Worker Ownership

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Worker Ownership ESOPs Securing the Jobs of
Australian Workers
ACTU National CongressBrisbane 2009

• AEOA
• Ian Woods, Anthony Jensen, Gary Fitton

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Summary

• Overview Social and Solidarity Economy
• Historical background
• European Union
• Australia a unionists view
• Overseas How it works and results
• Italy
• Spain
• USA
• France
• Australian Application Securing the jobs of
  Australian Workers
• Preserving Jobs in protecting companies with an
  ESOP
• Securing Jobs in company ownership transfer
  with a worker buyout
• Saving Jobs - in cases of insolvency and plant
  closure or concession bargaining with an ESOP
• Trade Unions and the Future
• National Benefits
• Increased membership increased voice
• Future directions
• Conclusion

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1. Overview - Australian Unionist

• Ownership transfer and closure comes up
  occasionally. We dont know which way to turn or
  who to go with. We need a road map. An EBO would
  be a great idea. We have lost productive capacity
  when plants have been closed unnecessarily
  because of bad politics not economics. Profitable
  plants have been closed and then new orders
  filled by importing. It makes you want to weep.
  CFMEU Officer

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2. Overseas- How saving jobs works

• Italy Cooperative Sector a parallel economy
• Retail, Manufacturing, Building, Construction
  Social enterprises
• Example CEFLA 1100 workers. Manufacturing.
  300 workers overseas. Company takeover of
  insolvent company acquired 300 jobs.
• Spain Cooperatives and Sociadades Laborales
• Mondragon C. Cooperativa 80,000 workers.
  30,000 0verseas. Company acquisition to save jobs
  MAPSA in automotive industry.
• Sociadades Laborales 120,000 jobs created or
  saved.
• USA ESOPs a profit sharing plan and a job
  saving pan
• Equity Concession Bargaining Teamsters, UAW
  and USWA
• Better companies South West Airlines 80
  unionised
• Rescues Chrysler 55 employee ownership.
  Mauwee Authority Stamping Company 100 employee
  ownership reopens after shutdown.
• Succession Printing Prep
• France -Share Ownership Compulsory profit share
  lump sum or shares. Invitation to participate
  in management of company. Worker Buyouts.
• Bouygues 140,000 employees. 16 employee
  owned. Resisted takeover.

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2. ESOPs Entrepreneurial Stragey Research
Results -USA
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2.ESOP Defensive Strategy USA

• Teamsters Guidelines for Job Saving
• Yellow Road Trucking Company.
• 35,000 workers, 30 of US market
• Bankruptcy -280 million in concessions/year over
  4 years
• Capital 130m
• Advised could get 85 equity - settled for 15
• Guidelines for Concessional Bargaining
• Not interested in running companies
• Trade 5 years concessions _at_10 over 5 years for
  49 of the company
• No workers on board but appointee
• Ensure the financial plan was viable
• Mandate savings go to new equipment
• Auditing rights
• Plans ratified by 75 of members

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3. Implementing EO in the Australian
WorkplaceWhat Unions need to Do

• Preserving Jobs Taking a Stake Securing
  Australian Jobs
• Major Companies QANTAS, Rio Tinto
• ESOPs and a voice at the workplace anchoring
  companies locally
• Comprehensive campaigns
• Recommendation ESOP/ Enterprise Bargaining/
  Legislation .
• Company - Worker Buyouts Securing Australian
  Jobs
• Manufacturing Industry Pacific Tyres, Pacific
  Brands relocate
• Forestry aging ownership Japanese interest
• Aged Care Industry Anglican Care Homes bought
  by Macquarie Bank
• Family Businesses major potential for job
  losses.
• Public relations campaigns
• Recommendation ESOP or Cooperative plus
  supporting infrastructure
• Insolvency and Corporate Rescue Saving
  Australian communities
• Child Care - ABC Learning 75 million
• Manufacturing Drive Train Systems
• Recommendation ESOP or cooperative plus new
  legislation

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3. Doing an Employee/Community BuyoutThis can be
done now under current legislation in Australia

• Establish the buyout team, leadership TU
  involvement
• Feasibility study value the business
• Prepare the business plan
• Raise finance
• Structure the buyout. Appoint management.
• Negotiate with existing owner
• Operate after the buyout
• Repurchase obligations
• Employee Buyouts Price Waterhouse, Australian
  Employee Ownership Association Department of
  Fair Trading

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3. Operating After the Buyout

• Stage 1 Start up liability of newness
  honeymoon
• TU assists in developing participatory work
  structures and networks with other worker owned
  firms.
• Enthusiasm, productivity cooperation.
• Stage 2 Early maturity crises
• TU role in bargaining solutions overcoming
  tensions
• Continuous learning in participation and conflict
  resolution
• Stage 3 Maturity expansion growth job
  creation
• TU works to resist decline of democracy
• Worker self management
• TU ensures links to labour movement support

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3.Building a Worker Buyout Sector

• A sector enables the market to be tamed
• Trade Union involvement essential
• Suitable source of finance
• Ongoing consultancy, training and research
• Support structures independent of government
• Supporting Government Policies legislation
• Government takes a stake when it provides finance
• AEOA as trade association representing the sector

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3. The Employee Owned Company and Job Rescue

• Betsaide SAL Foundry in Basque Country
• Acquired by 140 workers in buyout in 1984
• Access to finance unemployment lump sum
• Now employees 320 workers
• Workers elect board of 8 including President
• Board appoints subsidiary board of management
• Works council elected by all workers from all the
  trade unions in the factory.
• Trade Unions bargain collectively. No strikes in
  its history.
• General assembly meets four times per year
• Self managing work groups
• Customer main priority customer service teams
• Australia
• Australia
• PCR, Kenilworth Cheese Factory, Ruddles, Rank
  White Goods.

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4. Trade Unions , Worker Ownership Future

• Employee Ownership Necessary in Recessionary
  Times
• National more employment, flexible productive
  economy
• Strong Regional Economies social benefits of
  health, longevity, education
• Enterprise dynamic, democratic, participatory
  and high performance
• Truly stronger entrepreneurial companies
  financial injection
• Concessionary bargaining save jobs receive
  equity
• Profit sharing compensation
• TU benefits
• Efficiencies in enterprise bargaining
• New strategy to deal with economic restructuring
• Secure and create better jobs
• Preserve and Increase membership
• Ownership, Voice and control over plant closure,
  technology and work processes
• Future Action
• Trade Unions as Champions of Ownership
• Working Party Study tour
• Policy Formation
• Pilot Projects Ongoing research

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4.Conclusion - Social Economy and the European
Social Fund

• The employee owned company is an example to be
  followed by the
• rest of Europe. They are an exciting part of the
  market economy, not
• a contradiction to the labour part or an
  imposition on the economic part. It also has a
  cushioning effect on the destruction of jobs.
• Miguel Barrachina.
• Director General
• Promotion of the Social Economy and the European
  Social Fund