How Employees Took Over the Mill
A British Columbia wood products manufacturer went bankrupt and closed its doors in 1984. Today its 270 employees are living proof that workers can own a business and make it thrive.
In 1984 Sooke Forest Products Ltd., overburdened with a debt load of $55.8 million, closed its sawmill in New Westminster, B.C. and its manufacturing mill on Vancouver Island, throwing close to 300 employees out of work. In the spring of 1985, a few employees from both the union and management of the closed mills decided to explore the possibility of buying the company and starting it up again. By dint of hard work, determination, and the help of the IWA & Community Credit Union, they put together a financing scheme totaling $13.5 million. Each employee signed a personal guarantee of $12,500 as collateral, which later on translated into 12,500 shares at $1.00 each to be paid for through wage deductions.
In its first year of operation, the new employee-owned Lamford Forest Products Ltd. declared a healthy profit,-so that part of the long-term debt could be repaid and the value of the employee-shareho1der's stock nearly doubled.
Lamford Forest Products remains a union shop (IWA). Its board of directors now includes two management people, the two union local presidents, three outsiders selected for their industry experience, and two members of the mill workers. Management and workers meet weekly to review operations, while financial reports are discussed at monthly share-holder meetings. Decisions are made through group study and consensus.
Now that the employees are part owners and represented on the board of directors, their attitude to their work has changed. "A majority of people work harder than they did," according to fork-lift driver George McKimmie. "It's like your own. It's like your house, or your yard." Said another employee: "If it was strictly a union shop, people wouldn't put the emphasis on their work because they are going to get that wage anyhow. Here, you cut out of your own pocket if you don't produce." The mill's customers have noticed the enthusiasm and improved attitude wrought by worker ownership, and the Lamford sawmill has become a very desirable place to work in the community. There are few openings, however, because so far employees leave only for retirement.
One of management's concerns is how an economic downturn and the resulting retrenchment in business would affect morale at the mill. Said Bob Anderson, the New Westminster plant manager: "If we go through a protracted loss period, and we have to report that to the shareholders, I'm not sure what that will do to the attitude here." At any rate, Lamford Forest Products is off to a good start and has laid the foundation for an excellent relationship in the plant. (John Frustman, "When Workers Turn Bosses," Report on Business Magazine, March 1988, pp.41-48; Leslie W.C.S. Bames, "Cooperation the Key at Lamford Forest Products," The Worklife Report, Vol.5, No.6, 1988, pp. 1-2.)