A guest blog by the Wales Co-operative Centre: As the second series of Baker Boys draws to a close on BBC Wales it seems like a good time to reflect on the need to consider employee ownership and worker co-operatives as tools to help address some of the economic issues that so many of us are facing on a day to day basis.
But, first a quick recap.
For those of you unlucky enough to not live in Wales, Baker Boys is a fictionalised account of the creation of a worker co-operative in a South Wales Valleys town.
The original series followed the trials and tribulations of the bakery staff as they formed a buy-out team and raised the finances to take over the company. The series examined the issues a real buy out team would face – distrust, initial reluctance, the fear of investing redundancy payments and the effects the process can have on relationships with family and friends.
This second series has addressed issues that encompass not just the trials and tribulations of making a worker co-operative work but the real effects that the economic downturn has on businesses, communities and families.
The drama offers a warts ‘n’ all insight into the benefits and hardships that a worker buy out or worker co-operative offers. All is not looking good for the bakery. The business is struggling, their key investor has disappeared, there is dissention in the ranks, cash flow issues and the ongoing search for new business.
But it was never going to be an easy ride.
This is often the reality of a new business. Whether the business is created by a single investor, a partnership or is owned by its employees there will always be business challenges to live up to. The hard work, sweat and sometimes, tears are the building blocks of future success and this is the reason that both business owners and employee groups should consider employee ownership options and opportunities for the future of their companies.
If you didn’t get a chance to see Baker Boys, the good news is you can still catch the second series on BBC iPlayer here. The Wales Co-operative Centre has been blogging about worker co-operatives throughout the series – read more here
Wouldn’t it be great if the BBC showed it across the UK at some point next year in support of the International Year of the Co-operatives?
Business Succession in Wales
In Wales we are dependent on our SME sector. The sector accounts for more than half of total employment in the Welsh economy. However, in 2010 Wales lost over 11,000 businesses with only 8,000 new businesses being created– a net loss of 3000 businesses. In the UK overall there was a fall of 42,000 businesses between 2009 and 2010. For the second consecutive year business deaths have outnumbered business births. (Office for National Statistics).
Federation of Small Business research shows that the average business owner in Wales stays with his or her business significantly longer than in the UK as a whole. Over 1 in 5 business owners have been involved with their businesses for 21 years or more.
These figures have obvious implications for the future of the SME sector in Wales and throughout the UK.
Business owners expecting a trade sale to materialise out of nowhere to fulfil their retirement plans may be in for a nasty surprise in the current climate.
How worker co-ops can be part of the solution
Worker co-operatives engender a sense of ownership and commitment that a normal enterprise can’t. Workers who have a stake in their business want it to succeed and will endeavour to make it do so. Worker co-operatives and employee owned enterprises have a proven record of stability and growth in comparison to their privately owned equivalents.
Think about it. If everyone had a share in the business, wouldn’t everyone want it to achieve more? More turnover, more sales – more profit?
The approach makes good business sense as well.
The decision to set up a worker co-operative is a big one which will affect each employees work life, family life and potentially their financial stability. However, if the business succeeds the benefits would include long-term job security, financial security as well as ownership and control of the future of the business. It is essential that every employee is aware of this and is given the correct information to make their own decision.
The potential benefits of forming a workers co-operative could be enormous:
· Ownership of the business and a share in future profits
· A say in the future of the business
· The chance of long term security
· The chance of long term financial benefit
When Budelpack International, a Dutch owned packaging company, closed down their operation in the South Wales Valleys, 19 staff members decided to invest their redundancy payment into setting up a new employee owned company. With manufacturing jobs on the decline in Wales the staff were keen to preserve their livelihoods and keep jobs in the local area. The Wales Co-operative Centre provided legal and business planning advice and helped the company access funding. The new company, PrimePac Solutions Ltd, makes bottles, sachets and tubes with clients including leading brands in the health and personal care sector. The company’s new production facilities in Ebbw Vale were opened at the end of 2005.
“Establishing our business co-operatively means that all employees feel that they can become masters of their own destiny and develop our company into a real success story for South Wales”, says Steve Meredith, Managing Director of PrimePac Solutions Ltd
As with any business communication and a widespread understanding of the aims and objectives of the business are paramount. But, in an employee buyout situation it is essential that everyone involved, including family members, are aware of the level of risk involved. In the case of PrimePac solutions the risk paid off and the company is now worth several times the investment paid into setting it up.
We’ll have to wait until series 3 to find out how it turns out for the Baker Boys.
Some simple steps to setting up a worker co-operative
1. Communicate. Speak to your colleagues and consider forming a buy-out team
2. Get help. Coops UK, Wales Co-operative Centre, Co-operative Development Scotland are there to help you. Use them.
3. Assess the business’, strengths, weaknesses, opportunities and threats before committing.
4. Accept it will be a long, and at times difficult, process but that the potential rewards for you and your colleagues could be enormous.
The Wales Co-operative Centre has set up a project with Welsh Government and European Union backing to support business owners and employee groups develop employee ownership approaches. Our advisors work with both parties to ensure that the process is fair for both the owner and the employees. We offer support to employees on their journey from the initial formation of a buyer group to management support throughout the first months of the new business. Find out more at the Wales Co-operative Centre website here.
Similar opportunities exist in England, Scotland and Northern Ireland.
To give the story impact the scriptwriters pit the Valleys Bara employees against some big business challenges. Fiction needs drama to make it interesting. However, in real life, the Wales Co-operative Centre can be there to support employee buyout teams and worker co-operatives to minimise the drama that they face on a day to day basis.