Economic development, co-op style
Wellspring gives workers in Springfield opportunity to be owners
WELLSPRING COOPERATIVE IS PREPARING to launch its third business in Springfield, a greenhouse that will grow fresh greens and herbs and sell them to supermarkets and institutions in the area.
The greenhouse, built on a brownfield in the eastern part of the city, will use hydroponic gardening (think plants growing in mineral nutrient solutions rather than soil) to grow a wide variety of produce, including lettuce, cucumbers, and tomatoes.
Like the other two Wellspring businesses, Wellspring Harvest will be owned by the employees who run it. The Wellspring approach is a blend of economic development and worker empowerment. The goal is to marry the buying power of local institutions with small businesses providing products and services those institutions need. By giving the employees the reins of the company, Wellspring hopes to spur economic development and wealth creation in low-income areas.
“Wellspring is a model across the nation in not only hiring underemployed and unemployed workers, but giving them full power in managing their business,” says Gerardo Espinoza, who directs the Local Enterprise Assistance Fund, a Brookline-based organization that provided a portion of the funding for Wellspring Harvest.
The formula is fairly simple. Come up with a product or service that local institutions need, raise the money to launch a business, hire employees to do the work, rely on local institutions to provide a steady stream of orders, and over time convert the employees into owners. The approach builds businesses, creates jobs, and keeps more of the estimated $1.5 billion that local institutions spend each year in the community.
The $1.4 million greenhouse project is funded largely by loans and private investments that will have to be repaid out of revenues; less than $100,000 of the total capital and start-up costs is in the form of grants. Sales for the first year are forecast at $350,000, largely to the Big Y supermarket chain, Baystate Health, Mercy Hospital, and public school departments in Springfield and Worcester.
The greenhouse will have five employees initially. All of them will work at the facility, but one of them will also serve as manager, while one will oversee sales, deliveries, and customer relations.
The first two Wellspring cooperatives—the Wellspring Upholstery Coop and the Old Window Workshop—have been successful at pulling in work and developing a cadre of loyal worker-owners.
The two businesses focus on repairing items to help reduce the amount of old furniture and building materials that normally end up in landfills. The firms are located across town from the greenhouse in an old industrial building on the south end of Springfield.
On a visit to the Old Window Workshop, Pam Howland describes how windows past their prime can be remade to be as energy efficient as new ones by replacing the glass, paying careful attention to air sealing, and inserting a removable storm window in each pane. Howland has calculated that the cooperative has prevented 10 tons of building materials from going into landfills just through its work replacing the large, multi-paned windows on a Holyoke factory building.
Bowie says that working in the Old Window Workshop was something she fell into after she lost her job as a counselor in a residential treatment center for teenagers. Joining the cooperative has helped stabilize her finances and draw out talents she didn’t know she had, she says.
Upstairs, in the Wellspring Upholstery Cooperative, Gary Roby tacks new material onto an old couch from one of the waiting rooms at the UMass Medical School in Worcester. His prior work experiences were, like Bowie’s, a little tenuous. Though he had some experience as an upholsterer, he had not found stable employment. After recovering from an injury, he bounced around in a couple of low-wage jobs until the opportunity came up at Wellspring.
“I was both unemployed and underemployed,” he says. “When I learned that by working here I could be doing something to help build my own community at the same time, the decision was a no-brainer.”
Roby recently completed his first year at the upholstery company, and was voted in by the other employees as a worker-owner. “This is 100 percent like being self-employed. I am self-employed,” he says. “I have to think about what we’re doing every day and plan how we’re going to get it done. If you’ve been working for the man your whole life, this is completely different.”
Entry level jobs at Wellspring start out at $12 an hour, not wildly different than the minimum wage offered to entry level employees in most other businesses. But workers at Wellspring Cooperatives receive health insurance, vacation, and sick time, benefits that are sometimes lacking in entry-level jobs.
Jobs with more responsibility pay more, but a general rule of thumb for worker-owned cooperatives is that the highest salary should not be more than two to three times the lowest salary.
After a year of employment, workers at Wellspring businesses can opt to become a worker-owner if the other worker-owners agree it’s a good fit. New worker-owners invest $1,000 in the business, and then share in any profits.
According to Rose, the profit trajectory of Wellspring businesses is similar to most small businesses. “It takes about five years for most start-ups to make a profit,” he says. His projections indicate the greenhouse operation may be on a faster track, showing modest profits over the next few years (aside from the first year, which will be a loss) and $100,000 in profits over the course of a decade. Current plans call for expanding the greenhouse in the third year to double output. The number of employees is expected to grow from five to nine.
Wellspring provides training and assistance in managing all aspects of the cooperative. As cooperatives mature, they will be expected to pay for that assistance, and help worker-owners of newer cooperatives learn the ropes.
The network of cooperatives is a hallmark of Wellspring and an essential ingredient to the ultimate success of each cooperative. “There is an ecosystem that all needs to be in place for cooperatives to thrive,” says Espinoza, the Local Enterprise Assistance Fund director. “You need to have cooperative developers, people like Fred [Rose] who know how to support them, financing, and a network of cooperatives, so they learn from each other.”
The model for Wellspring Cooperatives was inspired by a much larger network of cooperatives operating in Cleveland, called Evergreen. While there are many similarities between the two models, Wellspring allows worker owners to run their own cooperative board without influence by the anchor institutions, the Wellspring Cooperatives board, or other interests.True to the bottom-up ideals of the Wellspring model, there are few guidelines for how the cooperatives are to be managed. To keep each of the collaboratives in alignment with the Wellspring mission, however, they must commit to staying in Springfield and continuing as a cooperative.
“We try to create companies that are owned and controlled in the city,” says Rose. “Attracting large employers, like MGM, [the company building a casino in Springfield] is appealing as an economic development strategy. But the risk is that they are owned and controlled by outside companies and can be very fickle. This city has seen a lot of loss of jobs and manufacturing over the years when local companies find it’s more profitable to be somewhere else. Our coops will not do that. It’s a different design.”