April 16, 2015
Congratulations to CEI on being selected as a semi-finalist in the Creative Finance Category for the NDC Academy Awards 2015. The NDC Academy Awards Semi-Finalists represent some of the most innovative and impactful developments changing the lives for residents in underserved communities across the country, NDC is honored to highlight the achievements of these organizations at the NDC Academy 2015.
Island Employee Cooperative – Stonington, ME
After 43 years in business, the owners of Burnt Cove Market, V&S Variety, and The Galley, all based on Deer Isle, Maine, decided to sell their stores. When a viable buyer didn’t materialize, the employees organized themselves into a worker cooperative, negotiated a purchase and sale agreement with the owners, and purchased the three stores. The Island Employee Cooperative (IEC) is now Maine’s largest worker co-op and the second largest in New England. The IEC employs 60 island residents, 45 of whom are member/owners. Burnt Cove Market and The Galley are grocery stores, one in Stonington and one in Deer Isle, the two towns on Deer Isle. V&S Variety offers a wide range of items from greeting cards, fabric, house wares, small appliances, clothes, and everyday hardware and tools, as well as housing a pharmacy. Burnt Cove Market also sells gas. In sum, these businesses provide a large majority of the products needed to survive on this isolated island community. A team of financial institutions, service providers, and technical assistance providers (core TA at time of closing was over 2800 hours!) worked together to complete the conversion and purchase in 12 months, a short time given the complexity of the project. Cooperative development had to occur in tandem with financial and business planning. The seller was supportive provided the transaction happened quickly. The successful completion of the project maintained local ownership and 60 jobs, buffered the stores from off-island competition, and ensured vital economic activity would continue on-island.
Three items are particularly notable about this transaction: (1) creative financing; (2) the development of a succession planning model for independent grocers in rural communities; (3) and the concurrent development of a worker cooperative conversion model. The project demonstrates a powerful way to maintain community assets and empower local workers
The purchase of these businesses by the IEC provided a “win-win-win.” The sellers gained a succession plan that will allow them a comfortable retirement; the employees have the opportunity to build wealth through ownership; and ownership stayed local, keeping operations and profits on the island.
- Transfer of ownership to 45 former employees and the creation of a democratic ownership structure: these individuals live and work on-island, which will keep money revolving locally as well as deepen the ties and capacity of the IEC to serve both residents and summer visitors. The new owners participate in running the business and get an equitable share of the proceeds.
- Ongoing technical assistance: Current TA providers are under contract to the IEC for 5 years to ensure the strength of the governance and business capacity of the coop. An advisory body has been formed. In addition, following an assessment process, workforce development trainings are planned in conjunction with regional partners. These training opportunities provide professional development for the employees and will build real, transferable skills.
- Food access, a priority of CEI’s, has been maintained on the island. In addition, the IEC is working with local producers, both farmers and value-add, to provide market outlets and highlight their products.
- Owners will build equity through purchase of Class A (voting) and Class B shares. In time, the coop may decide to sell additional Class B shares to the community, further deepening ties.
- Models of succession planning for independent grocers and worker cooperative conversion.
- While there is no initial environmental impact, the IEC is currently developing a plan to switch out old equipment for new energy efficient units (i.e. refrigerated cases) and developing plans to capture sales leakage off-island which would reduce vehicle miles traveled, among other strategies.
Read More HERE!