Growth of Co-ops a Positive Development as Corps Fail Us in Every Way
Dan Clore
http://groups.yahoo.com/group/smygo
The Growth of Citizen Co-Ops Is a Positive Development As Corporations
Fail Us in Every Way
By Sena Christian, AlterNet
January 5, 2010
http://www.alternet.org/story/144969/
During Andrew McLeod's 10-day visit to the Basque Country of northern
Spain, he met a 34-year-old man named Aitor Garro, who makes aluminum
car components. For the last 13 years, this man has worked at Fagor
Ederlan, a division of the Mondragon Cooperative Corporation, which is
the world's largest system of worker-owned businesses. Mondragon's 100
global businesses employ 120,000 people and produce sales exceeding $20
billion annually. Garro grew up knowing only this system, as both his
parents also worked in co-ops. "It was interesting to watch his
perception of co-ops," McLeod said. "He took them for granted. It was
like water to a fish."
McLeod, a California-based cooperative development specialist, spent the
past year and a half traveling around the world and throughout the
United States to learn about the valuable role cooperative systems can
play during economic hard times. His travels took him to the Trentino
region of northern Italy, the Pacific Northwest, the U.S. Rust Belt and
Spain.
Worldwide, roughly 750,000 cooperatives serve 730 million members,
according to the National Cooperative Business Association. Here in this
country, some 72,000 co-op establishments operate, providing more than 2
million jobs and serving 120 million members--that's four in 10
Americans. These establishments exist in energy, childcare, food
distribution, health care, insurance, agriculture, telecommunications
and other industries. But co-op advocates want growth, and they say the
time is now, as wealth concentration has reached dangerous levels, large
investment banks have crumbled and unemployment affects 10 percent of
the American population.
"A lot of cities are seeing that traditional economic- and
job-development strategies have hit a dead end," said Ted Howard,
executive director of the Democracy Collaborative.
Cooperatives offer a potential solution: Through shared ownership and
democratic control, co-ops distribute wealth, create jobs and keep
control in the local community by allowing people to make the decisions
that impact them, instead of leaving those choices to parasite investors
who can sell a stock and walk away. Co-ops--whether they be of the
worker, consumer, producer or purchasing variety--create a more
equitable formation for society that brings decision-making and
resource-sharing down to everyone, and investment earnings are not
limited to a small group of people.
"Our firm belief is that cooperatives are the best business model for
economic and social progress," said Adam Schwartz, vice president of
NCBA. "Because of the structure--owned by workers--it's a fair model and
treats people in a way that allows them to thrive while balancing the
needs of their community."
In the fall of 2008, McLeod visited Trentino, Italy, which has at least
545 co-ops serving the region. Here, McLeod learned that 90 percent of
the towns in the province have a food co-op as their only grocery store,
and credit unions comprise the majority of the financial industry. This
system--started by a Catholic priest in 1890--impressed him.
But his visit to Basque Country left a deeper impact. This mountainous
region runs between Spain and France along the Atlantic coast, and
houses a couple of large cities and many small towns tucked within the
valleys. Mondragon formed in 1956 and has since become a
transnational-cooperative system that includes Spain's second-largest
retail chain, with 2,400 stores, one of the country's largest banks, and
medical and educational institutions.
"In contrast to this country, where small rural communities face the
loss of industrial jobs, they're seeing growth," McLeod said. "It's
night and day." Workers earn an average income nearly 40 percent higher
than the rest of Europe, McLeod said, and the system survived Spain's
economic recession in the 1980s without laying off members. Profits are
pulled together in this integrated system and made available to help
support new, or struggling, cooperatives. Top executives can only earn
six times the starting base wage of workers, and the chief-executive
officer can only earn nine times the wage.
"Mondragon is the mother ship of what a thriving cooperative can be,"
said NCBA's Schwartz.
For all Mondragon's successes, the cooperative has experienced criticism
for how, in some cases, its co-ops have crowded out local businesses,
and for its expansion into other countries with non-cooperative
subsidiaries.
"They're grappling with that," McLeod said. "First and foremost, they're
business people. Their goal is to survive and be profitable for
members." In parts of Spain where co-ops thrive, McLeod observed no
visible signs of extravagant wealth or harsh poverty: no big cars, no
mansions, no homeless people begging for money.
Mondragon's brilliance, say its advocates, lies in its ability to
reproduce. And this reproduction is now occurring in the United States.
On an October day, McLeod flew from Bilbao, Spain to Cincinnati, where
he spent three weeks traveling the Rust Belt, weaving from Pittsburgh to
Cleveland and Akron, Ohio, then to Ann Arbor, Mich. and Detroit.
Incidentally, McLeod's first day in Pittsburgh coincided with the United
Steelworkers' announcement that it will create a worker-cooperative
partnership with Mondragon.
Next, in Cleveland, McLeod learned about the Evergreen Cooperative
Laundry, a 100 percent worker-owned cooperative established by the
Greater University Circle Institute at the Cleveland Foundation. The
nine employees (owners) wash hospital linen at a facility equipped to
handle 12 million pounds of industrial laundry. When the co-op becomes
fully operational, it will employ 50 people. The foundation also
launched Ohio Cooperative Solar, a solar and weatherization company,
which will eventually produce between 50 and 100 jobs. Both businesses
dedicate 10 percent of their pre-tax profit to a fund to build a broader
co-op network.
About five years ago, the Cleveland Foundation began an initiative with
large anchor institutions--the Cleveland Clinic, University Hospitals,
Case Western Reserve University--in University Circle, an economically
devastated neighborhood in one of America's poorest cities. The 43,000
people who live there earn a median income of $18,500. Yet, the area's
three anchor institutions spend $3 billion annually on food, janitorial,
laundry and other services. The goal of the initiative: channel the
purchasing power of these institutions back into the community.
"Lots of jobs have left Cleveland and companies have gone offshore,"
said Howard of the Democracy Collaborative, who assisted with the
initiative. "[The anchor institutions] aren't going anywhere. They are
very large economic engines, purchasing billions of dollars worth of
services and employing tens of thousands of people."
Initially, the Evergreen project was an attempt to break down barriers
between anchor institutions and the neighborhoods in which they reside,
and create jobs locally. But there was a problem: People were so poor,
jobs alone weren't enough, so planners began to think about
worker-cooperatives as a way for employees to earn a salary, gain
medical benefits and develop equity in the company.
"It's not only about jobs for local residents. It's about wealth
building," Howard said. "One of the strengths of the cooperative
structure is that ownership of the company is broadly held; when 50
people own their business in their own neighborhood where they live,
they're not going to send those jobs somewhere else."
In 2010, the project will launch Green City Growers Cooperative, a
5.3-acre greenhouse located in the heart of the city, which will employ
50 people. The food produced will supply anchor institutions, markets,
grocery stores and wholesale distributors.
After learning about Evergreen Cooperatives, McLeod left Cleveland and
arrived in Detroit, a once-bustling city whose formal economy has
grounded to a halt.
"It's kind of post-apocalyptic," McLeod said.
Not to mention, the city is a vast food desert. In 2007, the last two
major grocery stores in Detroit shut their doors. Now, residents buy
food from nearby convenience stores or drive several miles outside city
limits for the closest supermarkets. The Detroit Community Grocery Store
Coalition recently formed to create cooperative grocery stores within
the city. This collaboration between 80 churches, consumers and workers
will reinvest a portion of store profits into the creation of more
grocery stores, and eventually meet Detroit's food needs. For Detroit,
the development of co-ops is about survival.
"Cooperatives are a fairer way of going about providing goods and
services in good times and tough economic times," Schwartz said, adding
that they address the triple bottom line of profits, and the impact on
the environment and local community. "With a cooperative, you can make
money and serve your community. You can be proud of what you do."
--
Dan Clore
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