Re: Virginia Privatization and Employee Ownership

["Tim Mitchell" <pentim@netspace.net.au>]

Rafaella

Does the Virginia report say anything about rail, power or water?

If it does I'd be interested in obtaining a copy.

Tim Mitchell

-----Original Message-----
From: Chuahy, Rafaella B. <rchuahy@fed.org>
To: 'EOpriv@cog.kent.edu' <EOpriv@cog.kent.edu>
Date: Friday, 08,October, 1999 00:32
Subject: Virginia Privatization and Employee Ownership


>Hi all,
>
>If you want to find out more about Virginia's efforts towards employee
>ownership, a good source is the report entitled "Secretary of
Administration
>and the Commonwealth Competition Council on Methods to Privatize
Appropriate
>State Government Functions through the Development and Promotion of
>Employee-Owned Companies."
>Copies of the report can be obtained by writing the Commonwealth
Competition
>Council, P.O.B. 1475, Richmond, VA 23212.
>
>-----Original Message-----
>From: Timothy Regnitz [mailto:tregnitz@bcigroup.com]
>Sent: Thursday, October 07, 1999 9:33 AM
>To: 'EOpriv@cog.kent.edu'
>Subject: RE: unions, EO & privatization
>
>
>
>Did you get this?
>
>Tim Regnitz
>Principal
>BCI Group
>1-800-705-4964
>tregnitz@bcigroup.com
>
> -----Original Message-----
>From:   Timothy Regnitz [SMTP:tregnitz@bcigroup.com]
>Sent:   Thursday, October 07, 1999 8:20 AM
>To:     'EOpriv@cog.kent.edu'
>Subject:        RE: unions, EO & privatization
>
> Unions have large pension plan that invest in assets not limited to
>large publicly traded U.S. corporations. Why not use some of that cash to
>fund employee buyouts in companies where unions are present or have union
>membership a requirement for the loan? What's best for employees in the
21st
>century is ownership......most likely at the majority level.
>
> Tim Regnitz
>Principal
>BCI Group
>1-800-705-4964
>tregnitz@bcigroup.com
>
>         -----Original Message-----
>From:   Dan Bell [SMTP:dbell@kent.edu]
>Sent:   Wednesday, October 06, 1999 12:25 PM
>To:     EOpriv@cog.kent.edu
>Subject:        Re: unions, EO & privatization
>
>         Hello fellow EOPRIVers!
>
>         I would like to add a thought to the discussion going on
>about the role of unions in companies with employee ownership.
>From my point of view, this is relevant to the discussion on
>Employee Ownership in Privatization, because state-owned
>enterprises often have employees represented by unions and
>this can have an impact on the process.
>
>         The union role can be divided into two areas here.
>1. Union role vis-a-vis the process of privatizing
>2. Union role in the employee-owned company after
>   privatization has taken place
>
>         Regarding #2 (the post-privatization role), the union
>role is no different than in any other company making a
>transition from conventional to employee ownership.
>A. Protect the individual members: Unions are the
>   judicial branch which protects the rights of individuals
>   before the awesome power of the executive branch
>   (management). Even where management is accountable
>   to the workers as shareholders, as are our government
>   officials to the voters, an individual worker or
>   voter still needs judicial protection.
>B. Organize the workers' ownership into a coherent
>   voting block. Where workers are merely individual
>   and unorganized shareholders, their interests can
>   be divided and conquered.
>C. Develop an ownership culture among workers: Together
>   with management, union leaders can oversee the
>   establishment of an employee involvement structure,
>   and an ownership education and training program,
>   which helps workers develop the new skills and
>   knowledge to act as owners.
>
>         Regarding #1 (privatization process role), the union's
>role is to protect its memberships' interest, and seek
>the outcome which is best for its membership.
>At a macro-level, the union should influence laws which
>establish the ground rules for privatization which give
>employees the opportunity to participate in the new
>ownership structure in a meaningful way.
>At a micro-level this could be:
>A. Fight privatization: The taxpayer/voter can be convinced
>   that the service provided is appropriately subsidized with
>   tax dollars. There are three interests at stake: taxpayer,
>   consumer, worker. These three groups overlap but are not
>   identical. If the taxpayer stops subsidizing, this cost
>   is either passed on to the consumer (pays more out of pocket
>   or loses the service), or to the workers (reduced number
>   of jobs or reduced wages and benefits or both).
>B. Accept the inevitable and seek the best outcome: If the
>   taxpayer/voter cannot be convinced to subsidize, then the
>   government will stop providing the service. The union
>   can:
> 1. Oversee a feasibility study which shows how the new
>    private company will provide the service at a price
>    which the market will support. Once the amount of total
>    probable revenue is identified, then the union has to
>    maximize the share which its members will get.
> 2. Negotiate the tough choices. In all likelihood, this total
>    will be less than what it was before because the
>    taxpayer subsidy is gone. To maintain the previous
>    level of income for all the members, the new company
>    will have to both get more output from each worker and
>    expand its activities to generate greater sales.
>    Otherwise, the smaller pie will mean that the current
>    employees are kept at the current level of productivity
>    and wages are reduced, or the current workforce is
>    reduced and and the current level of productivity is
>    increased. Part of this equation can include the
>    additional income / capital acquisition which can
>    come from an ownership stake either gifted to employees
>    by the state or acquired by the employees with credit
>    made accessible to employees by the state.
> 3. Negotiate a voice in the long term strategy of the
>    company. One possibility is majority employee ownership,
>    but depending on co-determination laws in a particular
>    country, this may not be the only option.
> 4. Negotiate the ability of the union's membership to
>    acquire capital in the privatization deal. This can
>    include the gifting of some or all of the state's
>    ownership to employees (a taxpayer subsidy), and/or
>    providing the employees with access to credit to
>    purchase the enterprise at a market price (one which
>    can be repaid out of the future earnings). At a
>    minimum, any enterprise capital to be financed out
>    of future earnings should be sold to the employees
>    (and possibly the broader community). The only reason
>    to seek private investors should be where additional
>    investment is needed for expansion, modernization, etc.
>    Just as the employees are getting a market return on
>    the value of the existing assets in order to repay the
>    acquisition loan, the private investor should get a
>    market return on the additional assets brought to the
>    company with her or his investment.
>C. In some cases, a state-owned enterprise is a profitable
>   entity to begin with and actually subsidizes the state
>   coffers. In this case, there is no question about the
>   feasibility of the new business. Union leaders should
>   organize an employee buyout just as they would when any
>   profitable business goes on the market.
>
>         I look forward to hearing from others on where my opinions
>here make sense, and where (and why) I am off base.
>
>         Thanks
>
>
>         --
>Dan Bell
>International Program Coordinator
>Ohio Employee Ownership Center
>Kent State University
>Kent, OH 44242
>(330) 672-3028
>(330) 672-4063 fax
>dbell@kent.edu
>< http://www.kent.edu/oeoc/ <http://www.kent.edu/oeoc/> >
>
>