Last year the Independent Retailers Shared Services Cooperative initiated a worker cooperative buyout alternative as a succession plan for a rural grocery complex in Stonington, Maine. The Cooperative’s leadership and management are saving jobs, empowering employees as entrepreneurs and providing an important model for the future.
For Immediate Release
Island Community in Maine Creates Worker-Owned Cooperative to Retain Local Businesses and Jobs
Deer Isle and Stonington, ME, June 17, 2014–Employees of three rural Maine businesses –Burnt Cove Market, V&S Variety and Pharmacy, and The Galley–come together to create worker-owned cooperative.
The Island Employee Cooperative, Inc. (IEC), is the largest worker cooperative in Maine and one of the larger worker co-ops in the United States. Employees at Burnt Cove Market, V&S Variety and Pharmacy, and The Galley were able to purchase the businesses from retiring owners Vern and Sandra Seile. Combined, the three businesses are one of the island’s largest employers and provide the community with a full array of groceries, hardware, prescription drugs, pharmacy items, craft supplies, and other goods and services.
The employees were concerned when word first circulated that the Seile’s were thinking about selling the stores and retiring, as employment options on the island are limited. Employees feared that potential buyers who were not part of the community would have struggled to maintain the same level of jobs and services.
As a result, last summer, the Seile’s and the employees began meeting with the Independent Retailers Shared Services Cooperative (IRSSC), a purchasing cooperative of independent grocers in New England, and the Cooperative Development Institute (CDI), a nonprofit group that provides technical assistance to all types of cooperative businesses. These conversations explored the idea of transferring ownership of the companies over to the workers. Vern and Sandra Seile wanted to reward their employees for their hard work, preserving the heritage they built serving the residents of Stonington and Deer Isle Maine.
All agreed this was a win-win option. The employees began to work with IRSSC, CDI, Specialized Accounting Services and other advisors for nearly a year to create the worker cooperative, secure financing, purchase the stores, and ensure their livelihood while keeping ownership and profits local.
Now that they own their jobs, IEC president Alan White said, “This is a once in a lifetime opportunity. Many of us have worked in these stores for decades and never imagined this possibility. We know we have a lot to learn and a lot of work to do to be successful, but success means we will really achieve the American dream – economic security and building wealth through ownership, both for our families and our community.”
In a worker co-op, each worker-owner has one (and only one) share in the corporation and one vote in its governance. Co-ops typically get their start when workers band together to launch a new business. Conversions from conventional corporations are much less common, especially ones of the size and scope of the IEC.
Many independents are integral to the towns and villages where they operate and store owners are respected business leaders in their communities,” said Mark Sprackland, IRSSC Executive Director.
The IRSSC serves smaller, independent grocers and retailers around New England, and we hope that this is only the first of many locally-owned and operated co-ops that we can help form in communities focused on sustainable growth.
Technical support from Cooperative Development Institute and financial support from Coastal Enterprises, Inc, the Cooperative Fund of New England, and Associated Grocers of New England to assist the new worker-owners to finance the purchase, establish a management structure, and manage the transition to co-op ownership.
“People across the country have been trying to figure out the best way to assist business owners who want to consider conversion to employee ownership, either as a growth strategy or as a retirement strategy,” said Rob Brown, Director of CDI’s Business Ownership Solutions program. “In many ways this deal provides the model, and we look forward to working with the IEC into the future to ensure their success.
Maine-based CEI and the Cooperative Fund of New England, two Community Development Finance Institutions (CDFIs), organized the financing to buy the businesses. Without these funds, the workers’ dreams of buying the stores and keeping them local would have remained just that.
“This financial transaction represents the best kind of collaboration to build wealth in Maine’s rural communities,” said CEI Loan and Investment Officer, Cole Palmer. “CEI was tremendously excited to help the IEC realize its goal to purchase these three businesses.”
CFNE has worked with cooperatives since 1975 and was able to contribute expertise to the lending process. “We’re proud to commit to this very important worker-cooperative conversion, which preserves local ownership of these businesses and retains 62 essential jobs in the communities,” said Gloria LaBrecque, Northeast Loan and Outreach Officer with CFNE. “We congratulate the worker-owners of the IEC on this milestone achievement.”
Now that the employees own the businesses, they are excited to have a say in how they are run and a share in the profits they generate.
Independent Retailers Shared Services Cooperative
The IRSS Cooperative helps independent retailers grow into higher performing enterprises.
Contact: Mark Sprackland, Executive Director
Cooperative Development Institute
We make democratic ownership work for everyone.
Contact: Rob Brown, Program Director, Business Ownership Solutions
www.cdi.coop, firstname.lastname@example.org, 207-233-2987, Northport ME
Promoting sustainable economic growth in rural communities since 1977.
Contact: Liz Rogers, SVP, Marketing & Communications
email@example.com 207-632-7693, Portland, ME
Cooperative Fund of New England
A socially responsible lending organization and investment option, supporting cooperatives since 1975.
Contact: Gloria J. LaBrecque, Northeast Loan and Outreach Officer
firstname.lastname@example.org 207-272-2296, Portland, ME