delegate, I had the opportunity to talk with Jesus Herrasti who was the President of Mondragón International division at the time. And so it was a good conversation. We found that we had a lot in common. And that led to a lot more conversations with [United Steelworkers President] Leo [Gerard]. And that led to the point when we announced our collaboration in 2009.

Read the rest of the interview from Truthout.

Growing the Wealth | Center for American Progress Report

How Government Encourages Broad-Based Inclusive Capitalism

By David Madland and Karla Walter

American companies use a variety of financial incentives, from broad-based profit sharing and stock options to worker cooperatives and employee stock ownership plans, to reward their employees with a portion of the wealth those workers help generate. This kind of compensation goes well beyond simply paying wages or providing individual incentives, but rather involves granting workers ownership stakes in the company or a share of its profits based on workers’ collective performance—a concept we describe as inclusive capitalism.

Inclusive capitalism, when partnered with democratic workplace practices, has a proven record of helping workers and businesses alike in a myriad of ways. Additionally, it is an economic philosophy that can draw bipartisan support. Yet policy to advance inclusive capitalism has not been part of the national dialogue for quite some time.

The purpose of this report is to change this dynamic and jump-start a policy conversation aimed at promoting inclusive capitalism. While we do not advocate for specific policy changes in this report, our hope is that it will spark dialogue among policymakers and advocates about how inclusive capitalism can help address some of the most fundamental problems facing our economy; what government can do to encourage employers to use it more; and how to ensure that inclusive capitalism is done right so workers can enjoy the upsides of broad-based sharing and having an increased say on the job without being exposed to undue risk.

Inclusive capitalism is by no means a new or rare phenomenon in the United States. Companies and workers have practiced inclusive capitalism since the founding of our nation. Today almost half of U.S. workers receive some sort of inclusive capitalism compensation—though in most firms its use is quite limited.

Companies practicing broad-based inclusive capitalism range from unionized American steel manufacturers and air carriers to leading technology firms to growing, socially minded companies. The United States Steel Corporation, for example, pays quarterly cash profit-sharing payments to its unionized workforce, while a significant portion of Southwest Airlines’ stock is owned by its employees.3 Likewise, the high-tech firm Intel Corporation rewards its employees with both cash profit sharing and broad-based stock ownership through restricted stock and stock options. And then there are the socially minded companies such as the tea and coffee purveyor Equal Exchange and the beer maker New Belgium Brewing that are both employee-owned, the former through a worker cooperative and the other through an employee stock ownership plan.

Read more and download the report from the Center for American Progress.

The Mondragón Cooperatives: An Inspiring Economic Hybrid | Tikkun

by Georgia Kelly

Members of the Mondragón Cooperatives vote on a proposed 2013-2016 socio-corporative policy. Credit: Mondragón Corporation.

Members of the Mondragón Cooperatives vote on a proposed 2013-2016 socio-corporative policy. Credit: Mondragón Corporation.

Riding from the Bilbao Airport to the small town of Mondragón, one is struck by the sheer beauty of the forested hills and verdant valleys in Spain’s Basque Country. The roads are as smooth as if they were paved yesterday, and there is nothing in this bucolic landscape to suggest anything is amiss in Spain.

However, the economic woes in this country are well known. As of November 2012, unemployment has risen above 25 percent and calls for more austerity have been greeted with demonstrations and widespread popular opposition. But, in spite of the country’s financial crisis, there is a solution quietly thriving in northern Spain—a solution that has nothing to do with austerity.

Sixty years ago, the Basque region was the poorest area of Spain. Today, thanks to the cooperative culture, it is the wealthiest. The dramatic transformation leads directly back to the arrival of a visionary Catholic priest, Father Jose Maria Arizmendi, who was sent to oversee a parish church in the small town of Mondragón. Though he questioned the wisdom of this appointment, it didn’t take long for Arizmendi to discover his mission in the impoverished town.

Because of the high unemployment in Mondragón, Arizmendi decided to open a school that would provide skills to some of the unemployed men in the area. The polytechnic school trained workers to make machine parts and provided an ethical foundation for the formation of cooperatives. In 1956, a handful of worker-owners who were trained in this school opened the first cooperative, ULGOR.

From such a modest beginning grew the world’s largest consortium of worker-owned businesses—a consortium that now comprises 120 businesses and more than 83,000 worker-owners.

In 1959, the Mondragón Cooperatives formed their own bank, Caja Laboral. It is this financial institution that has been the engine behind the expansion and financial stability of the cooperatives. In 2009, when 25 percent of all businesses in Spain failed, less than 1 percent failed in the Mondragón Cooperatives.

Read the full article from Tikkun.


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