Re: What we need to do to attract Unions to employee ownership

["Don Ward" <donrward@hotmail.com>]

Deborah:

Good summary of how union leaders do and do not embrace employee ownership. 
I agree with all you said, however, I think the debate needs to move beyond 
the role of union leadership to a recognition that ownership is a desired 
objective regardless of whether a union is involved. In my own case, our 
company convinced our employees that they would be better served not to be 
represented by a third party years before we set up our ESOP. So my 
suggestion is that we concentrate on how ESOP's help all employees not just 
one group.

Your reference to unions who did accept ownership as a last resort reminded 
me of Northeast Ohio, where I first got a look at how  well unionized 
companies could adapt to an ownership culture. Unions have come a long way, 
since I did picket duty during my college years.

On the matter of ESOP's selling out and distributing the wealth to the 
employee owners. Our company president always supported this idea, if that 
is what the employees decided to do. However, anyone who bought a company 
like ours would probably buy it for the markets and sell off the 
manufacturing capacity. Employees would end up with a little money in their 
pocket but no job.

Then there is the social side of work. So long as employee owners feel their 
contribution is asked for, they have good bosses, friends at work etc. why 
would they want to throw it away for the proverbial 30 pieces of silver.

Speaking from personal experience, it did make me think, as I appproached 
retirement that  much of my retirement was tied up in the ESOP, or other 
company stock, I owned directly. At some age I could have diversified my 
ESOP but as a member of senior management, I did not want to send out the 
wrong signal.

The age for diversifying would specifically be known by others in our group. 
However, if that provision could somehow be liberalized, it might lessen the 
need for employee owners to sell because of the diversification.

Our Thanksgiving group is starting to arrive, so I will sign off. Would 
appreciate your and others thoughts.










>From: Deborah Groban Olson <dgo@esoplaw.com>
>Reply-To: EOpriv@cog.kent.edu
>To: EOpriv@cog.kent.edu
>Subject: Re: What we need to do to attract Unions to employee ownership
>Date: Wed, 24 Nov 1999 02:37:06 -0500
>
>Dear Barry, Dan, Tim, Norm and other EO Priv Folks:
>
>         I have not yet had enough time to review all the discussions,
>although I
>have noticed with interest this discussion about unions, co-ops and 
>employee
>ownership. Let me suggest two artilces of mine which are now in the COG 
>library
>which shed some light on the US labor experience with worker ownership.One 
>is "
>US Experience with ESOPs and Democratic Employee Buyouts" a speech to the 
>labor
>movement in Dublin, Ireland in 1993, while they were developing their new 
>ESOP
>legislation. The other is an outline of my 1982 Wisconsin Law Review 
>article
>"Union Experiences with Worker Ownership".  There are a few other related
>articles which might interest you as well.
>
>         However, I have been working with labor unions in the US on 
>employee
>ownerhsip projects for the last 20 years. I agree that some of their 
>concerns
>arise from a parochial view of their position. But much of their concern 
>arises
>from more practical matters. ESOPs have been used to prevent or avoid union
>organizing. Workers have received worthless stock in some instances. 
>Companies
>have used ESOPs to move valuable assets out of unionized firms and provide 
>the
>union members with stock in a hollow shell.
>
>         Most labor leaders these days are not opposed to employee 
>ownership.
>They just do not see it as a meaningful tool, except is a limited number of
>circumstances. They are not greatly impressed with any examples to date 
>other
>than United Airlines. There is some question whether United will retain a
>controlling employee ownership stake, as the Unions measure these benefits
>against others. Furthermore, United is an example of a company in which 
>some
>employees are owners while others are not. This creates friction amongst 
>the
>workers.
>
>         Some of the more interesting labor issues arise from successful 
>ESOPs.
>The United Steelworkers union embraced the ESOP concept when they felt that
>there was no other choice, but to lose the industry to the Japanese. Many
>companies were sold to the employees. Of those which survived, a number 
>have
>since been sold by the employees, most notably Republic Engineered Steel. 
>This
>leads to an important question for those of us who believe that employee
>ownership is a social good. Are we satisfied with employee ownership laws 
>which
>provide the greatest financial benefit to employees who sell their company 
>and
>cease to be employee owners? Can we reasonably ask employee owners to 
>sacrifice
>their individual financial benefits for the community's collective benefit, 
>by
>asking them to retain perpetual employee ownership of a company? There are
>methods for employee owners to perpetuate ownership, which are employed by 
>some
>employee owned companies, including clients of mine. But, in general, long 
>term
>employee ownership is not seen as the goal of the Union or the employee 
>owners
>by anyone involved in the deal.
>
>         There are certainly many examples of employee ownership serving 
>the
>welfare of unionized employees and their communities. Many such companies 
>and
>unions are my clients.  But these include a small number of companies. The
>employee ownership effort was ususally lead by a visionary individual. Our 
>job
>is to find, educate and cultivate these visionaries within the labor 
>movement.
>Most of them like to use employee ownership when it can work, but find many
>situations where it does not work.  Much of their days are consumed in 
>disputes
>with companies where the company has absolutely no interest in anything 
>like
>employee ownership, and the union is in not position to promote the idea.
>
>         If we are to  affect seriously these labor leaders, we need to 
>come up
>with policy proposals that help them with the problems as they see them. We
>cannot get anywhere by condemning them as either self-serving or lacking
>vision. We have to come up with programs that require companies to provide 
>or
>bargain about  providing employee ownership and control rights if we want 
>to
>attract labor to spend time on this issue.  My "stock for government 
>largesse"
>policy proposal is an effort to craft such a proposal. My proposal in 
>"ESOPs
>for People, Not for Wall Street" (also in the COG library archives) is 
>another.
>My proposals may not be the right ones. I would like some help from COG
>participants in reviewing these proposal. But I think we need to focus more 
>on
>labor's key issues involving realistic fear of the effects of 
>globalization, if
>we want them to be interested in our ideas.
>
>Deb Olson
>  At 05:41 PM 11/23/1999 -0500, you wrote:
> >
> > Norman Kurland and all others
> >
> > I have read "A Personal Journey to a Third Way."  Your lifetime of work
> > on this subject is truly impressive.  You have seen the idea through its
> > gestation phase, the blossoming and now its growth.
> >
> > You truly have tenacity and stick-to-it-ness.  You also appear to have
> > great patience.  But now you see the results.  Or to be more accurate,
> > now you see the results in the United States of America
> >
> > In the rest of the world the idea is growing more slowly.  It would have
> > been a good idea for Russia but that opportunity seems to have been
> > lost.
> >
> > If I examine why it is growing quickly in the US and not elsewhere
> > I come to the conclusion that it is because of the lawyers, bankers
> > and others who are able to make a living putting the deals together.
> > As well, the tax legislation is such that it is advantageous to the
> > owners to sell to ESOPs.  To be precise, and to paraphase the
> > Clinton 1992 election slogan, "It's the money, stupid."
> >
> > How can we convince the unions and coops that they would be
> > better off financially if they were to adopt ESOPs/CSOPs?
> > Presently, neither group is looking for anything other than
> > employment.  The union leaders want to keep their jobs and
> > the leaders of the coop movement want to keep their jobs.
> > Many of them don't seem to be looking beyond that.  Am I correct when
> > I make this statement?  And if I am correct, why is it that the
> > union and coop leaders are not able to see other possibilities?
> >
> > Or maybe I am more accurate when I say this of the coop
> > movement and less so of unions.  As has been pointed
> > out to me, many unions support the idea but I don't see
> > a major push by unions to obtain more ownership for their
> > workers.  It is not the union leaders who are at the forefront
> > of the ESOP/CSOP movement in the US or anywhere else.
> >
> > Is the profit motive the way to ignite this idea elsewhere or
> > am I on the wrong track?  Must we only be altruistic in working
> > on the ESOP/CSOP concept or should we change our thinking
> > so that we and everyone else who looks at this looks at it for
> > personal gain?  Would this thinking destroy a good concept
> > just as short term thinking about personal gain has had
> > negative implications for other things?  Or instead would it
> > ignite the idea and make it grow more quickly?
> >
> > Barry Randall
> > Ottawa, Ontario, Canada
> >>
> >> ----- Original Message -----
> >> From: <mailto:thirdway@cesj.org>Norman G. Kurland
> >> To: <mailto:EOpriv@cog.kent.edu>EOpriv@cog.kent.edu ;
> >> <mailto:pentim@netspace.net.au>Tim Mitchell ;
> >> <mailto:EOpriv@cog.kent.edu>Randall, Barry
> >> Sent: Sunday, November 21, 1999 10:35 PM
> >> Subject: Re: Unions and coops
> >>
> >> Dear Barry, Tim, Dan and the ESOP Privatization Community,
> >>
> >> There is a way for genuine labor leaders to be sold on ESOP/CSOP plus 
>the
> >> "real third way."  But it takes a gutsy, authentic leader like the late
> >> Walter Reuther of the UAW.  I worked as the CCAP's director of planning 
>for
> >> Reuther when he headed the Citizens Crusade Against Poverty from 
>1965-1968
> >> and brought him together with Kelso in 1966.  Reuther, who was 
>committed to
> >> the "revitalization of the labor movement" testified on February 20, 
>1967
> >> before the Joint Economic Committee of Congress that year and pointed 
>out
> >> that "stock distributions to workers would help democratize the 
>ownership of
> >> America's vast corporate wealth which is totally appallingly 
>undemocratic
> >> and unhealthy. . .If workers had definite assurance of equitable shares 
>in
> >> the profits of the corporations that employ them, they would see less 
>need
> >> to seek an equitable balance between their gains and soaring profits 
>through
> >> augmented increases in basic wage rates.  This would be a desirable 
>result
> >> from the standpoint of stabilization policy because profit sharing does 
>not
> >> increase costs.  Since profits are a residual, after all costs have 
>been
> >> met, and since their size is not determinable until after customers 
>have
> >> paid the prices charged for the firm's products, profit sharing 
>[through
> >> wider share ownership] cannot be said to have any inflationary impact 
>upon
> >> costs and prices."  (Page 774, Part 4 of "Hearings, The 1967 Economic 
>Report
> >> of the President, Joint Economic Committee, 90th Congress, 2d Session.)
> >>
> >> To give you some more background on the successes and failures of Kelso 
>and
> >> me in promoting the "pure Kelsonian" principles and applications among 
>U.S.
> >> and non-U.S. labor unions, please visit the CESJ web site at
> >> <http://www.cesj.org>http://www.cesj.org and read the labor sections of 
>  "A
> >> Personal Journey to the Third Way", the case study on South Bend Lathe, 
>and
> >> the long paper on Value-Based Management, which you can retrieve from 
>the
> >> CESJ "Site Map."
> >>
> >> Dan was with me when I made a presentation before the former communist 
>labor
> >> unions in Moscow and he saw the positive response I received in making 
>the
> >> case for labor's very significant role under the "third way."  Working 
>for
> >> the Banana Workers of Guatemala in 1972, Joe Recinos and I came very 
>close
> >> to acquiring all of United Fruit's banana plantations through a 
>leveraged
> >> ESOP with the backing of the U.S. anti-trust division of the Department 
>of
> >> Justice.  In Egypt in 1987 we worked with the head of the Chemical 
>Workers
> >> Union to implement the first leveraged ESOP in the developing world at 
>the
> >> Alexandria Tire Company, a joint venture with Pirelli Tire of Italy.  
>In
> >> Argentina we developed a leveraged ESOP for the Argentina utility 
>unions in
> >> privatizing the San Miguel nuclear power plant.  In Bangladesh we are 
>now
> >> working with all the textile worker unions to privatize 9 textile mills
> >> which the Prime Minister wants to "turn over to the workers."
> >>
> >> So, Barry, Tim and Dan, the key to getting organized labor aboard is
> >> challenging the leaders and even going over their heads to the
> >> rank-and-file, when appropriate, to abandon the feudalistic wage 
>system,
> >> which is the cancer of every economy on the globe today and to return 
>to
> >> roots of democratic trade unionism by spearheading economic justice for 
>all
> >> members of society.  (See our definition and paper on economic justice 
>on
> >> the web site.)
> >>
> >> Norm Kurland
> >> Center for Economic and Social Justice
> >> Web: <http://www.cesj.org>http://www.cesj.org
> >>
> >>
> >> ----------
> >> Barry Randall wrote:
> >>>
> >>>  When I sent the original message on unions and coops I was hopingto 
>find
> >>> out why unions had not embraced ESOPs and why coopshad not embraced 
>CSOPs.
> >>> I was hoping to find a way to convincethese two groups to join "the
> >>> ESOP/CSOP movement." Now after reading Tim's message I want to change 
>the
> >>> question.How could we take the best union ideals and framework along
> >>> withthe best from the coop movement and merge them with the bestfrom 
>the
> >>> ESOP/CSOP concept?  Is there common ground betweenthese concepts where 
>they
> >>> could all be improved upon? Barry RandallOttawa,
> >>> Ontario<mailto:brandall@fox.nstn.ca>brandall@fox.nstn.ca
> >>>>
> >>>> -----Original Message-----
> >>>> From: Tim Mitchell
><<mailto:pentim@netspace.net.au>pentim@netspace.net.au>
> >>>> To: <mailto:EOpriv@cog.kent.edu>EOpriv@cog.kent.edu
> >>>> <<mailto:EOpriv@cog.kent.edu>EOpriv@cog.kent.edu>
> >>>> Date: Wednesday, October 27, 1999 9:33 AM
> >>>> Subject: Unions and coops
> >>>>  I've just read Barry and Dan's contributions re above with great
>interest.
> >>>> I think that's an excellent discussion point. I've wandered to myself 
>how
> >>>> to make coops and esops compatible in a meaningful, practical and
> >>>> significant way. In Australia, there is a new group called Mutuality
> >>>> Australia which I will try and vend in to this discussion. They are
> >>>> committed to the promotion of coops and third way type ideas. I'm 
>also
> >>>> going to forward your comments Dan to some of the high level 
>bureaucrats
> >>>> in my Department of Fair Trading. They administer registration of 
>coops in
> >>>> this state and I have prompted them to develop some thoughts on CSOPs 
>in
> >>>> light of our pending competitive electricity and gas market at all 
>levels
> >>>> including residential. They are keen to set up a discussion group 
>within
> >>>> the Department on the subject and assuming we come up with something
> >>>> useful feed it in to the regulation formation processes. I'll keep 
>you
> >>>> posted. Cheers Tim Mitchell
> >>>
> >>
> >
>
>
>
>Attorney Deborah Groban Olson
>Principal
>Shared Equity Strategies, Inc.
>3163 Penobscot Bldg.
>645 Griswold St.
>Detroit, MI 48226
>(ph) 313/ 331-7821  or 964-2460
>(f) 313/ 331-2567     or 964-4065
>
>dgo@EsopLaw.com
>www.EsopLaw.com
>www.Shared-Equity.com
>
>ESOP and stock plan professionals, providing legal, financial and
>administrative guidance to create and maintain employee stock ownership 
>plans
>and other forms of equity compensation.
>

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