Worker Ownership Anchors Good, Green, Jobs & Union Membership

1. 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

2. Organizing local economic strength in global economy • Unions, cooperatives, worker–owned & community-based companies share human/community empowerment values • Worker owned companies • More successful at surviving & thriving • Innovate rather than laying off their workers owners • Successful unionized examples • Global economy raises new job-creation question & role for unions • Detroit Community Cooperative (DCC) – community economy platform in Metro Detroit

3. Worker economic security strategies • Labor unions • Community- based enterprises • Cooperatives • 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

4. Community-based enterprise (CBE) Slows Bar BQ Courtyard Definition • Sustainable • Locally rooted • Intentionally structured to provide community benefits; and • Committed to paying living wages Legal form irrelevant

5. 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)

6. Consumer (food, housing, electricity) Producer (farmers) Worker Multi-stakeholder Types of cooperatives

7. Co-op values & principles VALUES • Self-help • Self-responsibility • Democracy • Equality • Equity • Solidarity • Honesty • Openness • Social Responsibility • Caring for Others PRINCIPLES • Voluntary, Open Membership • Democratic Member Control • Member Economic Participation • Autonomy & Independence • Education, Training & Info • Cooperation among co-ops • Concern for Community

8. 30,000 U.S. Cooperatives 73,000 Places of Business Economic Impact of U.S. Co-ops: Assets $ 3 Trillion Revenues $ 654 Billion Wages & Benefits $ 75 Billion 2 Million Jobs 857,000 direct

9. Types of worker ownership • Traditional Corporate & LLC forms • Worker Cooperatives • Employee Stock Ownership Plans (ESOP)

10. 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

11. Ohio manufacturing job loss 2000-2008Ohio ESOP Survey – Kent State University 11 • 29% overall • 1% worker Owned Network • Reasons: • Far less likely to outsource • Have avg. 2x higher rates of capital investment • More worker participation in making business decisions

12. 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

13. Mondragon Cooperative Corporation “Humanity at Work”

14. 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

15. Ongoing support & resource sharing creates more successful start- ups • Well funded & staffed support centers provide ongoing assistance with accounting, legal, business plans • Much more support than US incubators • Saiolan Start-up center at Mondragon University • Started in 1980’s • 89% of its start-ups are still in business 5 years later • 83% are still in business 10 years later • US system – 1 out of 5 start-ups is alive in 5 years • Detroit Community Co-ops (DCC) - following Mondragon model – users own support system

16. 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. Worker ownership makes people healthier & happier, not just wealthier 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) Attorney Deborah Groban Olson www.esoplaw.com

17. 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 Worker owned companies perform better Attorney Deborah Groban Olson www.esoplaw.com

18. Ongoing, successful, unionized worker owned company examples Homeland Grocery Stores – UFCW Maryland Brush Company – USW

19. UFCW & HAC partnership to increase worker owned & unionized stores • AWG bought stores in 2002 bankruptcy • 2011 HAC created to sell 100% ownership of s 76 stores + expansion stores to workers thru ESOP • Employer sought to terminate UFCW’s defined benefit plan • UFCW negotiated: • New defined benefit plan • ESOP participation for union members • Union seats on board of directors • Collective bargaining agreement covering any new stores

20. Maryland Brush Company (MBC) • Started in 1851 • Part of PPG Industries since 1904 • 1990 became 100% worker owned USW ESOP

21. Maryland Brush co-op values • Sees itself as long term community asset • Must retain competitive edge to continue • Maintains cash reserves • Reinvests in company • Balances risk- protecting investment of older workers & jobs needs of younger worker • Involve workers in all major decisions

22. Maryland Brush: co-op governance structure in a 100% S corporation ESOP 4 internal board members • MBC president • Local union president • 1 selected by salary group • 1 selected by wage group 3 external board members • 1 appointed by USW district director • 1 appointed by MBC president • 1 nominated by USW, affirmed by MBC

23. Mature markets problem – Maryland Brush finds solar product • Specializes in custom designed power brushes for: • Steel industry • Nonferrous metals industry • Truck Tire retread industry • Industrial distributor market • Special machinery market • Welding industry • By 2007 - Maryland Brush Company knew it needed to diversify outside of the brush industry • Finds new solar energy product

24. 2010 MBC bought Photensity

25. Now called “Skylouver”

26. 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

27. U.S. union density Percentage of US workforce Unionized as of 2010 ( Source = Wikipedia)  ▪ Total: 12.4%  ▪ Public sector: 36.8%  ▪ Private sector: 7.6%

28. 21st century challenges create union role in job creation • Job scarcity • Unions • Not in job-creation business • Could use assets to • Create union members • Help worker ownership • Increase political capital • Benefit from focus on community-based businesses

29. Challenges for worker co-ops • Mostly small • Investment capital hard to find • Need political clout to get resources • Need managers with • business sophistication • participatory values & skills • If co-ops want union involvement, they need to find ways to generate union membership

30. Proposal: co-op union members • Continue to organize & represent collective bargaining members • Create a new class of “Co-op Union Members” • Provide different services for these members: • Access to business experts • Pooled resources like insurance & purchasing co-ops • Lobbying • Connections to labor friendly inventors & entrepreneurs • Become bidders for public & private outsourced work

31. Mondragon in Detroit • Center for Community Based Enterprise (C2BE) • teaches co-op & community based enterprise best practices • Ingenuity US, L3C • seeks products & business opportunities • focused 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

32. Detroit Community Cooperative (DCC)“Declaration of Interdependence” • Statement of Values • Based on Mondragon & International Co-op Association principles • Seeking declarers & members • Attached

33. 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

34. 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

35. Detroit Community Co-op (DCC) • Founding Members • Better 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

36. 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

37. Unity builds local economic strength • Unions & worker owned companies are primary protection for workers • Good models of unionized worker ownership exist • Shared resources can scale up community economy • Technical support & cooperative platform, MCC, Italy, Cleveland, Detroit Community Co-op • Existing 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

38. For more information contact Center for Community Based Enterprise, Inc. (C2BE) 2795 E. Grand Blvd., Detroit, MI 48211 (313) 331-7821 www.c2be.org info@c2be.org dgolson@c2be.org www.esoplaw.com dgo@esoplaw.com (313) 331-7821 (313) 300-6517 www.esoplaw.com

39. Additional Resources www.usworker.coop – US Federation of Worker Co-ops http://unioncoops.wikispaces.com/ - USFWC Union Co-op Committee www.ica.coop – International Cooperative Alliance www.community-wealth.org – Democracy Collaborative www.ncba.coop – National Cooperative Business Association www.nceo.org – National Center for Employee Ownership www.mcc.es – Mondragon Cooperative Corporation www.circlepinescenter.org- Circle Pines Center