Monday, January 16, 2012
ROBERT OWEN, CO-OPERATIVES AND THE WELSH ECONOMY
The picture of Wales globally is one that is normally a mixture of coal, male voice choirs, daffodils and rugby.
Yet, it is easy to forget that one of the greatest gifts that this small nation gave to the World originated with an ironmonger’s son from Mid-Wales.
Born in 1771 in Newtown, Robert Owen was the creator and inspiration behind the co-operative movement where the business is owned and operated by a group of individuals for their mutual benefit.
Although most of his work in this area took place in New Lanarkshire in Scotland rather than the country of his birth, his legacy lives on not only in Wales but also in many other countries across the World.
For example, one out of every four people in Germany belongs to co-operatives whilst 30,000 co-operatives provide more than 2 million jobs in the USA. In New Zealand, 22% of the country’s wealth is generated by co-operative enterprises, especially in the food industry where they have 95% of the export dairy market and 70% of the meat market. The South Korean fisheries co-operative has a market share of 71% whilst a Canadian co-operative is responsible for 35% of all world production of maple syrup. In India, over 239 million people are members of the co-operative movement.
Therefore, the whole business of co-operatives is not a marginal activity but one that has a significant economic and social effect in both the developed and developing World. Indeed, with the United Nations estimating that the livelihood of half of the World’s population is dependent, in some way, on co-operative enterprises, this august institution has deemed 2012 as the International Year of Co-operatives.
So what about the co-operative movement in Wales?
According to a new publication by the Bevan Foundation, co-operatives – which include credit unions, housing co-operatives and worker co-operatives - are contributing more than £1 billion to the Welsh economy. They currently employ more than 7,000 people in a variety of sectors, with nearly three quarters were to be found in retail.
Whilst many may think of co-operatives as being organisations that do not make any money, it is estimated that Welsh co-operatives generated a total pre-tax profit of £19m, which is then distributed to members or reinvested in the business. Indeed, the co-operative movement across the UK recorded pre-tax profits of £715 million in 2010, an increase of 25 per cent since 2006.
Therefore, co-operatives are real businesses and nowhere is this exemplified more than by the John Lewis Partnership, which owns the John Lewis Department stores as well as the upmarket Waitrose. Currently, it is the third largest privately owned businesses in the UK with annual profits last year of £432 million.
In Wales, one of the real success stories within the emerging cleantech field has been the renewables firm Dulas, which employs 100 people and currently has an annual turnover of over £22 million. This Machynlleth-based workers’ co-operative, the second largest in the UK, has appeared on the Wales Fast Growth 50 listing for the last three years and is developing a global reputation in a fast growing and expanding market.
Given this, is the co-operative movement the way forward for the future of businesses in an age where politicians are increasingly wary of predatory profit-seeking capitalists?
Certainly, the Bevan Foundation report makes a strong case for the co-operative movement, suggesting that their focus on creating sustainable jobs, generating community benefits and protecting the environment is the business model that all organisations should follow. They also make a persuasive case for the Welsh economy, indicating that co-operatives are innovative, profitable and, more importantly, are anchored in Wales.
Yet, I still believe that the model, whilst it works for some organisations, is not necessarily the one that should be pursued by all businesses. In fact, it could be argued that, despite exceptions to the norm such as John Lewis and Dulas, many co-operatives lack the entrepreneurial drive necessary to become growing and prosperous businesses in key sectors of the economy.
Certainly, I cannot imagine Apple, Virgin, Microsoft and many other successful businesses would have become the success that they are the vision and drive of key individuals such as Steve Jobs, Richard Branson and Bill Gates. Perhaps the real triumph of the co-operative movement is its innate philosophies, many of which have been adopted by successful firms.
During the last few years, we have seen businesses increasingly sharing their profits with their employees, investing heavily in local communities and making a real effort to reduce their environmental impact.
And that, perhaps, is where the real triumph of Robert Owen can be found – not in that every organisation is a co-operative but, 240 years after his birth, having more and more businesses across the World adopting his philosophies for sustainable growth. I believe that if he were alive today, this fact, more than anything else, would make this visionary businessman and reformer very proud of what he created.