Bendable Business
Dan Clore
http://groups.yahoo.com/group/smygo
http://www.dominionpaper.ca/articles/3039
December 4, 2009
Bendable Business
Cooperatives less likely to break in economic crises
by Amanda Wilson
The Dominion
Cooperatives have been able to use the challenging economic situation to
deepen commitment to their values, not dilute them.
OTTAWA -- Mondragon Internacional (MCC), the world�s largest worker
cooperative, has been the focus of a lot of media coverage in recent
months, inciting discussion on how worker cooperatives have been
affected by, and are responding to, the global economic crisis.
On October 27, 2009 the United Steelworkers announced a framework
agreement with Mondragon to develop unionized worker cooperatives in the
manufacturing sector in the US. Under the agreement, both parties have
pledged to develop a model that combines the collective bargaining
system with the �one worker, one vote� hallmark of cooperatives. While
it will not be the first time worker cooperatives have looked to
unionization, the scale and formal partnership of the
Mondragon-Steelworkers proposal is without precedent and could signal a
way for cooperatives and unions to work collaboratively in weathering
economic storms.
Perhaps even more surprising, The Economist recently published an
article on how Mondragon is coping with the current economic crisis.
According to the article, cooperatives can react more quickly to such a
crisis because workers decide themselves to cut wages or take unpaid
leave, avoiding the delays of formal negotiations with labour unions.
Mondragon is the world�s largest worker cooperative, located in the
Basque region of Spain. Started in 1956 by five workers, and inspired by
the work of local priest Don Jos� Mar�a Arizmendiarrieta, it has grown
into a complex of over a hundred worker cooperatives, a cooperative
bank, and housing and social cooperatives. It now employs approximately
34,000 people and is one of the largest producers of domestic
appliances, machine tools and automotive parts in Spain.
However, Mondragon is not your average worker cooperative, and not
everyone thinks that it is a great model to look to. While many people
on the left assert that the prospering Mondragon is an example of how
cooperatives present an alternative business model that puts its workers
above profits (it is referred to as an �empire of egalitarianism� in a
September, 2009 article by Kelly and Massena in Yes Magazine), there is
also growing criticism that Mondragon is straying from its cooperative
principles by centralizing decision-making, developing partnerships with
capitalist firms and hiring more non-member workers.
So, beyond the mammoth Mondragon, how are smaller, less powerful worker
cooperatives weathering the economic crisis?
The International Organization of Industrial, Artisanal and Service
Producers� Co-operatives (CICOPA) reported that cooperatives have been
more resilient in the face of the economic crisis than other business
models. Based on a survey it conducted of its members, CICOPA found that
while cooperatives have experienced a downturn in production and sales,
they have experience almost no job losses, focusing instead on
adaptation measures such as a reduction in hours or wages.
CICOPA attributes this resilience to the combination of flexibility and
security of the worker cooperative model. Participating in decisions
about the future of their workplace, workers -- who are also owners --
collectively decide what they are willing to sacrifice for the long-term
viability of the business, and ensure that this is achieved equitably.
By contrast, in a traditional capitalist businesses, managers and owners
may simply inform workers of a decision to cut wages or hours, lay off
staff or force labour concessions to save profits, leaving workers
outside the decision-making but front and center in the effects of
re-structuring.
The fundamental goal of cooperatives is to provide employment for
members, as opposed to other business models, which seek profits or
return on investments above all.
Three worker cooperatives in Ottawa and Kingston have come up with
creative ways to make ends meet. Though they were not easily made, these
choices have kept their cooperatives alive and, in some cases, stronger.
***
A recent addition to Ottawa�s Centertown neighborhood, the Umi Cafe, is
a cooperatively-run coffee shop, selling light meals and drinks, as well
as hosting music and political events in the evenings.
Sergio Guerra, one of the directors of Umi, says the shop was hit
hardest by the recession about a year ago when the Ottawa bus drivers
strike made the economic situation all the more difficult, grinding the
entire downtown to a halt. Without public transit, Umi saw fewer people
coming through their door. During the worst of it -- late fall and
winter of last year -- the worker-members faced the choice of either
shutting down the business or not getting paid. Guerra says Umi didn�t
loose a single worker; everyone stayed, even with low wages, because
they were committed to the cooperative and their investment.
They also drew on the neighbourhood and called a meeting where they
presented the coffee shop�s financial situation as well as what they
needed to stay afloat. The community responded, raising the necessary
funds to keep Umi alive, a testament to the solidarity built between the
cafe and the neighborhood. For its part, Umi has increased the variety
of its products to entice passersby into the cafe.
According to Guerra, the cooperative model -- with its commitment to
outreach and solidarity -- was invaluable during the difficult economic
times. Without support from the neighbourhood the cafe�s survival was
uncertain.
They also consulted other cooperatives and received advice and support
that might be unlikely from traditional competitive businesses. �Without
that help and solidarity we wouldn�t have been able to do it, in other
businesses it's all about competition,� says Guerra.
Also, as a co-op, it is in Umi�s interest to educate and empower its
members; in return, members are committed to the survival of the
business. The cooperative model helps to ensure that the perspectives of
members are incorporated into the very direction the co-op takes.
Sergio says they�ve come a long way in a year: �We�ve proven that we can
exist and we can grow.�
He finds humour in their difficulties, saying sometimes it feels like
they are on the set of a sitcom: �We�re in season two, and its been very
entertaining, not only thinking about the bottom line.�
La Siembra Cooperative, another worker co-op, manufactures and
distributes organic fair trade chocolate and sugar products. La Siembra
has twice been awarded the Worldwide Democratic Workplace Award by
WorldBlu, a not-for-profit social enterprise offering programs, services
and awards for democratic workplaces. Cailtin Peeling, the cooperative�s
Marketing Communications Manager, reports that while La Siembra has been
facing some challenging times, they�ve been able to use the challenges
as an opportunity to explore new products and re-affirm their commitment
to supporting their production partners in the South.
La Siembra was facing declining sales and stalled growth and was hit
hard by the fluctuating US exchange rate. The co-op reacted by focusing
its energy on areas where it was still seeing strong sales: baking
products. La Siembra found that people still wanted to support organic
fair trade products, but were doing so in a more affordable way.
That focus led several of their producer co-op partners to increase
manufacturing capacity, allowing them to sell a higher value-added
product instead of the raw materials. A producer co-op in Peru now
manufactures chocolate chips to send to La Siembra, as opposed to the
raw cocoa powder, allowing more of the revenue to stay with the producer
in Peru. During the most difficult period, many of the workers at La
Siembra took a voluntary reduction in hours.
Peeling says La Siembra has been able to use the tough economic
situation to deepen its commitment to its values, not dilute them, by
connecting with producer cooperative partners in new ways, and
supporting the increased capacity of these co-ops to manufacture their
own products. She says, �It's been a tough time but we�ve been really
motivated for a longer�term vision.�
The Sleepless Goat, a worker cooperative cafe in downtown Kingston, has
gone through a difficult year. While it hasn�t seen a reduction in
overall sales, rising food costs and a realization that some menu items
were in fact losing money, the Goat had to increase prices. Dave
Burling, a worker-owner, says that while the cafe wants to keep menu
prices accessible, without the increase the Goat likely would have gone
out of business.
It has also been forced to make modest reductions in the number of staff
working particular shifts, and has canceled its contract with overnight
cleaners.
A sole owner of a business may decide it is in her interest to close up
shop; however, the workers at the Sleepless Goat were committed to
keeping their doors open, acting in their own collective self-interest
to keep themselves employed. �Frankly, if the Goat had been a capitalist
business it probably would have closed six months ago,� says Burling.
While difficult, the plan seems to have paid off: the Goat has recovered
from the economic shock of last year. The cafe foresees some hurdles,
including planned street closures due to construction, and the upcoming
increase in minimum wage. Nevertheless, Burling is optimistic, saying
that experience has shown that the cooperative model can adapt to change.
Worker cooperatives, like any businesses, are not immune to crises in
the economy. They do seem to be surviving better than other business
models, however. While every worker cooperative is different, the
structure provides more freedom and control to adapt to a changing
economic environment. What a cooperative does with that flexibility
depends on its values and commitments and the strength of its community.
At the very least, the cooperative structure gives workers choices in
how to address the challenges they face, allowing them to take their
fate into their own hands.
Amanda Wilson lives in Ottawa. She is interested in questions of
alternative organizations of work and non-capitalist production and
exchange models. She has an MA in Labour Studies.
--
Dan Clore
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"From the point of view of the defense of our society,
there only exists one danger -- that workers succeed in
speaking to each other about their condition and their
aspirations _without intermediaries_."
--Censor (Gianfranco Sanguinetti), _The Real Report on
the Last Chance to Save Capitalism in Italy_