Financing Workers’ Co-operatives

Nearly three years ago, Co-operative & Community Finance made a loan to a veg box co-op in Manchester that was just starting to take root. It had about 40 customers and just one collection point. Now Veg Box People supplies over 300 vegetable boxes and 100 fruit boxes a week through 19 collection points. Working with a network of organic growers all within 50 miles of Manchester, it brings fresh organic produce into the heart of the city within a few hours of harvesting. This delivers maximum taste with minimum waste.

Chris Walsh, one of the founders of Veg Box People, said: “The loan was critical to our growth and banks would not lend to us. If we had not have got the loan we would be struggling. We needed to spend a chunk of money to enable our customers to order online. And it worked. Now we have over 300 customers and the future is rosy. We would like to be a lot bigger and bringing a lot more organic fruit and veg into the city and making it available to people who traditionally would not access it. There are loads of farmers who are struggling on the periphery of Greater Manchester and if we could support them by buying their produce that would be great.”

Veg Box People is part of a growing network of organisations in Greater Manchester that are passionate about creating a fair and sustainable local food system. It was set up in 2015 by the Kindling Trust in partnership with Manchester Veg People and the University of Manchester.

The Kindling Trust, established in 2009, is working to create a just and sustainable society. It supports progressive practical projects based around food – production, consumption and activism.

Manchester Veg People is a co-operative of local organic growers, commercial buyers and workers. It is a wholesaling operation that brings together producers and buyers to build a fair supply chain that makes small scale organic production viable.

Veg Box People and Co-operative & Community Finance were featured in the BBC TV series A Matter of Life and Debt (first shown 22 November 2018). The programme looked at how a loan from an ethical lender can make a life changing difference to individuals and small enterprises.

Scotland’s only employee-owned foundry is preparing for a growth in sales after a difficult first year. A loan from Co-operative & Community Finance is easing the pressure on cash flow as the business returns to profitability.

Specialised Castings in Denny, near Falkirk, is one of just two iron foundries left in central Scotland, which was once the heart of this industry. The ironworks dates back nearly 200 years. The current company was established in 2001 following a management buyout from a larger group. Then in 2015 the retiring managing director, Steve Waring, sold the business to the workforce.
“I couldn’t be responsible for allowing the last foundry in the district to go,” he said at the time of the sale. “By selling to the employees, Specialised Castings will stay in Denny for the foreseeable future, keeping the foundry tradition alive and providing real employment for generations to come.”

The foundry produces a high quality bespoke casts in a wide range of metals for both engineering and architectural use. It has, for example, supplied the cast iron railings for Buckingham Palace. It also supplies the pipes that suck up sea water for firefighting pumps on oil rigs.

Unfortunately the transfer to employee ownership coincided with a drop in orders mainly as a result of the downturn in the oil and gas industry and the knock-on effect on manufacturing. The new employee-owners took the difficult decision to issue some redundancies. This was painful and expensive. There are now 25 employees, 19 of whom work on the shop floor. The business returned to profit earlier this year.

“Now we are snowed under with orders,” said Operations Director Ian Walker. “And finding skilled staff is becoming a problem.”

Asked what difference employee ownership had made Ian replied: “The lads have embraced it and are getting more involved. They are coming forward with suggestions for how we can improve operations on the shop floor; for example, saying that if we do it this way we’ll make an extra £5 profit on every component. Lots of small changes add up to a big difference.”

Non-executive Finance Director Catherine Maciocia said: “The loan is very welcome indeed. We have been living hand to mouth and as we return to profitability we have been relying on the goodwill of our suppliers. The loan means we can concentrate on the day job rather than juggling the cash.”

Ian Rothwell, Investment Manager at Co-operative & Community Finance, said: “It’s great that we have been able to support yet another employee-owned business in Scotland. In fact we have heard that the former owner was inspired to sell to his staff by the example of Clansman Dynamics, who we also helped a few years ago.”

The UK’s leading supplier of personalised school uniform, which is employee-owned, is investing in new IT and preparing for growth with the help of loans from Co-operative & Community Finance and the Co-operative Loan Fund.

Sheffield-based School Trends supplies 6,000 schools and well over 1 million school children throughout the UK with personalised school uniforms. The business started in 1988 and grew rapidly, with the founders strongly believing in a participative work culture and in 2004 the company became employee owned.

There are 125 employees mainly based at the company’s office in Westfield near Sheffield. The business is 100% employee-owned. The majority of the shares are held by the employee-benefit trust and all permanent staff also own shares directly. Employees elect representatives to the governing council of the business.

Daran Brown, Managing Director of School Trends, said: “I absolutely believe that employee-ownership brings out the best in our staff. It means that everyone here has a personal investment in doing the best for our customers.”

School Trends also has strong environmental and ethical trading policies and supports local charities, it is an excellent example of a responsible business that combines profits and principles.
Co-operative & Community Finance and the Co-operative Loan Fund supported School Trends in 2013 when it bought the freehold of the premises it was leasing, and so these lenders were the first choice when School Trends needed further finance. The new lending is being used to invest in a greatly improved IT system.

Daran Brown explained: “At the moment we have three separate IT systems which is not ideal. With the loan we are investing in the best one and losing the other two. Ten percent of our customers are already on the new system and in the first quarter of 2017 we expect all of them to be.”

School Trends have also taken the opportunity to consolidate other loans into a more economic package, which will give the company more working capital to manage growth.

Tim Coomer, Business Development Manager at Co-operative & Community Finance, said: “We are pleased to lend to School Trends again. It is a successful employee-owned business with strong principles. It is just the kind of venture that Co-operative & Community Finance and the Co-operative Loan Fund were set up to support.”

A loan from Co-operative & Community Finance is helping an innovative international creative agency to expand and strengthen its co-operative structure.

Small Axe, with offices in London and Colombo (in Sri Lanka), provides creative communications for courageous causes. The name comes from a Jamaican proverb made famous by Bob Marley: “if you are the big tree, we are the small axe”.

Its services include strategy, branding, messaging, campaign films, email marketing, creative content, website design and app development. Its clients are campaigning organisations, social enterprises and not-for-profit organisations. Recent clients include the Green Party, Bite the Ballot and Robin Hood Tax.

Small Axe was set up in December 2011 by Jana Mills, a refugee from Sri Lanka, and Dan Stanley, a community organiser and social psychologist. They shared an ambition to help good causes succeed by improving the way they communicate with their audiences. Jana’s cousin, Nishan Mills, a software architect in Colombo, joined soon after. And so the international communications co-operative was born.

Today there is a team of 12 creatives, organisers and technologists based in London and 13 website and app developers, project managers and technologists based in Colombo.

Founder Dan Stanley said: “Small Axe has grown rapidly over the last two years and we realise that we need to strengthen the co-operative. We have always worked in a co-operative way but many of our employees have not yet formally become members.”

Part of the loan from Co-operative & Community Finance is being used to implement an action plan of co-operative training and development. The remainder will be used for office space, equipment and administrative staff.

Dan Stanley expects Small Axe to continue to grow over the next two years, he said: “We want to grow the work that interests us most. We started out in websites and apps and that will continue, but in recent years the creative work has become much bigger. The new area we are planning to develop is our political and organising work.”

Small Axe recently recruited a new Political Director, Dan Firth, formerly a lead organiser at Citizens UK. He will be leading this new strand of work, as the business unites the best of creative technology and organising techniques in support of its projects.

Ian Rothwell, Investment Manager at Co-operative & Community Finance said: “We are very pleased to help this dynamic, international communications business to grow and become more co-operative.”

weare.thesmallaxe.com

Award-winning, employee-owned care provider Care and Share Associates (CASA) has completed the first phase of its ambitious plan to more than double its turnover in the next five years. Co-operative & Community Finance, The Co-operative Loan Fund and Big Issue Invest are providing finance following an innovative restructuring of the business.

CASA provides domiciliary care in some of the largest metropolitan areas in the north of England, including Newcastle, Manchester, Leeds, Warrington, Knowsley and North Tyneside. It works closely with local authorities and commissioners to deliver home-based health and social care services to older people, disabled people and those with learning difficulties.

With over 700 employees and it delivers over 16,000 home visits per week to some 1,000 clients. Its bold business plan for the next five years is to grow from £10.5m to £25m turnover, generating profits of £1.5m a year.

CASA started in 2004 with the aim of replicating the success of Sunderland Home Care Associates, the longest running and possibly best known employee-owned care provider. Until 2014 each CASA base – in Manchester, Knowsley, North Tyneside etc – was an independent company operating as part of a franchise.

During 2014 the whole operation was restructured to create a single employee-owned business which started officially on 1 January 2015.

Managing Director Guy Turnbull said: “By combining the franchises into one company we have a much stronger balance sheet, which means that we can bid for larger contracts. The new corporate structure is also more tax efficient and the governance is more transparent, which is essential for an employee-owned business.”

Under the new corporate structure at least 51% of the shares will always be owned by the Employee Ownership Trust but individual workers can also be rewarded with share incentives.

Guy Turnbull said: “We are convinced that employee-ownership makes for better business. Research by the King’s Fund shows that more engaged employees provide a higher standard of care. Also we’ve found in CASA we have lower than average staff turnover which provides better continuity for our clients.”

CASA and Guy himself were recently recognised in the Great British Care Awards: Marie Hedley and Karl Lamb won regional awards in the category of Home Care Worker and Guy won the Outstanding Contribution to Social Care Award for the North East region. They will go through to the national finals in spring 2016.

Ian Rothwell of Co-operative & Community Finance said: “CASA is an innovative and professional business operating in a difficult and changing market. They have borrowed from us on several occasions to help their business adapt and grow.”

A leading video production co-operative has upgraded essential equipment and expanded its services, after receiving a loan from us.

VET (Video Engineering & Training) is one of the film industry’s leading training providers, offering professional support and development to a large, diverse client base. The co-operative also runs a Post Production facility offering a wide range of services, including video editing, grading, delivery to broadcasters, and archive of videotape and 16mm film to file, as well as full-service production.

The loan from Co-operative & Community Finance will go towards purchasing new software and video post- production equipment, ensuring that VET remains operating on the cutting edge of technology.

The newest service on offer is a comprehensive archive service, which includes transferring old tapes and 16mm film into digital formats which can be catalogued for easy access. This vital undertaking is often the only way to save valuable archive material from deteriorating completely.

Joan Leese, long-standing member-director of VET, said: “The world of video production is very fast moving, with constant developments in technology and equipment. The loan from Co-op Finance will allow us to keep up with these rapid changes, as well as expanding the services we offer.”

The co-op was set up in 1985, with a clear mission to make video technology available to everyone. Founding members had skills and experience in production and broadcasting, and wanted to share those skills with their peers in a democratic way. The co-op was originally located in Southwark, London, but moved to Islington in 1992 and finally to Hackney – where it is currently based – in 1998.

Joan said: “Our unique co-operative ethos has served us well over the years, allowing us to shift comfortably between working with high-end broadcasters and independent film makers. We cherish our wide range of clients who like ‘the human touch’”

Our Investment Manager Ian Taylor said: “VET has been a borrower of ours for over 20 years. They’re a reliable and professional group of people, who make a great co-op! They’re well respected within a very competitive field. This loan will help them stay up to date with technology, and expand their offering into some exciting new projects.”

For more information about VET visit vet.co.uk

One of the leading providers of home care in Scotland is set for further growth thanks to a refinancing package involving three ethical lenders. Loans from Co-operative & Community Finance, The Co-operative Loan Fund and Big Issue Invest have given Highland Home Carers, an employee-owned business with nearly 250 staff, the capacity and incentive to win more contracts across the Scottish Highlands.

Highland Home Carers provides care and support for elderly, disabled and vulnerable people to allow them to remain in their own homes and retain their independence. Its commitment to excellence has been recognised by several awards in recent years. In 2011 it picked up two awards at the Scottish Care National Awards and it also won the Global Energy Award for Excellence in People Development leading the Scottish Social Services Council to comment: “Highland Home Carers are at the cutting edge of the changing face of social care – taking it away from institutions and placing it firmly in the communities where clients want to remain.”

Highland Home Carers started in 1994 and in 2004 became an employee-owned business, with advice and financial assistance from the Baxi Partnership Trust. In the last two years staffing has increased by over 50% and turnover has topped £3m.

Managing Director Stephen Pennington said: “The new loans have allowed us to repay Baxi. We are a much bigger business than we were eight years ago, and also interest rates have gone down. It made sense for us to restructure our finances and we’ll be much stronger for future growth.”

Highland Home Carers remains fully committed to the principle of employee ownership and Stephen Pennington would like to see more employee-owned care businesses in Scotland. He said: “We believe that if staff have an investment in what they are doing, they are more likely to want to do it to the best of their ability. Our view is that employee ownership can improve staff recruitment and retention rates in a field in which these figures can be poor.”

Our loan adviser Ian Taylor said: “The sympathetic lending from our funds, the Co-operative Loan Fund and Big Issue Invest has enabled this employee-owned business to restructure its finances when other lenders had been unwilling to help. The new finance package better suits Highland Home Carers’ plans for growth and development, allowing them to tender for new contracts with confidence.”

He added: “I was impressed by the obvious commitment they have to providing the highest quality services. Highland Home Carers has become the first choice provider for local authorities in the Highlands. They are brand leaders outperforming the large private companies.”

For more information visit: highland-home-carers.co.uk