Workers’ Cooperatives: The British experience in the 1970s.

The 1970s in Britain were a decade of contestation and polarisation. Following a leftward shift amongst the labour movement, groups such as the Institute for Workers’ Control (IWC) supported the concept of industrial democracy to suggest a new direction for a worker-oriented economy. In this guest post, Daniel Burridge reports on the formation of the so-called “Wedgwood Benn cooperatives” (Oakeshott 1978: 108), the purest expression of the industrial democratic ideal from the perspective of the IWC. These were located at the Triumph factory in Meriden, the Scottish Daily Express printing factory in Glasgow and the Fisher Bendix factory in Kirkby, near Liverpool. The new tactic involved buying out the factory sites and equipment of jaded private ownership and running production on the democratically-decided terms of the workers.

Meriden Motorcycles Cooperative

The Triumph Motorcycles’ factory in Meriden was the setting of perhaps the most successful instance of worker cooperation. The two remaining companies of the struggling motorcycle industry, BSA-Triumph and Norton Villers, merged in 1972. When the Triumph factory in Meriden was to be closed with the loss of 1750 jobs, the workers proceeded to occupy their factory, whilst management was barred from the site. The work-in developed into a sit-in, and twenty-four-hour worker supervision of the factory continued for more than a year.

Union officials, in conjunction with a local Labour MP, proposed a workers’ cooperative.  With Labour coming into government in February 1974, a key proponent of industrial democracy, Tony Benn, was now Secretary of State for Industry, and the formation of the cooperative seemed feasible. After a long period of struggle against his own cabinet ministers and civil service staff, finally, in March of 1975, Meriden Motorcycles Ltd opened as a cooperative with the help of a government grant of £750,000 and a loan of £4.2million.

Photo by Ronald Saunders

The cooperative emphasised the importance of a democratic structure. The shareholders voted as directed by a majority of the workforce in a monthly meeting. The first directors consisted of eight senior shop stewards, who were overseen by two outside advisors and subject to a yearly re-election. Meriden soon began to reclaim some of its market share, particularly in the US. The workforce had increased by February 1976, and the firm’s ailing performance under the previous private management had been partly reversed. Under the ownership of NVT, each worker produced twenty-one motorcycles a year.  As a cooperative, in 1978 this figure had risen to twenty-six motorcycles a year (Oakeshott 1978).

Meriden achieved some mid-term success, impressively outlasting the Norton Villiers Triumph sister plants at Small Heath and Wolverhampton, which closed in 1976. It achieved a remarkably harmonious workplace arrangement, attracting large numbers of new job applications despite its relatively low wage levels. Its success was testament to a commendable degree of organisational skill between trade union convenors, shop stewards and Tony Benn at the Department of Industry.  The cooperative diversified its product range within a short space of time and under testing conditions. Meriden soon entered difficulties, however, as it faced up to the reality of the international market, which rendered British machines clearly subordinate to their more efficient, better-funded competitors. Meriden continued trading until 1983, when it failed due to lack of government support and a debilitating recession.

Scottish Daily News

Like Meriden, The Scottish Daily News (SDN) was born out of an attempt to save jobs in a company that had failed under capitalist ownership. In March 1974, owner Lord Beaverbrook declared that the printing of the Scottish Daily Express and Sunday Express papers in Glasgow would cease, resulting in the loss of 1850 jobs. Soon after the announcement, an Action Committee was formed by a group of dedicated trade unionists. The idea of a workers’ cooperative was touted to form a new Scottish newspaper, which quickly attracted support from the public. A new investor, Robert Maxwell, was found, who offered to invest half of the £250,000 that workers had already agreed to put in. Again, disregarding his advisors, Benn announced on 24^th July 1974 that the Action Committee would receive a substantial loan from the government. Following a six-week period of additional fundraising, the Committee was agonisingly close to meeting its targets, remaining just £14,000 short of the £475,000 required. Maxwell agreed to provide this money, in exchange for executive power over the company’s affairs.

On 5 May 1975, the first edition of the Scottish Daily News was circulated. Its fortunes, however, looked bleak from the outset, with circulation falling from 300,000 to 200,000 in the space of a week. Internally, acrimonious relationships developed between Robert Maxwell and the rest of the more ideologically-driven membership. Maxwell had considerable leverage because of his individual investment, convincing the workforce that his business expertise would guarantee their jobs. He bitterly criticised Mackie as leader of the Action Committee, whilst circulation and advertising revenue continued to decline. Maxwell’s involvement proved incompatible with the democratic structures required to run the cooperative successfully (Bradley and Gelb 1980). The Action Committee was forced to abandon their democratic principles and the Scottish Daily News failed just months after its establishment. 

Kirkby Manufacturing and Engineering Ltd

The third of the Benn cooperatives was Fisher-Bendix, established in Kirkby near Liverpool.  It had produced a range of products, including washing machines, electric heaters, sheet metal products and, curiously, fruit juice. In June 1974, workers were abruptly told that by the end of the month the factory faced closure. Within a day of the Receiver arriving on site, the workers had escorted him to the factory gate, taking control themselves. Re-entry was only permitted when he agreed to employ all twelve hundred workers whilst a buyer was sought. An application for a workers’ cooperative was submitted in September 1974, which would be funded by a £3.9 million government grant.

On 1 November 1974, the government awarded the grant as requested. The Kirkby Manufacturing and Engineering (KME) cooperative started trading in January 1975. Almost immediately, the problems of the undercapitalised business rose to the surface. Demand for soft drinks had fallen away as buyers had turned elsewhere, leaving the cooperative with large stock that had to be sold cheaply. Average losses amounted to £30,000 a week.  Inflation which was upwards of 20 per cent at the time meant that the workers, who had not received a wage rise since 1973, were in a worsening financial position.

Tony Benn, Against the Tide, 1973-6 (documentary), see especially minutes 8 to 13:

Kirkby was perhaps the most sobering demonstration of the frailties of cooperative enterprise selling into international markets. The workers were continuing production at a factory that had not turned a net profit in 13 years in the middle of an international oil crisis. Thus, it had inherited all of the problems of capitalist ownership, with the added difficulties of underfunding and lack of management experience. A huge amount of business had been lost when the firm entered receivership, and the price levels of their products never truly recovered.  By 1979, it could no longer afford to fund new ventures and the factory was sold and shortly after demolished.  

Lessons to be learned

On the issue of labour relations, the Benn cooperatives performed exceedingly well. At the SDN cooperative, for example, there were no labour disputes over its entire existence (Bradley and Gelb 1980). At the same factory the year before, there were over 40 disputes. By handing workers a role in the ultimate control of the workplace, they were bound by a degree of responsibility to it. This meant that the cooperatives may have offered a real solution to the frequent labour militancy that had characterised the Keynesian period, without resorting to neoliberal, anti-worker measures.

Economically, however, their performances were at best mixed. From their very inception, the cooperatives suffered from the business inefficiencies that had characterised industrial decline during the period of Keynesianism. Whilst chronically undercapitalised, they inherited outdated machinery, premises, products and processes. Financing of modernisation proved almost impossible against the backdrop of a global slowdown and energy crisis.  The compulsion to compete in international markets, coupled with capital shortage, meant that workers within the cooperatives were forced into ‘self-exploitation’ (Fletcher 1976: 177).  In other words, to keep pace with better established capitalist firms, a reduction in wages was necessitated.

Most importantly, apart from the academics and trade unionists of the IWC, there was never any substantial support from the wider political left. Both of Labour’s 1974 manifestos, for example, were committed to an Industrial Democracy Act, although no details were ever subsequently specified. Dick Jenkins, the long-time convenor of shop stewards at the Kirkby Manufacturing and Engineering Works once opined:

“I don’t believe there’s more than one or two members of the present Labour Cabinet who really believe in the Cooperative and want it to succeed.  And it’s the same with the great majority of trade union officials whom I meet. Fundamentally they are not on our side” (Jenkins 1975, cited by Oakeshott 1978: 35).

It is worth noting that only one union, ASLEF, provided any financial support for the Action Committee at SDN. As Mackie contends, “there was either hostility or indifference in the majority of executive councils” (Mackie 1976: 119). At both Meriden and Kirkby, fundraising also remained the responsibility of the workers. Trade unions did play a significant role in the cooperative organisation, but only at a local level. 

Photo by GLF

Nor had the cooperative ideal been entrenched in a wider economic strategy. Tony Benn, to his deserving credit, attempted this through his advocacy of an Alternative Economic Strategy, but was rebutted by the reticent and more powerful figures above him. In a sense, it was only due to the good fortune of having Benn as a natural and well-positioned ally that the cooperatives ever took off. Even then, he was fighting against the tide of the invisible British establishment. He remembers pushing through the cooperative funding against the will of the senior civil servants in his department. His officials would often warn him: “We are afraid that what you are doing will damage the cooperative idea, because these are (capitalist) companies with difficulties, and you don’t want to associate the two. What they were really saying is that they were terrified that they would succeed…if by the cooperative movement, you could have a phoenix-like recreation of a firm out of the ashes of capitalist collapse then, of course, it would undermine the disciplines of capitalism” (Benn 1991).

When Wilson moved Benn from Industry to Environment following the EEC referendum in the summer of 1975, it effectively ensured the termination of the cooperative project. The Socialist Worker was fond of insisting that the cooperatives succumbed “as islands of socialism in a sea of capitalism”. In one sense, certainly, it was a miracle they ever rose from the sea. In another, sections of the left may have done more to ensure that they did not sink.

References:

Against the Tide (1991) (17 Mar). Available at: https://www.youtube.com/watch?v=4h9qv1HQ4w8 (Accessed 21 April 2017).

Bradley, Keith and Gelb, Alan (1980) ‘The Radical Potential of Cash Nexus Breaks’, The London School of Economics and Political Science, 31/2: 188-203.

Fletcher, Richard (1976) ‘Worker Co-ops and the Co-operative Movement’, in K.Coates (ed) The New Worker Cooperatives. Nottingham: Russell Press, pp. 173-216.

Mackie, Alastair (1976) ‘The Scottish Daily News’, in K. Coates (ed) The New Worker Cooperatives. Nottingham: Russell Press Ltd, pp. 109-141.

Oakeshott, Robert (1978) The Case for Workers’ Co-ops. London: Routledge and Kegan Paul Ltd.

Daniel Burridge has successfully completed his BA in the School of Politics and International Relations at the University of Nottingham in July 2017. His dissertation on Between the post-war compromise and neoliberal restructuring: Could the British cooperative movement of the 1970s have formed a viable economic alternative? received a high 2.1 level mark.