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Wednesday, September 27, 2006

Worker's Cooperatives

Andrew Leonard at Salon notes the demise of Burley bikes:

Cheap labor vs. a worker's cooperative, by Andrew Leonard: Eleven years ago, ... I bought myself a mountain bike and a Burley Trailer to tow my 1-year-old daughter around Berkeley, Calif. The Burley wasn't cheap, but its striking blue and yellow colors were, and still are, a familiar sight around the Bay Area. And it's held up well -- my ex-wife still uses it to transport groceries and other vital necessities around town.

I did not know until today, however, that for 25 years Burley had been a worker-owned cooperative in Eugene, Ore. I say, "had been," because I also learned today, via a link from Treehugger, that in June, after three years of mounting losses, Burley converted itself to a private corporation. Then, on Sept. 11, a local businessman bought the company. Already, some 40 employees have been laid off and more will probably follow.

It's easy, especially living in Berkeley, where memories of the infighting and squabbling that doomed the legendary Berkeley Co-op 20 years ago still linger, to hear the words "failed worker-owned coop" and start pointing fingers at some inherent flaw in collective management. New owner Michael Coughlin alluded to exactly that, in the most mild of ways, when he told the Eugene Register-Guard that "I think it is a great business. I just think that they really had troubles adapting to competitive issues and keeping their product costs under control. I think managing a business in a very competitive arena is not well suited for a cooperative structure."

What exactly would that competitive arena be?

How about competition from Taiwan and China, pumping out cheapo bike trailers currently on sale at your local Wal-Mart or Target? It's tough out there... But it seems a little unfair to pin the blame for Burley's woes on its co-op structure. As former employee Patricia Marshall writes in a moving requiem, there was much of value to be cherished in 25 years of worker-owned operation. And as plenty of other business owners can attest to, you don't have to be worker-owned to be vulnerable to the challenge of cheap labor and the Wal-Mart effect.

I live in Eugene - it's where hippies come to further their education once they've graduated from the Berkeley scene - and I almost posted the Burley bike requiem a couple of days ago when it first appeared, but thought it might be too provincial. The bikes are pretty much everywhere, the recumbents are popular, and the trailers are the first choice for child transport for the alternative, car-shunning, organic grocery, vegetarian, Birkenstock, tree-hugging, Saturday Market crowd that lives here (please don't get me wrong, they give this place character - no problems here at all). I know two people who worked at Burley and it's an interesting place, they were dedicated employees. But it wasn't for everyone. I also know someone else who needed a job but refused to work there because he didn't think it was fair for him - an accountant - to be paid nearly the same as production workers. Here's the requiem Andrew Leonard references:

Burley's sale doesn't mean co-op failed, by Patricia Marshall, The Register-Guard: Burley was one of many cooperative businesses that sprang up in Eugene in the 1970s: Genesis Juice, Hoedads, Second Growth, Starflower - most of them are gone or have reorganized as more conventional businesses. Burley remained a cooperative for 28 years, one of the longest-running and most successful.

In the mid-1990s, Burley had nearly 100 members, all of whom enjoyed good wages and exceptional benefits, as well as a share in the company's profits. When the dividend checks were issued, a couple of times a year, it seemed that hundreds of thousands of dollars flooded the community, temporarily boosting the profits of restaurants, bars and home improvement stores.

The last few years haven't been as flush. In June, the remaining members voted to dissolve the cooperative and become a traditional corporation, to prepare the company for sale to a private owner. In the aftermath, everyone has an opinion about what went wrong.

It's easy to point the finger at the cooperative structure, to see the dissolution of the cooperative as vindication of the idea that co-ops are an unworkable way to manage a business. But to do that is to ignore the fact that it did work, and the company prospered for more than two decades, supporting local families and turning the wheels of local commerce, all the while adhering to the democratic idea that the member-owners had equal say in the company direction.

And it's easy for ex-members, many of whom may lose a chunk of money that they were counting on, to blame bad management and increased product cost for the decline. The whopping $1.5 million loss in 2005 lends itself to that theory.

But the truth, as with many things, probably lies somewhere in the middle. Burley has never been easily defined, or easily managed. It was a group of people who took a funky little bike trailer and made it world famous, while running a business with integrity and care. Despite the democratic structure, Burley was as effective in the market as any bike business, and more effective than many.

The thing that struck me the most when I came to Burley in 1992 was how dedicated everyone was to the cooperative idea, and how differently that dedication manifested itself from member to member. There was no challenge that members weren't ready to tackle, despite widely diverse opinions. Meetings were the heart and soul of the business, the place where we hashed out the issues of the day. For many, leaving no stone unturned, leaving no one's opinion unexamined, was the only fair way to operate.

The democratic process wasn't always pleasant, but it made us feel connected: It caused the seamsters to sew better, the salespeople to sell harder, the assemblers to take extra care with the trailers and bikes they personally identified with.

We worked hard to pull through tough times, but after the issues were resolved and the work was done, we could enjoy free lunch, or go on a bike ride, or cheer the Insane Unknowns while they played softball on a summer night. Once in a while, the trailer production team deep-fried a turkey and invited the co-op to lunch. We held Burley Cafes to raise funds for charitable causes, adopted families every Christmas, donated trailers to those in need and contributed to local non- profits.

Throughout it all there was a sense of camaraderie, a sense that we were working for something bigger than ourselves, the sense that we could redefine the work world, and come out better for it.

I don't know about the Burley of the past few years. I know there were big changes - changes that curtailed the flow of information and streamlined the process by minimizing democratic decision-making. The cooperative structure always meant that the business would be what the current members made it. At the meeting during which the remaining 33 members voted to sell the business, one director pointed out that they had chosen to stay and fight it out, rather than closing the doors.

I didn't make that decision, but if I had been asked, I probably would have supported it - even though it meant a portion of my retained earnings disappeared - because that decision meant my friends and former business partners would still be employed making products I cared about. Other people might have made other decisions, but it wasn't up to them. The members made the choice.

We had a saying at Burley: Once you work here, you're ruined to work anywhere else. I've discovered, along with a lot of other former co-op members, that it's not true - there are other jobs in Eugene where workers are respected, are paid well, and have some flexibility. There is life after Burley, something too many people will be finding out soon.

But I doubt there's any job out there that will replicate the experience we had at Burley.

    Posted by on Wednesday, September 27, 2006 at 06:54 PM in Economics, International Trade | Permalink  TrackBack (0)  Comments (7)

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