A stake in the business
Can new workers' co-operatives bridge old ideological divides?
JOE Caygill and Dave Kerin are the most unlikely of collaborators: one is a conservative-voting small businessman; the other, a Marx-quoting trade unionist.
Caygill has been in the manufacturing industry for 30 years. He’s the owner and CEO of Everlast, a hot water tank manufacturer based in Dandenong. But before long, he won’t be the boss anymore – just a worker-owner like everybody else.
He’s teamed up with Kerin and a group of volunteers, many of whom are environmental activists, to convert his business into “Eureka’s Future”, a not-for-profit workers’ co-operative factory.
“I used to negotiate hard against a lot of union initiatives in the earlier days, but as you get older you get wiser,” Caygill says. “And I realised that it doesn’t matter whether you’re way left, way right or somewhere in between, people can come together for a just cause.”
Their cause is the Earthworker Co-operative. The Dandenong factory, and a new facility at Morwell in the Latrobe Valley, will be part of a network of co-operatives aiming provide local jobs and stimulate a “just transition” from fossil fuels to renewable energy.
Caygill did not expect it to turn out this way, but he is adamant that his workers should own his business. Indeed, he believes it’s the only option. Imported tanks are sold in Australia for what it costs Everlast merely to make them. Unless something changes, the business won’t last much longer.
“With not-for-profit co-operatives, all of a sudden we can be competitive,” he says. “As long as we can comfortably cover our costs, we don’t need to make a profit.”
In a worker co-operative, all employees have a stake in the business and an equal vote in the way it runs. Typically, pay is much more even. Caygill anticipates that as a manager at Eureka’s Future he’ll earn no more than double the lowest paid worker. The co-operative’s other advantage is an innovative sales plan: it is using workplace agreements to offer solar hot water systems to workers in lieu of wage rises.
“To my mind, the country needs to be underpinned by a strong manufacturing base,” he says. “I think it’s critical. At the moment it’s underpinned by resources, but the resource boom isn’t going to last forever. And it isn’t only manufacturing we need to address, but also climate change, because our country is going to be one of the most vulnerable.”
Kerin is a life-long union and social justice activist. Currently a member of the Australian Manufacturing Workers Union, he’s been an organiser for several different unions. For the last 16 years, he has been toiling on the Earthworker plan as a volunteer, seeking the right time and place to begin. “It’s been a real learning experience for all of us. Now I know what they mean by the word ‘co-operation’. It’s hard work,” he says.
As a teenager in the late 1960s, Kerin joined the Builders’ Labourers Federation. He participated in the “green bans” of the early 1970s, when the builders labourers refused to work on projects they considered environmentally or socially damaging.
For him, the idea of the co-operatives grew from the roots of the green ban movement: he believes the responsibility to provide meaningful work is inseparable from the need to tackle climate change. Now, he says reaching beyond the ideological divide has become non-negotiable too, because governments are backing away from climate action.
“To me, apart from the climate emergency, the big story in all of this is that small Australian companies have been hit by neoliberalism just as hard as working people. The old Marxian expression for what has happened to small business is they’ve been ‘proletarianised’. They’ve been pushed into the working class. Everything they make, they’re pumping back into their business.
“The good ones, like Joe, feel great responsibility for the people they’ve employed over the years and they don’t know what to do about it. That’s the seedbed for a new approach for the common good.”
While Kerin spent his formative years organising with the Builders Labourers Federation, Caygill rose through the management ranks at the industrial multinational BTR Nylex. In the late 1980s, he started his own plastics manufacturing business.
“I’ve always believed that if somebody gets off their arse and achieves things, what they reap is their reward,” Caygill says. “Dave and I are really on opposite political sides: he’s fairly left wing and I’m fairly right wing. We’ve probably fought each other over picket lines.”
But what unites them has now become more important, he says: a belief in manufacturing, social justice and doing something about climate change.
Workers’ co-operatives are few in Australia. Historically, Australian workers chose to unionise to bargain wages up, rather than organise to own production themselves. Other kinds of collectivism prospered, however, especially agricultural co-operatives, such as Dairy Farmers, as well as small-town co-operative stores and credit unions.
“Not many people in Australia are very familiar with the idea of a worker-owner co-operative,” says Professor Katherine Gibson, an economic geographer from the University of Western Sydney. “Traditionally there has always been an antagonism between the union movement and the idea of worker co-ops.”
In recent months, however, this has changed: new worker co-operatives include a civil engineering services co-operative in Melbourne (which is affiliated with Earthworker), a café in Adelaide, a date farm near Alice Springs, and an aged care business in Sydney [see box].
Gibson’s most recent co-authored book is called ‘Take Back the Economy’. She sees the co-operatives as part of a broader social context in which old political categories and alliances are vanishing. Independents and minor parties are rising, and farmers and environmentalists campaign together against mining.
“The divisions of the past are breaking down given the challenges we’re facing today,” Gibson says. Earthworker shouldn’t be understood as a union or green scheme, but rather, “an initiative of a community saying we need a different way of organising our economy”.
“In co-ops and other experiments like social enterprises, we’re seeing that people crave a more ethical relationship with the economy, rather than the belief that we’re all looking out for ourselves,” she says. “As a society we need to care for each other, and there’s a thirst for asking how we might do that within an enterprise model.”
Melina Morrison, CEO of the newly formed Business Council of Co-operatives and Mutuals, says it is “to be expected” that people will turn to the worker co-operative model in response to the decline in manufacturing.
“Co-operatives thrive in times of economic downturn because they are a self-help solution. In a worker co-operative, labour hires capital, not the other way around. The reason for the enterprise is job creation: the profit is the job,” she says.
But people’s ambitions, however worthy, don’t always match reality: starting a business is hard going, and even harder if you’re doing something unusual, for which advice and finance are thin on the ground.
In mid-2012, when Heinz shut its tomato sauce factory at Girgarre, in the Goulburn Valley, the workers and the local community rallied. They formed the Goulburn Valley Food Co-operative and, initially, offers of funding rolled in. But Heinz refused to sell the factory to its old employees. Before long, the money dried up.
Les Cameron, the co-operative’s public officer, regrets not being able to capitalise on their time in the national spotlight. “If Heinz had been willing to sell to us, that would have given us breathing space. But even so, we would have been trying to compete with global capital in a shrinking market.”
Later that year, the group was considering an alternative plan – taking a lease on a smaller facility in Kyabram – when the Banksia Securities financial group collapsed. A lot of people in the region lost money, including ex-Heinz workers who had invested their redundancy payouts with Banksia.
So the food co-operative changed tactics again. “We felt putting money into a risky, undercapitalised venture would be like rubbing salt in the wound,” Cameron explains. It now uses its funds – raised from one-off contributions by more than 1000 members – to finance local growers and food businesses to increase production and sell into a wider network of stores and restaurants. These include makers of pasta and sauce, pear cider, strawberry jam and liqueur, with more on the way.
The Girgarre site remains all but idle. A small section of the plant is being used by a business that converts out-of-date food into animal feed, Cameron says. “There’s probably a metaphor in there for what happened. And all that infrastructure, a lot of which was paid for out of the public purse, is effectively rotting.”
Only a few ex-Heinz workers are still involved in the co-operative. It is volunteer-run, not worker-owned. No one is getting paid. Its gains, compared with its initial dreams, have been modest. But they are gains all the same. “In some ways we feel stronger than we ever have been – it feels like we’re doing something at the human scale that could be repeated,” Cameron says.
“It’s our attempt to replace the current distribution system, which is dominated by the supermarket oligopoly. Like a lot of big ideas, it isn’t going to deliver in five minutes.”
Both the Goulburn Valley Food Co-operative and the Earthworker Co-operative were inspired by the Mondragon co-operatives from the Basque country, in Spain.
Beginning with two-dozen workers making paraffin stoves in 1956, the Mondragon Co-operative Corporation now comprises a web of 289 businesses including a university and a bank, 110 of which are owned by their workers. The group employs over 80,000 people, and it has proved comparably resilient throughout the deep recession in Spain.
“It’s been a successful model of regional development and it has inspired a lot of people more recently, especially in areas where companies have moved on and left whole workforces abandoned,” Professor Gibson says.
For instance, the Evergreen Co-operatives in Cleveland, Ohio, which formed a cluster of laundry, urban farming and solar panel installation co-operatives beginning in 2009. So far, their growth has been far slower than anticipated, and few jobs have been created.
The journey for Earthworker has been protracted. But it has now negotiated clauses in a range of Enterprise Bargaining Agreements, including a university, a council, and a community sector agency, which allow employees to salary sacrifice for its hot water systems.
“We use the agreement as the means to distribute the goods – that’s never been done before,” Kerin explains. “It’s a world-first. We build the demand side and manufacture into it.”
As with the Mondragon model, Earthworker will be a central co-operative that provides finance, training and support for subsidiaries, such as Eureka’s Future and the engineering services co-operative.
Recently, the group raised nearly $80,000 in a fortnight-long crowdfunding campaign for Eureka’s Future. “That just shows that people aren’t waiting for governments because, crikey, we can’t wait any longer!” he says.
His ultimate vision is to offer childcare and housing, via co-operatives, as a part of their job. They’d be part of a growing “social sector” in the economy: “We would be manufacturing the things the country needs in terms of jobs and climate: the new green electricity, water and mass-transit grid. Three decades of that work will see this country prosper.”
As a businessman, Caygill is rather more circumspect. “We’ve got this transition period now where it can all fall down, or it can get stronger and bigger,” he says.
Until three years ago, Everlast was in operation 24 hours a day, 6 days a week. It employed 45 people. But that ended overnight when the then federal Labor government cut rebates for solar hot water units. “It’s been a real struggle ever since,” Caygill says. Now he employs only ten, but believes Eureka’s Future can re-create the old jobs within 12 months.
He says that while his views on politics haven’t changed, he’s been troubled by the decline of manufacturing, the growing influence of large, footloose corporations, and the casualisation of the workforce.
“One of the only ways people can make money [in manufacturing] now is to exploit the workers and drag down the costs. That’s the reality of it,” he says.
“I think everybody deserves to make a decent living. That should be a God-given right in this country, and it isn’t. We need to try to change that. And when you address both manufacturing and climate change, the beauty of it is that there can’t be any opposition. It’s unique because it brings everybody together.”
Caring for the carers
WHEN Robyn Kaczmarek began working on a casual contract for a community care agency, visiting elderly people in their homes, she didn’t like the way she was treated. “It’s a poor quality, low-paying job. It’s really, really hard work and you’re usually alone,” she says. “The people at the bottom don’t have any say and that was really disheartening.”
She also observed that it was bad for the clients too – high staff turnover and poor communication undermined the continuity and quality of care.
Home support workers are “already economically marginalised”, says Melina Morrison, from the Business Council of Co-operatives and Mutuals. They’re often women from non-English speaking backgrounds, or older women returning to work part-time.
“Aged care workers are a forgotten bunch,” Kaczmarek says. “Nobody is looking after them.”
Rather than put up with it, she founded a worker-owned business. Co-operative Home Care is based on successful models in the USA and UK. After two years planning, it began operating last October. The workers are based in Sydney’s inner-west and south-west, employing 20 people and growing quickly, with plans to expand into a network of linked home-care and day-care centres.
For now, management, administrative staff and carers all receive the same rate of pay. Each worker gets one vote and the books are open so everyone knows how the money comes and goes.
Kaczmarek says the upside is clear for co-op workers: comparatively higher wages, more training, and the opportunity to take on different roles in the business. “The other benefit is that they’re supported,” she says. “They’re not alone in the job, which otherwise doesn’t happen in this industry.”
Read ‘The Co-operation’, a related article about the Goulburn Valley Food Cooperative.