B.C. Workers Become Mill Owners
Hard times have hit the B.C. plywood industry. In the last decade numerous plants have shut down in a sea of red ink. It was therefore not surprising that the large forestry company Weldwood decided in the summer of 1988 to close its money-losing plywood plant in South Vancouver. About 300 workers, some of whom were long-time employees, would be without a job.
But the employees and the local plant manager, Lance Ripley, decided to try to rescue the mill with an employee buyout. Weldwood management agreed to cooperate, but there were many hurdles to overcome. The first requirement was to buy time so that a complicated financial package could be assembled. Weldwood agreed to keep the plant operating for another six months despite the fact that it was losing money. Local management and hourly paid employees took the drastic step of agreeing to a 25 per cent wage cut (some or all of which they would recoup if the mill became profitable again). These were hard times for the workers. About 100 employees left the company, but the rest persevered. One mill employee said the handwriting was on the wall. She explained; "Everybody at the mill knew the B.C. plywood industry was in a very insecure position. If we refused to take a rollback, the mill would go under and everybody would be out of a job."
An option-to-buy agreement was signed and the employees assumed responsibilities for the mill. They worked hard at cutting costs and improving efficiency, bringing the operation back into the black. But the biggest hurdle was arranging the financing for the buyout.
Weldwood set the price of the mill at $7.2 million. Substantial additional finances would be required to upgrade the mill equipment. The employees had to raise some $3.5 million themselves. About 220 of them agreed to become shareholders. It was decided that once the buyout plan was completed only employees who agreed to buy shares in the new company would have a job. (After October 1989, the minimum price of shares was set at $ 22,000.)
The B.C. government, through its Employee Share Ownership Plan, provided a generous 20 per cent tax credit. In addition, the B.C. Regional Development Ministry promised to lend $4 million, and the government also provided a $2.5 million loan guarantee to back up an operating line of credit from the bank. Negotiations with the various parties were time-consuming and there were many delays. Finally, the deal was completed and the proud new owners are now facing the challenge of combining ownership with their employee status.
"Putting More Into Our Jobs"
The new employee-owners are very well aware of how much is riding on the success of this plant. Yet they are confident and optimistic that they can make it succeed. They are also realistic about the tough economic times facing their industry. As union business agent Gary Wong said, "Everyone who made a decision to participate knew what they were getting into. And they understand that plant shutdowns and future layoffs are always a possibility."
According to spokespersons for the unionized (International Woodworkers of America) employees, they are prepared to approach their work differently. One 26-year employee explained, "When we sign the final deal and the mill is ours, I think a lot of attitudes around here will change. Some will be happy, some will be proud, and some of us will be scared to death." A young foreman-trainee said, "We're our own bosses now, and we have to watch out for each other. That may mean putting more into our jobs than we've been used to, but that's what it will take to make this place work."
Lance Ripley, the plant manager who has worked long days to arrange the buyout, said, "It's been tough. But once everybody knows for certain that the deal is done, we're going to have a good company, because we have good people."
It is obvious that the task before the new mill owners will not be easy. They know that not every buyout is a success. Another sawmill on Vancouver Island (Lamford Cedar) was bought out by the employees after the previous owner went bankrupt in 1985. As of January of this year, the company folded despite the best efforts of the new owner-employees.
Much is at stake for the owners of the new company (renamed West Coast Plywood), which has an annual payroll of $8 million and an assumed debt load of $10 million. One thing will make a significant difference, namely, the positive attitude of the workers who realize that cooperation and their best efforts will be required to ensure that their jobs will exist in the future. Now if all unionized workplaces could benefit from a similar attitude, that would be true progress!
(See Gordon Keast, "Employees....to the Rescue," B.C. Business, June 1990, pp. 16-23.)