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From International Socialism, No.73, December 1974, pp.16-19.
Transcribed & marked up by Einde O’Callaghan for ETOL.
THE IDEA of the workers’ co-operative is not a new one, indeed it flourished on a wide scale in the early days of the labour movement, and it has figured prominently in many recent redundancy struggles. It has been seen by many as a possible alternative to nationalisation under workers’ control. At first sight, it is an attractive idea: ‘get rid of the owners who have taken a rake-off from our labour for years and work for ourselves – then we can enjoy the full fruits of our labour.’
Unfortunately, looked at more closely, the idea is a very suspect one. If we ask the question: in what way does the ownership of the factory by the employees differ from ownership by a capitalist?, we obtain some painful answers.
A company has to buy its raw materials on the market, along with every other company. It does not get steel, oil, copper, coal, any cheaper because it is owned by its employees. Indeed, to the extent that it is smaller than many other companies it may well have to pay more because it cannot obtain the same concessionary rates that really large customers obtain.
A company has to sell its finished products on the market, along with every other company. It does not get higher prices for its goods because it is owned by its employees. It has to compete with every other manufacturer in terms of price, delivery dates, quality etc. To the extent that it is smaller than other companies in the field, it will have problems in reducing its unit cost by means of economies of large scale production. To the extent that it is ‘different’ from the orthodox capitalist concern it has to compete that much harder. It may find itself excluded from the informal price-fixing ring that exists in many industries, and it may be subject to a concerted campaign of underselling by its capitalist rivals.
In order to compete over any length of time, the new company will have to invest in new plant and equipment. To do this it will require a large amount of capital. If this is obtained by borrowing, then the new company will have to convince the banks that it is a viable and profitable concern, run along good business lines. It will be under even greater pressure to prove that it is viable just because it is a different sort of company. If it gets a loan from the government the same rules will apply. Of course, it may decide to raise the capital needed for investment out of the profit on its sales.
That brings us back to the way in which the new concern is different. Inside the factory, there are no owners other than the workers. But they buy goods at the same price as other capitalist concerns. They sell goods at the same price as other capitalist firms. They compete flat out with other capitalist firms. If they are to make enough surplus to re-invest, or to convince the banks they are good for a big loan, how are they to do it? They are in a trap. Either they sack some of their fellows; or they increase their own intensity of work; or they take a wage cut. Whichever avenue they choose, their decision has two effects. Firstly they have attacked their own living standards. Secondly, they are acting as an unconscious argument in the hands of other bosses against their work-forces. If an employer in another factory is faced with a demand for, say, a wage rise, he will immediately reply that he can’t afford it. Few trade unionists will believe that straight off, but if the employer can point to a worker co-operative and say: ‘they work for less than you are demanding. It seems a perfectly reasonable wage to them, with no boss, why are you demanding more?’ then he has an excellent propaganda weapon against other trade unionists.
All this sounds very harsh, but it is no way meant as a slight on those workers who have fought long and hard for a workers’ co-operative. In many cases they have fought that fight very well indeed, but the logic of capitalism has doomed their efforts. Let us look at a concrete case of a redundancy struggle which ended in a co-operative and see exactly what went on.
THE STRUGGLE against redundancy at Norton-Villiers Triumph (NVT) had its origins, as do so many redundancy struggles, in a sordid record of management double-dealing, incompetence, and downright chicanery. The British motorcycle industry has a long record of management incompetence. Since before the war they have failed to employ modern designs and techniques, and consequently lost a whole range of markets:
In a dozen years 10 manufacturers have been wittled down to two, with six basic models – and thousands of motorcycle workers have lost their jobs as the bosses fought to salvage money and profits from the wreckage. (Socialist Worker, 13 October 1973)
Norton Villiers Triumph was the product of the collapse of the BSA motor-cycle production which lead to 3000 redundancies at Small Heath in Birmingham. In early 1973 the Tory-run Department of Trade and Industry handed £4.8 million to Manganese Bronze to finance a merger between them and BSA. The companies were split to give the profitable parts to Manganese Bronze proper, while a separate and less profitable concern – NVT – was set up to manufacture motorbikes. According to the Economist of 1 December 1973 ‘there was a £50,000 a year pre-tax profit in it for Manganese even if NVT failed.’
Mr Dennis Poore, a very rich man who combined the chairmanship of Manganese Bronze Holdings with that of NVT, very quickly came to the conclusion that NVT was not profitable. Some rationalisation was needed. He decided to close the Triumph plant at Meriden and to concentrate production at Small Heath in Birmingham. After the massive sackings of a few years ago, it is not surprising that wage rates at Small Heath, which was now to take on new labour, were about £10 a week lower than those at Meriden. Mr Poore:
... insisted the decision to close Meriden was in no way connected with the labour relations record at the plant or the fact that its labour force was easily the highest paid in the new group. (Financial Times, 15 September 1973)
The unions at Meriden had already made a number of concessions on working practises in a bid to stave off redundancies, but the announcement that the plant was to close with the sacking of 1,750 workers aroused a much more determined response. At a meeting on 14 September, Poore announced massive and highly dubious losses and told the stewards that the plant would close.
The two weeks following were holiday weeks, but pickets were maintained which prevented any plant being moved out of the factory. On 2 October, a mass meeting, faced with Poore’s definite plans to close down the factory, agreed to prevent the movement of finished bikes from the factory, to establish links with other NVT workers, to call for blacking of NVT products at the docks and to publish a daily bulletin to keep the membership informed. Poore was furious: ‘This is verging on the insane. If it goes on much longer we will have to shut the factory at once’ (Birmingham Evening Mail, 2 October).
The unions were in a strong position, as this was the peak period for supplying bikes to the profitable American market. However, the local leadership was already feeling the pressure. The TGWU convenor, Dennis Johnson, went out of his way to stress the respectability of the move: ‘This is not really a work-in in the accepted sense. We are still working under local management with whom we have no quarrel. It is of course possible that the parent company could stop the supply of parts but I don’t think they will do that. It would not be in the company’s interest.’ (Ibid.)
A LOT of pressure was coming from two people – Bill Lapworth the local TGWU fulltimer and Leslie Huckfield, Labour MP for Nuneaton. Lapworth had of course already been involved in the negotiations, but Huckfield, who described himself to the Financial Times as the ‘Henry Kissinger of Coventry’ (9 October), had so far restricted his public activity to meetings with Christopher Chataway. The management were threatening to close the factory immediately unless the blockade on finished bikes was lifted when these two came up with a bright idea: a workers’ co-operative.
This proposal was put to a mass meeting on the afternoon of 5 October, and overwhelmingly accepted. According to the Coventry Evening Telegraph, 6 October: ‘Shop stewards at the plant said there was a feeling of elation over the plan to run the factory by the workers’, and John Grattan, the ETU convenor was quoted as saying: ‘There is a new feeling that this is the right idea and we are going somewhere.’ These two quotes sum up both sides of the demand for a workers’ cooperative. On the one hand it seems like a real chance to get the boss off your back once and for all. On the other hand it looks like an easy way to put an end to a long and bitter redundancy dispute.
Dennis Poore had had nothing but threats and abuse for the workers at NVT for the last few months, but his response to the new moves was: ‘I think it is a marvellous idea. They can certainly have my wholehearted co-operation in discussing the proposals.’ (Financial Times, 6 October 1973).
It was left to Bill Lapworth to spell out what the cooperative would mean in practise:
If Mr Poore is going to sell the Meriden factory we are in the market as buyers ... The fact that we are prepared to establish a workers’ co-operative as a viable proposition shows that the workers are prepared to back their judgement that Meriden can be kept going on a profitable basis ... We realise we have to achieve credibility with the banks and other interested parties but we are confident this can be done. Certainly we are not anticipating any difficulty in attracting competent management. (Ibid.)
Among the problems which had to be overcome was the little matter of raising 3-5 million pounds to buy the factory etc. from Poore, the question of the Triumph brand name, and the eventual arrangements for sales and marketing.
After the idea was first floated, it was hoped, at least by the workers, that these matters could be settled quickly. After all, the Coventry Evening Telegraph, which had greeted the closure announcement as ‘Tragic but Logical’, was now speaking in breathless terms of this ‘exciting and unexpected form of workers’ participation’ (8 October).
The haggling began. The workers of Meriden, who had taken the lead in the initial fight, now dropped into the background. The arguments now concerned the officials, the lawyers, the accountants, and the experts, and, of course, Mr Leslie Huckfield, MP. Of him, the Financial Times commented drily:
If the plan does get off the ground it should establish his reputation as a negotiator as well as a debater. On the other hand, such a close identification with the TGWU should do no harm to his bid to become a sponsored transport workers’ MP: his nomination for the union’s parliamentary panel comes up on Thursday. (9 October. He made it.)
Poore’s initial enthusiasm turned to threats and then to layoffs as the negotiations dragged on. Bill Lapworth called in the Department of Employment Concilliation Service to help sort things out, and rumours of an immediate settlement floated around. On 3 December the Coventry Evening Telegraph was hopefully reporting that the men would be back at work by the next Wednesday.
Christopher Chataway, the Tory Minister involved, passed on in March to be replaced by Anthony Wedgwood Benn. Still the negotiations dragged on. By 19 June, the Financial Times was still forecasting: ‘The release of finished motor-cycles from the Triumph factory ... which has been occupied for nine months by ex-workers trying to establish a co-operative, is to begin this week.’ By 11 July 1974, 326 of the 2,700 cycles had actually been moved, and there was still no final settlement.
THE ROSY hopes of a quick settlement had evaporated. It was true that the state was prepared to put up a loan to launch the co-operative, but the delay of approaching a year cannot simply be blamed on sloth, bureaucratic inefficiency or obstinacy. There was a purpose behind it.
When the final decision by the government was announced on 20 July, some of the reasons for the delay became obvious. The workforce at Meriden had originally numbered 1,750. By the time the agreement was finally reached, the number still occupying was down to 250. The projections on which the final deal was based called for a total workforce of about 800. This workforce was to produce 500 finished motor-cycles a week. The original 1,750 had produced about 600-800. Other estimates have been even less rosy:
So far undisclosed plans are to turn out 12,000 bikes with a workforce of 450 in the first year, stepping up employment to 750 to double output in 1975. As Meriden never turned out more than 30,000 machines with 1,750 men on the payroll under previous managements, this is a productivity boost of at least 85 per cent. (Sunday Times, 28 July)
The long delay had whittled down the number prepared to fight to stay at Meriden dramatically and it had enabled Benn to impose an agreement on those who remained which would never have been conceded in the first place.
Other details of the final offer smell even nastier. The government agreed to provide £4.95 million for the cooperative. This compares with the £4.8 million (interest free for three years) handed to MB on a plate a year or so before. The terms of the offer eventually made were on the government’s concessionary rate of interest, apart from a grant of £750,000, and it was hedged around by close restrictions on the running of the plant:
Among the conditions under which assistance is to be provided, the government will have first charge on the assets of the co-operative and my prior consent will be required for substantial acquisitions and disposals; for making wage, salary or other payments in excess of £50 a week to any employee, director or official of the co-operative; for the declaration or payment of any dividends on the co-operative shares; and for the taking up or making of loans. I will also have the right to appoint a director to the advisory board of the co-operative board. (Anthony Wedgwood Benn quoted in Financial Times, 30 July)
After a long and bitter struggle, the remaining workers at Meriden came out of it with a manager (on £8,000 a year) straight from Jaguar’s boardroom; a drastically reduced workforce; an amazing increase in productivity; a maximum wage well below what they could get elsewhere in Coventry; the DTI as a nanny to monitor every move they made; and the right to subcontract work from NVT, who retained the profitable links with the American market.
Leslie Huckfield came out of it with TGWU sponsorship. Wedgwood Benn came out of it with a bit of publicity. Sir Dennis Poore came out of it with a reduced workforce and a fistful of money from the sale of the factory.
The workers’ co-operative has not yet faced the problems of competition.
THE WORKERS’ co-operative has not yet started production, and a new and dangerous development has arisen. The workers at the NVT factory at Small Heath are worried that the NVT management will use their sub-contract with the Meriden workers in order to cut their jobs and wages. Despite negotiations with Benn, they remain unsure about their own futures.
Benn addressed a meeting of workers at Small Heath on 8 November during which he tried to explain what he was up to. His smooth-talking for once failed him, and he was heckled vigorously. When he left, his car was surrounded by angry workers.
The dangers of the solution of workers’ co-operatives are becoming clear. Benn’s strategy has been simple and deadly effective: first he has haggled and argued for months in order to wear down the resistance of the workers still prepared to fight, and to drive some of them into taking other jobs. When the workforce has been worn down and exhausted, an impossible deal was forced on them, imposing massive productivity increases and threatening wage rates. The workers who have then held on in the hope of a better future then find themselves cruelly used as a stick to batter other groups of workers into keeping their heads down.
At the same time as playing this game with the hopes and militancy of workers, Benn is still prepared to hand over large sums of cash to the employers. Dennis Poore got £4.8 million from the Tories, he has got a good price from the Meriden workers for the factory and plant, but he has also had a guarantee for another £8 million from the government to hold up his profits over the next couple of years.
Vast sums of money are being thrown into the pockets of the NVT shareholders. Two groups of workers are at each other’s throats in a fight to snatch jobs from each other. The only people who are happy are the NVT shareholders and Anthony Wedgwood Benn.
The need for nationalisation under workers’ control has never been clearer. As the Financial Times commented:
A possible way out may be to put the two NVT factories ... under central management. But whose? ... Central management without fully-fledged nationalisation looks a non-starter. (11 November 1974)
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