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.
