WORKING TOGETHER FOR THE BENEFIT OF WALES

When the great American politician Benjamin Franklin famously said that “We must, indeed, all hang together, or assuredly we shall all hang separately”, I am sure that the future of small businesses never even entered his mind.

Yet, in an economic future where savings and efficiencies seem to be driving the strategies of many firms, it would seem that one option that should be seriously considered by smaller businesses is to work together to create new opportunities and bring down costs.

One way of doing this, as highlighted this week by the Wales Co-operative Centre, is through the establishment of a co-operative consortium. This is a co-operative that is owned and controlled by a group of people or organisations that then enables those involved to come together to share costs, services or a common facility to help members improve their business performance. As a result, businesses can share experiences and risk, increase buying power, share the costs of ‘backroom’ services such as bookkeeping, work together on joint marketing campaigns, and ultimately reduce costs.

Within Wales, most of the focus on co-operative consortia has focused on specific business sectors and this has enabled business working in the same industry to work together to achieve objectives that cannot be achieved by working in isolation. One sector that has been at the forefront of such consortia for decades is the food and drink sector, especially through agriculturally based co-operatives that have brought farm producers together, especially in industries such as dairy and meat. However, the Welsh Co-operative Centre has helped companies in smaller niche areas to come together for mutual benefit.

For example, the Welsh Perry and Cider Society is a consortium of businesses that have come together to promote the manufacture and consumption of one the fastest growing drinks segments in the UK. With over thirty cider producers in Wales, the consortia has employed a development officer to provide technical support on the management of orchards and harvesting, quality control, encouraging collaborative and co-operative working practices. She is also adding value to the orchard owners and growers through marketing and branding initiatives that benefit all the members. Tourism is also a sector where groups such as hoteliers’ associations have long been in existence within traditional holiday areas throughout Wales. But with the move towards more specialised tourism offerings with consumers demanding something different, a co-operative set up in mid-Wales has shown how a small town can put itself on the world map by getting the community to work together.

In the small town of Llanwrtyd Wells, a group of businesses calling themselves Green Events have developed a new approach to tourism with the aim of differentiate the area from other destinations. This has been largely achieved by creating a number of distinct events that have put the town on the map, including the world famous Man vs Horse Marathon and the World Bog Snorkelling Championships, as well as stone skimming championships and mountain biking competitions. As a result, the consortium, has succeeded in creating a strong global brand for this small spa town and local businesses and volunteers who are part of the group now run all the events. Certainly it is a model that many other towns in Wales should consider replicating to boost their own local economies. However, it is not only traditional sectors that are benefiting from this business model.

In the creative industries sector, one of the best examples of this is Craft in the Bay, established by the Makers Guild in Wales. This is a highly successful retail gallery situated in Cardiff Bay that has been running as a co-operative venture since 1997. It brings together seventy members, many individual craftspeople, who get the opportunity to display their work within the gallery. They also spend an agreed number of hours working there each year to reduce running costs and so benefiting all those within the consortium. Therefore, there are plenty of opportunities for many small businesses and the self-employed to come together to benefit from working together. 

For example, recruitment agencies that specialise in certain sectors or occupations could co-operate in providing workers for larger firms with differing needs. Or a consortia of electricians and plumbers could work together to provide a one-stop shop approach to services to the home or for other businesses.

Certainly, the possibilities for getting businesses to work in Wales are endless if only entrepreneurs would stop looking as every other business in their sector as a competitor but as a potential partner in a consortium where the sum of the parts is potentially greater than the whole.

ROBERT OWEN, CO-OPERATIVES AND THE WELSH ECONOMY

Western Mail column 14th January 2012

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.