The Rust Belt shines

I just returned from the Eastern Conference for Workplace Democracy, a gathering of about 150 brave souls doing good work. I’m very inspired, although somewhat scatterbrained from all the new leads and ideas.

Without getting into much detail, I had an excellent time in Pittsburgh. It is a beautiful (although gritty) city, with an amazing history, amazing geography, and amazing architecture. It had a rough couple of decades, but seems to be bouncing back quite nicely. One of the more intriguing developments is a local trend of repurposing big old buildings, such as the Mattress Factory art gallery and the Church Brewpub. They also have crazy sandwiches. I could go on and on, but I would rather zoom out a bit and discuss some of the cooperative projects that I learned about during my time among people who are creating a democratic economy out of the ruins of industrial capitalism.

My own city of Sacramento is currently in the early stages of what seems to be a similar collapse, in which its main industries (government, real estate, agribusiness) are coming under increasing downward pressure. There are some flailing efforts to attract new industry, such as a Nestle bottled water plant that will convert tap water bought at $0.00016 per pint into bottles sold for roughly 10,000 times that. The equivalent of 150 households’ water will be privatized; that is not a huge amount, but we don’t have any to spare for this nonsense. This is against a backdrop of a nearby river running dry due to groundwater depletion, agricultural water deliveries entirely cut off in some parts of the valley, and orchards cut down or left to die. Orchards! 

But hey, at least we’ll (supposedly) get 40 jobs! I hope that we can learn our own lesson quickly, and not spend too much time giving away our scarce assets in this insane race to the bottom. 

One way to preserve jobs so we don’t have to beg outsiders to come bail us out is to explore is worker ownership. And this is where we get back to the Rust Belt and the lessons it has already started to learn.

In suburban Toledo, a manufacturing plant is reopening under employee ownership (you don’t hear that news much lately!). Maumee Authority Stamping, Inc. was formerly a captive supplier of large parts to the Ford Motor Co. Its 800,000 s.f. plant was shut down in 2007. The employees immediately formed a committee to buy the facility and re-open it. They discovered that an employee-owned company could break even operating below 50% of plant capacity, suggesting that the shutdown was probably more related to the early stages of a contraction in Ford’s operations (which at least helped that company avoid the need for a bailout) than to any inherent overcapacity in the industrial sector.

The Ohio Employee Ownership Center helped develop a plan for reopening Maumee. The plan relied on outside investors, but each of the employees will invest $16,000 through accumulation of shares. Because Ford took the customer book, Maumee will have to rebuild their client base. Early indications are that they have a good chance of this. They have already resumed operations at the plant with 50 employees, and will scale up operations as orders warrant. (source: Owners at Work magazine, p. 6-8)

This is great news for a one-off effort, but we are starting to see an extremely interesting systemic development in Cleveland. It seems that a large chunk of the city’s leadership has caught the cooperative bug, and there is widespread support for an initiative to systematically develop worker-owned cooperatives in an underserved neighborhood called University Circle.

Evergreen Cooperative Laundry is a new, green, $6 million facility that is owned by its workers, most of whom live nearby in a neighborhood where unemployment tops 30%. Once the co-op opens next month, its six employees will earn $15/hr and up cleaning linens for businesses including the hospitals involved in the initiative. More importantly, workers will start to accumulate equity investments in the business, perhaps $65,000 per person in less than a decade. If things go well, there may soon be as many as 50 employees.

And that’s not all. Already, Ohio Cooperative Solar is envisioned as the largest solar power generator in the Midwest. It will lease rooftop space from community institutions, who will also buy its power. Further down the line is a major urban farming enterprise, which will grow millions of heads of lettuce and bunches of basil through hydroponics.

So what’s gotten into Cleveland? One word: Mondragon. Last October, while the rest of us were watching the economy unravel, the Cleveland Foundation sponsored a study trip to the Basque region of Spain, which is home to one of the world’s greatest (although imperfect) expressions of cooperative economics. In the 1950s, the region was devastated by war, but through worker ownership they built a system that made it through a brutal decade-long national recession without ever laying anyone off. Whenever an enterprise failed, its worker-owners were retrained and moved to another enterprise.

To make sure that the laundry is not an isolated success, Cleveland has also borrowed a page from the Mondragon playbook on finance. They are creating a cooperative development fund that will grow through the continual contribution of at least 10% of member cooperatives’ pre-tax profits.

There is always the chance that this effort will fail due to a worsening economy. Co-ops do not have to continually feed outside investors, but they are still businesses that must at least break even to survive. But on the whole, I’ve got a much better feeling about Cleveland’s innovative approach than Sacramento’s same-old, same-old. Rather than giving away our resources to companies like Nestle, we need to save the jobs we already have.

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