Union co-ops the future of labour?

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Co-operative organization models are being re-invigorated as unions face weakening member base

A new collaboration between North America's largest industrial union and the world's largest worker-owned co-operative has reinvigorated proponents of an alternative to top-down business models. Unions and co-ops also look to such partnerships as a way to strengthen their respective memberships.


In late October, the United Steel Workers (USW), which represents 1.2 million active and retired members in Canada and the United States, announced that it will collaborate with Mondragon Co-operative Corporation (MCC), a co-operative based in the Basque Country. While specific projects have yet to be identified, the collaboration would allow USW to test an alternative worker-ownership model to that of Employee Stocker Ownership Programs (ESOPs), citing that they have found their results "disappointing." Mondragon, in return, can work with the union in order to lay the foundation for a North American membership, encouraging Steelworkers and their companies to become co-operatives and join the global Mondragon movement.


In a press release announcing the collaboration, the organizations state: "the goals of this collaboration are to develop and grow manufacturing jobs in the United States and Canada, to improve the quality of life of workers, and to create sustainable jobs in a sustainable economy that supports stronger communities and sustainable environmental practices" and "demonstrate that the Mondragon worker-ownership model can be highly effective as adapted to an organized workforce and North American culture."


The announcement came on the heels of a push for worker-owned co-operatives by filmmaker Michael Moore. In his film Capitalism: A Love Story, Moore briefly highlights several successful worker-owned co-operatives, looking to their higher wages and democratic decision making as an exemplary alternative to what he terms the "totalitarian" corporate model. Moore extrapolates upon his love for such a model in a recent interview with Naomi Klein. "[I]f you believe in democracy, democracy can't be being able to vote every two or four years. It has to be every part of every day of your life... But we spend...our daily lives at work, where we have no say." Klein encourages Moore's rhetoric, but worries that unions would be uninterested: "One of the biggest barriers I've found in my research around...co-operatives is not just government and companies being resistant to it but unions as well.... In most cases, particularly with larger unions, they have their script, and when a factory is being closed down their job is to get a big payout." But Moore says that at the film's premiere at the AFL-CIO convention earlier this year in the U.S., union members "cheered it...I think that unions at this point have been so beaten down, they're open to some new thinking and some new ideas.


"People love this part of the film," he continues. "I've been kind of surprised because I thought people aren't...going to understand this or it seems too hippie-dippy -- but it really has resonated with the audiences that I've seen it with."


While Mondragon currently has only one holding North America (in North Little Rock, Arkansas), the co-operative movement is not new to the region. Currently, over 17,000,000 Canadians are co-operative members and the country's co-operatives, credit unions and caisses populaire lay claim to $275 billion in assets.


Union-co-operative collaboration is also not a new phenomenon. According to Peter Kardas, Director of the Labor Education and Research Centre at the Evergreen State College, the Industrial Workers of the World, a radical labour union which hit its peak in the early 1920s and is known for its stance on abolishing a wage system and creating on a "worker class," holds worker-owned co-operatives at the core of its ideals. "[Union-co-operative collaboration] has been around for a long time," Kardas explains. "It was originally a socialist and communist and anarchist idea." As backlash against radical union ideas increased, support for the co-op model lost steam, but has been re-invigorated as unions are faced with a weakening membership base and a weakening labour movement. The economic recession, resulting bail-out of big companies but not workers, and lost jobs across Canada and the U.S. has further spurred unions to re-think their approach.


In the Oct. 27 press release, USW international president Leo W. Gerard states: "Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollow out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities [and] makes business accountable to Main Street instead of Wall Street."


While USW has worked with ESOPs -- a form of worker-ownership in which employees can eventually own shares of the company -- Rob Witherell of the Steelworkers told Andrew McLeod of the blog "Cooperate and No One Gets Hurt," "our ESOP experience soured us a little bit...By the time we were offered the opportunity to buy the shares the company was so financially strapped that it had a very small chance of success, and those that did succeed were usually bought out by some other investor...[E]ven earning those shares didn't actually translate to any accountability to the workers or worker input. It really didn't change the nature of the work in a lot of cases..."


Unlike ESOPs, Mondragon's model encourages full employee ownership and is based on "one worker, one vote" philosophy, allowing for workers to steer the direction of the company.


The co-operative model could not only help to strengthen the voice of workers already unionized, but also increase the number of new members: USW could work to unionize newly-started North American Mondragon co-operatives, reaching out to those interested in worker-ownership but not necessarily part of the formal labour movement. Conversely, Mondragon would have access to USW workers, encouraging them to join the co-operative movement. "[Mondragon] ha(s) an interest in a North American presence and have [an] interest in developing a union worker-owner co-op model....That's going to be more beneficial in the long run for our existing members, [and] a way to build our membership," explains Witherell.


Since its beginnings in the Basque Country in 1956, Mondragon has bought other companies, particularly if they were threatening to compete with the operations of the MCC. In addition to its one U.S. holding, Mondragon currently has operations in 18 other countries outside of Spain, ranging from South Africa to Brazil to Germany. "They have a tremendous amount of money," says Kardas. In 2008, Mondragon's annual sales topped 16 billion euros from its co-operative university, bank and social security mutual. "They buy up these companies and then they convert them to Mondragon. It's a corporation like any other corporation. They're huge." However, buying these companies does not necessarily translate into a greater co-op presence, as each worker has to pay to enter the co-operative: while workers are technically part of Mondragon, they often have few ideological ties to the worker-ownership model and therefore are not inclined to offer the significant amount of money necessary for worker buy-in. Witherell explains: "[Mondragon has] gone in and taken over a place and set up without finding out what the culture and ideas are from the beginning, [and] they have a hard time getting people to buy into being an owner. Because [the attitude is] 'I'm a worker, I show up, I get paid and that's all I have to do.'


"For them, it made sense to work with us because we have a lot of those relationships and can help steer them in the direction [where] we really can implement that model. Our members are not making minimum wage and going from one job to another every six months... They are looking for somebody that is really going to be committed to the work that they are doing...[With the collaborative model], they [can] create their own insurance for lifetime jobs."


While the hopes are high for such a collaboration, Witherell warns that the model will likely start very small. "It's very preliminary and it's going to take a lot of work to figure out which ideas are going to be the most suited... Also [Mondragon estimates]...that it takes about eight months...from when they start talking to people to changing over to a co-op.


"Ultimately our agreement was pretty basic and broad. But we figured it's better to start with something that was...simple and figure out where you go from there, rather than try to figure out all the details at first," says Witherell. "It's very preliminary." According to Kardas, "at first, this is going to be so small that nobody is going to notice. I would definitely not oversell this as the end of capitalism, but it is an interesting model."


When asked whether any backlash could be expected from conservatives or corporate America, Kardas states: "it's not going to be considered communist or socialist. People are going to put their own money into it, so how can capitalists not support it? Owners have been saying forever, 'if you want to own it, then you buy it,' and that's exactly what would happen. Co-ops are operating in a market system...To capitalists they look as good as apple pie."

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