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Marty Frost from the BC Co-op Association and the Western Labour Worker Co-op
REPORTING · 3rd March 2010
Walter McFarlane
When the CEP 298 began their feasibility study, they talked about turning the plant into a Co-op if they made the bid. On Wednesday, February 24th the people of Kitimat gathered at the Mount Elizabeth Theatre for a presentation about Co-ops and how they work. There was little talk about potential buyers for Eurocan but there was some discussion on what it could become.

Mary Murphy welcomed everyone and introduced the co-op scenario to the people present and explained what the worker buy out plan would look like.  She called upon Marty Frost from the BC Co-op Association and the Western Labour Worker Co-op Council to speak.

Frost introduced himself and explained he was going to talk about co-ops and how they are structured in the country.  Then he would talk about worker co-ops because this is what Murphy is hoping Eurocan will become.

“The thing we will be talking about tonight is the [different types] of Co-ops and how they are structured and so on.  I will go into more detail about how a worker co-op might be used and how it might be structured in a way that it would take on a position in the mill,” said Frost.

Frost went over the topics for the night before defining co-ops as:  “A way that people can achieve together what would not have been possible individually.  If you look back at the co-op history, that is really how the Canadian Co-ops got started.”

He used the Wheat Pools in Alberta and the need for grain elevators as an example of the co-ops as well as other co-ops in Canada such as the stores and the Credit Unions.  He followed up by talking about the origin of the co-op in Rochdale in the United Kingdom.

Frost defined a co-op as: “A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs through a jointly owned and democratically controlled enterprise.”

He explained co-ops are different from other businesses because they work to meet the needs of the members rather than maximize profits, are controlled by the members rather than the shareholders, and capital goes to improve their services.  In addition, co-ops are locally owned, retain local wealth, ownership, build leadership and promote sustainability.

Frost moved on to the values system.  Self responsibility, democracy, equality, equity solidarity as well as ethical values are some of the co-operative values.  He stated some of these values are not found in other business structures.  The principles of a co-op include open and voluntary membership; people cannot be coerced into joining a co-op.  The members are democratic and make the policies and decisions.  Every member invests in the capital of the co-op when they become a member.   Co-ops also work for the bettering of their communities.  

The capital is the property of the co-op.  he explained co-ops are not there to create money for their members, members control the co-op and co-ops can enter into legal agreements which can not infringe upon the rights of the members.  

Frost talked about the organizations which have been formed by the from co-ops.  He also looked at the number of people in Co-operatives around the world and in Canada before moving on to the different markets Co-ops cover.  Specifically, he moved into worker co-ops which is what Kitimat is talking about.

The purpose of a worker Co-op is to provide employment to members who receive a say in the policies of the business.  He gave as an example several Co-ops including the Natural Foods Co-op which was built by worker Co-ops before getting bought out by a company in the United States.

Worker Co-ops are owned by the worker members; directors are elected by the worker members; working conditions are determined by the workers, and profits distributed are based on participation.

As the end of the presentation drew near, Frost talked about how the mill would be structured.  The people would be the members of the worker Co-op.  The Co-op would be legally owned by the members and the entity could then act on the collective behalf of the workers.  The options are for the workers to be the sole owner, joint owner in the mill, one member of a multi-stakeholder Co-op and this is determined primarily by the financing for their buy out.

“So if you set up the system so the worker Co-op is the sole owner, the worker Co-op owns all the assets and divides them for all the liabilities,” said Frost.

He stated if things go wrong, the most a worker ever loses is the amount of shares he invested in.  Financing would come from the workers through the member’s buying into the project.  It could be too high to purchase.  If the capital load was too large, they could bring in a partner.  Profits would then be distributed to both members and partners.

Another option, a multi-stakeholder Co-op, is where a parent Co-op assists in the buy out.  The next steps are a conversion plan, which will confirm supply, markets, management plan and how the management and workers will work together.

The business plan comes next and management succession, incorporation into the Co-op, structures and policies and training management and governance.

Frost explained not all Co-ops are successful Co-ops.  1 in 6 are successful.  The worker Co-op  model provides a better chance at success than the other models.  He expressed the commitment and support from the community and union was a good thing and the local ownership and government would provide new opportunities for the community.

Councillor Randy Halyk wanted to know, what happens if someone gets fired.  Someone can get fired from a Co-op but they could go through a structured evaluation process.  Membership could be revoked from the mill.

One person asked if the Co-op was approved, would the union be redundant.  Frost explained even in Co-ops, workers need to have their rights protected.  Sometimes, managers are not even members of the Co-ops.  The workers may even need protection in a joint venture or a multi-stakeholder Co-op.  “The relationship would have to find their own place,” said Frost.

Halyk stepped back up.  He asked where the workers would find money for the capital for a mill.  Frost explained money could be up front or over time.  There are venture capital companies willing to invest in these things.

Another member of the community wondered how long this would take.  Frost said time is important.  As soon as possible when you want.  Another question was what happens to the money invested.  Frost replied money invested into the Co-op is returned when the worker retired or otherwise leaves the Co-op.

Someone wanted to know what happens if the company goes bankrupt.  You lose your share.  He asked a second question and Frost replied the Co-op is risky because businesses fail, although worker Co-ops do not fail as often as the others.  He stated it was worth it because the worker Co-op could create employment in the community.

Murphy stepped up to thank Frost for coming and explained there was a lot going on in the background and he would meet with the members in the morning.  She also mentioned there is a steering committee working on the community's behalf.

“It might not look like what it does today but even if we take small steps to get it going, we could always add more as it goes along,” said Murphy.