Locally owned and operated.
These words represent more than just a good tagline for area businesses. They’re the ticket to success in our changing economy.
Encouraging and expanding local ownership is a sure-fire way to bring economic strength to Minnesota’s Iron Range and beyond. Not surprisingly, it’s also a vexing challenge amid current conditions.
After all, the region has strongly trended toward distant ownership, almost from its inception. When the Merritt Brothers discovered iron ore on the Mesabi Range, they stood right there at the bottom of the hole with their workers.
But the Merritts lost their holdings to John D. Rockefeller. Locals complained about the mining company big shots in Duluth. Then the big shots were in New York. Now many are in foreign cities no one here can pronounce, much less find on a map. In fact, many of the “owners” are investment firms run by people who couldn’t find us on a map either.
The strength of Iron Range communities began in the diverse array of small businesses founded by pioneers and immigrants alike. Then, beginning slowly in the 1960s and ‘70s, and accelerating through the ‘80s, ‘90s, and ‘00s ownership of commercial businesses became more corporate. More chains and franchise-based businesses moved in. TV and radio stations, and even the very newspaper in which you read this column, became part of large corporate families, rather than family-owned.
Now, corporations aren’t bad in themselves. This just means that decision making leaves the community. Over time, that means decisions made for others’ benefit, not always for ours.
Many of the biggest success stories here in Northern Minnesota come from local businesses that stayed local and invested in themselves. Sometimes outside investment fuels success, too, but local investments always goes farther.
We often ask what we can do to bring economic diversification to the region. Well, fueling local ownership is key. Helping more people build, keep and expand small businesses works, whether those entrepreneurs wear shiny shoes, work books, Crocs or Spiderman slippers.
From local ownership we can explore another possible avenue for success: employee ownership.
Lueken’s Village Foods store in Bemidji is employee-owned, gradually given to its workers by its late owner Joe Lueken. My sister worked for an employee-owned bakery in Duluth. Workers elect managers to make day-to-day decisions. Major decisions are made democratically. Workers share the profits among themselves based on established job titles, hours worked and seniority.
It’s a model that can work for existing business owners wondering about succession. Employee ownership can also be a valuable benefit that could attract better workers. It might even become a way for many people without much money to start a business together, or keep one going after a bankruptcy.
So, unlike pure socialism, all workers share a desire for the business to make a profit. Unlike modern capitalism, distant shareholders can’t extract profits from workers or make major changes (like closing a store) unless it’s truly necessary.
In an October 2017 article in Yes! Magazine, Fran Korten interviews Marjorie Kelly, author of the book “Owning Our Future.” Kelly advocates for employee ownership as a model for business and community development.
“Research shows that when employees own the company, they make higher wages, have about double the retirement savings, and are one-fourth as likely to be laid off,” said Kelly. “Their companies are more likely to be environmental stewards, and they don’t export their jobs overseas.
“With employee ownership, a lot of things we worry about in the economy are on their way to being solved,” continued Kelly. “That’s because you no longer have absentee shareholders looking only at their returns. It’s a radically different vision of a company.”
In fact, the most successful democracies in the world right now thrive because workers toil close to the decision making process, not pushed farther and farther away.
Scandinavian social democracies like Sweden’s earn scrutiny for their high taxes and strong social safety net, but those aren’t the only reasons they’ve done well. The relationship between labor and private industry management is much closer and more collaborative. This allows success to be shared and failure to spur innovation, retraining and growth. The same is true in many parts of Europe.
In fact, in 2014 when the United Autoworkers sought to form a union in a new Volkswagen plant in Tennessee, the German company supported the union while local politicians railed against it. The company imagined the kind of relationship it had with German workers, who share a formal role in the operation of its European plants. Nevertheless, the union vote failed over the objection of management due to local political pressures.
One aside: Volkswagen stepped into a major scandal when it admitted to rigging tail pipes to cheat U.S. emissions tests in 2016. Since then its new management team stopped supporting the United Autoworkers bid for representation. Perhaps they merely learned how to be more like an American corporation.
Large scale political action might effect change at the top; but local focus is far more practical and less partisan. First, local entrepreneurship is a vital priority. Second, employee ownership is a viable business model. Third, if business leaders and workers alike share goals and profits they do better. They also keep the success and resulting economic impact local.
Aaron J. Brown is an author and community college instructor from Northern Minnesota’s Mesabi Iron Range. He writes the blog MinnesotaBrown.com and hosts the Great Northern Radio Show on Northern Community Radio (KAXE.org).