Worker Coops As Justice

by Elizabeth “Libby” Sholes, Director of Public Policy

California Council of Churches’ work on economic justice has taken a new path.  We still fight for the safety net, for better education, and all the traditional issues such as lifting the minimum wage and increasing taxes on obscenely large corporate profits.  However, we have come to the conclusion that it is not enough. 

If we are to make serious inroads into economic inequality, we have to find a means to change not just what decisions are made about jobs, pay, and opportunities but also who is making those critical decisions.  We are supporting the creation of worker owned cooperatives, both with unions and without, as a redirection in economic justice.  The true ‘makers’ are those who create the wealth.  Only from ownership of the businesses where they toil will workers realize the full benefits of their labors.

The key to success lies in unleashing the creativity and knowledge that employees bring to their jobs.  Three stories illustrate the enormous void we’ve created in this nation on not just the outrages of income inequality but on the profound loss of skill, of solidarity among citizens, and on our democratic processes — all in the quest for corporate riches and domination.  These stories illustrate what is the art of the possible in worker ownership and why it is the right strategy for our time.

In 1976 Bethlehem Steel, second largest producer in America, hired its first ever outsider from Price Waterhouse Accounting to be its CEO.  Although the company was making a small but steady profit, highly respectable in the annals of industrial capitalism, the lure of double digits proved the company’s undoing.  The company’s Lackawanna plant had a rail rolling facility that was old but productive.  It also had an amazing boss roller, Don Landsittel, whose 40 years of experience allowed him to judge the heat of rails by sight and to understand the art of how you bend rails to cool properly.  The rest of his rail mill team were equally skilled, equally devoted to their craft.  1976 was also the year Conrail decided to rebuild the entire NE corridor track lines from Chicago east.  With this amazing market and incredibly skilled labor force, Lackawanna was poised for huge rail orders when the new CEO decided to shutdown the entire rail operation and take the federal accelerated depreciation that got them huge amounts of cash to sweeten the bottom line.  The mill never produced another dime in profits ever again, and when in 1983 the whole plant was closed, almost 22,000 people of skill were permanently out of work.

In 1984 Buffalo Brass that produces brass and copper rolled products and was then owned by ARCO petroleum, was slated to be closed because again, it was profitable but not obscenely so.  Shutdown would mean the loss of hundreds of skilled jobs.  However, five local capitalists bought the plant then met with the supervisors and union, USW Local 593, and said that they had NO idea how to run Buffalo Brass so the workers should do it.  The union was the lead, and within weeks they had changed the production process, the receipt and shipping of alloy raw materials, obtained new business, and started up old abandoned product lines.  There were almost no supervisors — workers were self directed on how they did their jobs — and no managers.  At the end of one year they moved the plant from marginal profitability to million-dollar boom.  However, workers did not own the facility so five years later when the investors decided to sell, the people who created all that wealth had no say in its sale.  Buffalo Brass never ran so well again.

Deindustrialization, plant closings, offshoring of jobs to Asia all have decimated not just the numbers of jobs but the foundation of our middle class.  We have also lost critical skills as highly trained workers retire, move away, or die just as we turn to imported capital goods for infrastructure that turn out to be inferior quality.  The saga of the new Bay Bridge that is deteriorating as it was being built lies partly in our loss of skilled steel workers and metallurgists who successfully provided the materials for every earlier bridge made in America and erected by local ironworkers.  One of them, Alfred Zampa, helped construct every earlier Bay Area bridge prior to the one now bearing his name that spans the Carquinez Straits.  We lost such amazing people when we rushed to save money and discard local production, local jobs.

The third story, however, is different.  It is of a community rebuffed in its efforts to stop exploitation and who now serve as our role model.  In 1976 Lykes Steamship bought the Youngstown Ohio Sheet & Tube plant precisely to close it for the federal accelerated depreciation that provides owners with huge amounts of tax-free cash.  Both Lykes and US Steel closed their facilities in Youngstown leaving over 10,000 people without jobs.

This time the community fought back.  They could not stop “Black Monday,” a date that lives in Youngstown infamy, but they knew these plants were profitable and that THEY could own and run it.  Starting with the Mon Valley Ecumenical Coalition, the community created a plan to buy, modernize, and run the steel works as a community owned operation.  They appealed to the Carter administration for a federal loan and had the backing of local business people, most local officials, and most citizens in the request.  However, despite clear evidence of fiscal responsibility, profitability, and skill capacity, the loan was refused.  Youngstown never recovered.

However, out of the ashes of this eastern mill town came all the impetus behind our work in California and that across the nation to create and sustain worker owned cooperatives. 

A second inspiration is the success of Mondragon Cooperative Corporation based in the Basque region of Spain.  With 80,000 worker owners in over 120 cooperatives from heavy manufacturing to supermarkets to the university, it has grow and flourished as a vibrant economic presence run by democratic principles by the working people themselves.  Where Spain’s unemployment is over 25%, Mondragon’s is 4% and those who are unemployed are sustained at 80% of their salaries by the support of their peers.  In worker cooperatives, labor and education are central.  Capital is a subordinate instrument important only to help labor grow and prosper. 

At the heart of every one of these three American stories lies a fundamental issue — the embedded and intentional refusal to permit working people any say at all over their work, their company’s investment decisions, over their lives as working people.

If the people who create the wealth do not share in that wealth, we have massive inequality.  If the people who create the wealth have no say over the terms of production, investment, dissolution — we lose not just income but create a permanent oligarchy that operates without a shred of regard for our families, communities, states, and nation’s well being.  It is not just unequal — it is viciously predatory.

We know the history of Mondragon Cooperative Corporation that emerged as an economic strategy to counteract the brutality of Franco’s fascistic Spain.  While we understand the economic equity that comes from cooperative economics, we sometimes miss the far more essential part of why cooperative ownership is THE answer to exploitation, and that is the power of workers’ voices speaking to their own destiny.  The success of Mondragon lies in its ability to provide every single worker owner with a vote on the conditions of work, the investment decisions of the cooperative, the strategies for handling setbacks.  Labor is always primary.  Capital is merely an instrument.  The voices and votes of working people create the policies by which every single decision is made.  When managers determine a new strategy or investment — it has to be sold to the rank and file who get to vote up or down on that issue.  That is power that generates income equity.  Without workplace democracy, there is no fully functioning cooperative economics.

In 2009 Mondragon began negotiating on a program to bring the full force of their experience to the United States.  Facilitated by Washington DC coop supporter and strategist, Michael Peck, Modragon and the United Steelworkers of America formed an agreement to create worker cooperatives, especially Union worker coops, in the US. 

The solidarity between cooperatives and unions is based on their shared common principles.  They both look to the Common Good, they elect leaders via the foundational principle of “one worker, one vote,” they promote leadership from the rank and file, they emphasize and provide education and skill development for all members.

In the union coop model the union is inside the coop, not external to it.  While coops always look to the well being of workers as owners, the union coop model also looks after the well being of workers as workers.  The union coop model uses an elected Union Committee in the functional location of Mondragon’s Social Council. 

Mondragon understood early on that worker ownership was not, per se, the solution to strife, differences in goals, personal injustices.  Therefore the social councils exist to mediate the inevitable problems that can arise between worker owners and management even when each is comprised solely of worker owners.  It also assists individuals whose rights may have been trampled.  As Mondragon’s Director of Cooperative Dissemination Mikel Lezamiz notes about their profoundly successful system, “This is not paradise.  We are not angels.”  Assuming that worker ownership conveys perfection in all things is disregarding inevitable differences of opinion, of need, and of operation that need to be settled.

As the Social Council does for Mondragon, the Union Committee made of worker owners will engage in collective bargaining with management the results of which will be voted upon by those impacted.  This assures that all workers are treated fairly just as the Social Councils do.  This brings the unions’ strengths and experience on bargaining and places it right in the hands of the worker owners and strengthens their ability to speak for their rights.  This links the union and the worker-owners in novel ways.  Rather than being outside of the going concern, the union is a partner.

This is incredibly helpful in other ways, too.  One of our projects, a Food Hub in Livermore, will house a variety of vendors including a union coop, the United Food and Commercial Workers may contribute some of their pension funds as either capital or collateral.  Unite Here is working on bringing the union coop model to their own members in their training centers, calling this a training and transition model.  Where expertise is needed — skill development, apprentice programs, licenses, certificates, permits — the unions often have them ready to go.  Having prepared workers inside at the start can allow the necessary lead time for others to gain those skills and certifications and not forcing the business to wait.  In one of our premier union coops in Cincinnati, UFWC released one of their members and subsidized her to help create “Our Harvest” farm and food distribution.  Because of her skills and knowledge of the business, Our Harvest now does $700,000 worth of business and was created as a viable worker coop within its first year, and she along with others are viable worker owners as well as union members.

In Pittsburgh, the Pittsburgh Clean and Green laundry, a United Steelworkers worker coop, has secured amazing head start via the union members’ previous experience working in a now defunct industrial laundry the union had also represented in more traditional ways.  Down the road, they are exploring the possibility of manufacturing commercial laundry equipment.

New Era Doors and Windows company has a most famous story — in 2008 workers held a sitdown occupation of the company against Bank of America’s lockout of workers and rip off of their pay.  Their dedication eventually moved into ownership with the help of United Electrical Workers, the electricians union.  While some of their professional advocates were negotiating the buyout of New Era, workers were STILL locked out of financial negotiations and UE helped them picket for a seat at the table.  They won the right to be part of their own finance agreements and in the structuring of their own cooperative. 

Throughout the Northeast — the proverbial Rust Belt of shuttered factories and mills — the union coop model is being adopted in many communities.  Reading, PA, surely one of this nation’s most battered cities from deindustrialization, has adopted the union coop effort as a citywide strategy.  In Cincinnati OH, even the very Red city leadership — John Boehner territory — has adopted union coops as a key ingredient in their economic revitalization.  Work is going on across the nation in Denver, Seattle, and here in CA where we have several projects gearing up.  We have just made alliance with the UAW that, while not a big presence any longer in CA, will be a force to offset plant closings in the Midwest. 

Service unions also are involved.  In the Bronx, NY, Cooperative Home Health Care is a SEIU — Service Employees International Union — cooperative of over 2000 home healthcare aides.  About half are now fully vested owners, and everyone earns far above the standard wage for this work.

Is it imperative for unions to be involved in every worker coop?  Of course not.  We have more non-union related success stories than union ones.  Our allies in Lompoc working with the Valley of the Flowers United Church of Christ created the “Green Broom Brigade” housecleaning service.  Immigrant women now have risen from low wage work to middle class status by owning this business.  They have the developed the critical county-wide network of coops now assisting one another through the spin off of the Lompoc Community Development Project that is helping to expand the idea of worker ownership throughout Santa Barbara County.

However, union affiliation offers a huge hand up in technical assistance, organizing, conversion projects, and even financing.  From conversion to start up, the partnership of unions with worker owners has been and will be a powerful new strategy. 

The face of Mondragon USA is now called 1worker 1vote, Inc. and can be found online at 1worker1vote.org.  California Council of Churches holds the only MOU with them for CA where we, as with others around the nation, are coop catalysts to help communities come together to do this work locally.

In CA we offer background information on how worker coops operate, conversion information and strategies, financial data and resources, organizational help, and alliances with labor.  We are working with communities of color, immigrant rights groups, low wage workers, ex-felons, dislocated former foster kids, along with our own congregations, and where possible, unions, all united in this strategy.  And we do this for free. 

Our strongest role is creating local communities of practice — groups arising from their own situation and creating projects appropriate to their own local needs — so that what is created belongs authentically to the people and is not something imposed upon them from above.  This vastly improves the likelihood of success since community buy-in as well as worker ownership strengthen the outcomes and through the authenticity of support.  Where communities such as Lompoc make major commitments to this work, the entire community benefits from it.  Stable businesses with stable jobs — ones that cannot easily be sold or shut down — helps the communities also to be stable.  

Anyone interested in gaining our help, having our study guide and tool kit may contact me at sholes@calchurches.org.  We welcome all new energies and all new voices in this work.  This is the new way for find and make manifest economic justice for all.