The Cleveland Model

Several nonprofit and medical institutions in Cleveland have turned to the Mondragón model for a consortium of businesses that will provide needed services and bolster an impoverished community.

The Cleveland model takes us beyond both traditional capitalism and traditional socialism. The key link is between national sectors of expanding public activity and procurement, on the one hand, and a new local economic entity, on the other, that “democratizes ownership and is deeply anchored in the community.”

Evergreen Cooperative Laundry (ECL) — worker-owned, industrial-size. Green operation.

  • “Aims to take advantage of the expanding demand for laundry services from the healthcare industry.”
  • After 6 months, employees buy in to the company through payroll deductions. “Employee-owners are likely to build up a $65,000 equity stake in the business over eight to nine years.”

Ohio Cooperative Solar (OCS) — another part of the Evergreen effort, “large-scale installations of solar panels on the roofs of the city’s largest nonprofit health, education, and municipal buildings.”

Green City Growers — “will build and operate a year-round hydroponic food production greenhouse in the midst of urban Cleveland…will almost certainly become the largest urban food-producing greenhouse in the country.”

Neighborhood Voice — community based newspaper, “an initial complex of ten companies will generate roughly 500 jobs over the next five years.”

Evergreen Business Services — meant to “support the growing network by providing back-office services, management expertise and turn-around skills, should a coop get into trouble down the road.”

 The Cleveland Clinic, Case Western Reserve University and University Hospitals are powerhouses of economic activity, spending a combined $3 billion on goods and services annually. But little of that money stays local. So what if some of that financial largesse could be deployed within the surrounding city blocks, creating assets and new wealth within the underclass?

The coop businesses are focusing on the local market in general and the specific procurement needs of “anchor institutions,” the large hospitals and universities that are well-established in the area and provide a partially guaranteed market.

Significant resources are being committed to this effort by the Cleveland Foundation and other local foundations, banks, and the municipal government.

Each coop must pay 10% of its pretax profits back into the fund. This helps seed the development of new jobs through additional coops — each business is committed to helping its workers and the general community.

“In addition to the technical training, we’re training in administration and managerial skills — how to obtain work orders, track profitability,read a financial statement.” Unlike the typical workplace, here employees know how much a company — and each individual — is making. “There’s a value in dealing with an informed workplace,” says Kiel. In terms of problems that can arise, including safety, production and theft concerns: “if people feel a part of it, that makes solving the problem a lot easier.”

The CEO earns no more than 5 times the lowest-earning entry-level employee.

Other cities are thinking of trying this “Cleveland model” out — Atlanta, Baltimore, Pittsburgh, Detroit.

Late in October [2009], in fact, the Mondragón Corporation and the million-plus-member United Steelworkers union announced an alliance to develop Mondragón-type manufacturing cooperatives in the US and Canada.


________________________________________________________

Alperovitz, Gar, Thad Williamson and Ted Howard. “The Cleveland Model.” 11 February 2010.

Schwartz, Judith D. “In Cleveland, Worker Co-ops Look to a Spanish Model.” 22 December 2009.

Restoring Cleveland: the hopeful laundry.” The Economist. 7 January 2010.

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  1. […] Evergreen Cooperative in Cleveland and other co-ops […]



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