Worker Buyouts and the Story of Uniontex

Worker-management partnership and worker owned business in capitalist economies - an anarchist approach

On Oct. 26, a demonstration was held in defense of Slawomir Kaczmarek in Lodz, Poland with a solidarity demonstration also in Madrid.

For those who don't know the story, Kaczmarek lost his job in Uniontex almost two years ago in a power play with the Management Board who wanted controlling share of the company.

Many of the other details of the case which you might read may be contradictory: some reports state he was fired for fighting for the health and safety of the workers, other that the Management wanted him out as a pretext to take over the company, others that he leaked info to the press. Despite these inconsistencies, one part of the story reported remained consistent: that Uniontex s.p. was established as a worker-owned company.

And it's this part of the story which I would dispute. It's the question of worker partnerships and management and how anarchists can approach it that may provide insights into what went wrong in Uniontex - and what workers can do to avoid making similar mistakes.

Worker Ownership and "Spolka Pracownicza" in Poland

A little background on what an s.p. (Spolka Pracownicza, or Employee's Company) is in Poland. S.p. is a form of ownership by which the employees own all or part of the shares of a company. In Poland, s.p.s are mostly set
up not as cooperatives, but as the result of privatizations or in bankruptcy cases. There are over 1500 s.p.s functioning in Poland now.

S.p.s can take different forms: they can be 100% worker-owned or they can be worker-management, or even management-worker partnerships.

For example, in the case of a privatization, if the workers formed an s.p., they would have share purchase options. Although there are several possible models for an s.p., several factors are important:

- where shares are sold, workers with capital may purchase shares and become shareholders, whereas others may become disenfranchised

- after the initial distribution of shares, workers can acquire more shares

- votes are apportioned according to the amount of shares

- stocks can be traded

- profits can be attained from the stocks

- people can retain stocks while not working in the company

- shareholders are not guaranteed employment

- wage labourers who are subsequently hired are not guaranteed share options

S.p.s in Poland have worked in different ways, but the most common model is the capitalist business model, with workers being the new owners, employers and profit makers. In many situations, only a few former workers accumulated large share packets and took control, sometimes togther with outside
investors.

It is important to understand this model to understand what happened at Uniontex. As presented, it seems strange that a "worker-owned" company was taken over by the management. That's because it was not "worker-owned" in the sense that many people would expect - meaning collectively run. In fact, it seems to have been a worker-management collaboration and that the description of it as worker-owned very much a misnomer. It would be more accurate to say that some workers had shares in the company.

What happened and how Uniontex went wrong

What exactly happened at Uniontex is partly a matter for speculation as different sources of information present the history differently. This is what I know to be true:

Uniontex was once a large factory with 14000 workers. When Poland entered the global capitalist marketplace, Uniontex started to go downhill. Uniontex was eventually privatized by a shady firm called Fasty in 2001. By that time, only 1400 workers were employed there. Fasty bought Uniontex for only 350,000 zl., less than 100,000 euro. Fasty was interested in several things: cutting the workforce and shifting losses and making all sorts of accounting machinations were two things. (The Senate even held an investigation into this and revealed these machinations.) But most importantly in these
privatizations is probably the property. I was speaking today to a privatizer who told me and her most recent privatization: she was well aware that none of the bidders were interested in the firm, but all wanted to get
their hands on underpriced real estate. She was very much aware that the firm would be liquidated after some time and the real estate sold. In the case of Uniontex, property was sold to supermarket LeClerc and now trendy lofts, each of which will sell for more than the privatization price, will be built in former factory buildings. It is not 100% clear to me which property exactly was acquired, kept and sold by Fasty and which was foreclosed in bankruptcy proceedings later on, but it is certain that pillaging for saleable assets was one of Fasty's motivations.

Fasty brought Uniontex to bankruptcy. Beginning in 2003, they stopped paying workers who eventually went on strike. After a month of strike, Fasty filed for bankruptcy. 90% of the employees were fired.

It was then that four workers, one of whom was Kaczmarek, decided to try to set up this s.p.. Some details then are fuzzy. It is clear that the city government was interested in this plan and made a four-year, 1 million
dollar loan. Also, the s.p. was registered. Although anarchist and leftist sources all refer to it as worker owned, it is not at all clear how many workers bought shares. It is also a fact that two people, one from the
former management, helped create a business plan and that the workers only had 2/3 of the shares and that these two wound up on the Board. The exact composition of the Board, or the Supervisory Board, which Kaczmarek was part of, is not known to me. The fact that the company was not 100% worker-owned is essential.

It is also important to know that Uniontex started to hire wage labourers (at minimum wage and through a city sponsored scheme to hire unemployed people). So it is not clear whether 10% of the workers owed shares and had votes, or whether 75% of the workers did. Nobody seems to be forthcoming with this information, although I'm sure I'll clarify it shortly.

In 2004, the Board claims that there was a GSM where they voted to increase the share capital. When a company increases share capital, more shares can be sold on the market or acquired internally. By increasing the share capital, members of the Board were able to acquire a controlling packet in the firm. Kaczmarek claims this vote was falsified.

(I don't have the articles of association of Uniontex s.p.. In normal procedure, a notary must be present and notarize the decision of the GSM to authorize an increase in share capital. However, a company may also authorize the Management Board to do so at its discretion (sometimes up to a certain amount), but this should be voted to or included in articles. It's not clear whether this was a deception of the Management Board or if the workers didn't understand something and agreed to give the Board these powers.)

In July they got rid of the Supervisory Board with Kaczmarek. (The Supervisory Board has the right to dismiss member of the Management Board, and why they didn't do this, I have no idea. Also, members of the Supervisory Board are removed by a general meeting - it's not clear how he was removed.) Then he remembered that he's not an owner but a worker and started a Workers' Initiative Union branch. Later that year, he gave an interview to the (right wing!) Nasz Dziennik newspaper and was fired for presenting the company in a bad light.

An anarchist approach

There is much discussion of whether or not a worker-owned collective can avoid reproducing capitalist relations in a capitalist economy. Without going into that issue, let us proceed from the presumption of a capitalist economy and the inevitable reproduction of capitalist relations in some form or another and simply address the issue as one of worker self-management vs. wage labour and no say in the running of the business.

There are a number of problems in the worker-owned model which is present in Poland and which Uniontex was part of which should be obvious. Although there is a question of legality as well, even when a company might be forced to appoint "management boards" or issue shares, when certain anarchistic priniciples are transposed even into the world of capitalist business, workers can lower the risk of being fucked.

What do I mean by this? Suppose that workers, who have to adhere to certain convention of privatization law, have to issue shares.

In a more anarchistic cooperative form of business, several things can be supposed:

a. That one person = one share = one vote. Anarchists would try to avoid the concentration of power.

b. Even workers who could not produce a capital investment should have voting power.

c. That people who do not work should not retain shares and profits - unless by agreement to create a retirement or disability fund.

These are basic, and other points may be added - for example, that profit over salary be reinvested or channeled into social funds, etc. etc.

One of the basic problems we see in the s.p. model (usually) is that 1 share = 1 vote. But of course, legally, non-public companies are not required to issue any certain amount of shares; they can issue 2 shares, 10 shares or
100 shares. (A Limited Liability Company in Poland needs only one shareholder.) And they can issue exactly as many shares as are workers. In general, there are contractual solutions to ensure that nobody can own more
than one share. The most basic mistake therefore of worker owned enterprises is to allow the accumulation of shares and thus enequal power and influence in a company.

Of course, capital is the main problem still to address. Not all workers will have capital to but shares, and if the workers do not have
creditworthiness or profit, they may be tempted to increase the share capital and issue more stocks as a means of finance. There is no easy solution to this question. Yet there has to be absolute clarity that unless steps are taken to ensure that people without capital are not disenfranchised, then
you will simply have new owners and new wage labourers. Then it's rather a farse to talk of a worker-owned industry.

There are several ways around this, but each way requires conscious goodwill and a rejection of the hierarchical capitalist model. A possible solution I could find in the situation of the housing cooperative where I live.

Although the law rather obnoxiously requires a Board, etc. etc., this institution in fact can have fictive powers. In my cooperative, only owners of flats had voting rights and tenants not - but actually, there's nothing
stopping us from saying that we ignore that rule and give tenants voting rights in practice. But this would require a collective decision to include them in decision making on all the resolutions, thus counting their votes, despite the fact that owners are legally entitled to pass resolutions without them. The same can be theorectically practiced in an workplace - provided that the workers are committed to workers self-management and not capitalism.

In this way, all workers, whether or not they are capital participants, would have votes, and each person would have the same vote as any other.

This is one way to approach it - that you will not in practice appoint any privelege to capital shareholders, even though they may be entitled to it by the law.

The other way to approach it is to lend money to or fundraise to purchase shares for the other workers. In 2004, the share capital of Uniontex was only 380,000 zl. (Less than 90,000 euro.) 140 people were employed. This is in fact, 2500 zl. - about 600 euro, per worker. I think that it's rather clear that with loans or fundraising, probably the workers could have got around having to work with the ex-bosses. I find it rather unfortunate that the workers either didn't try or didn't have the know-how to organize what is essentially an extremely small amount of capital in relative terms.

But, let us assume that for a poor worker from Lodz, it's impossible to imagine raising 600 euros capital. What other solution is/was theoretically possible? Contributions- in- kind are used throughout the business world
where a worker may contribute something - such as machinery, unpaid overtime labour or something else to cover the cost of his share. Or, issuing one share per non-shareholder worker at a later time to be purchased only by that worker. Or not paying out dividends on shares and allowing them to
vote, thus making it not much difference if they have shares or not. Or prohibiting the sale of stock altogether, except by resolution.

One can forbid outside shareholders and keep shares in an employee-held and controlled trust.

Essentially, again, s.p.s are essentially employee buy-outs, and these companies with employee participation or even 100% ownership are not the same as cooperatives, which generally assume a more cooperative structure. But there is no reason that such a company cannot be transformed into such -
provided the workers want to do so.

In many EU countries, where the amount of such companies are even higher, there are regulations for example, which forbid more than 1/3 ownership by any individual, or which designate a certain amount of profit be
re-invested.

Although none of this is ideal, workers who want to buy-out their enterprises have a lot to keep in mind and should understand that dealing with old management or shady investors is a recipe for disaster. I
personally don't believe in worker-management partnership since I don't agree to this division.

What is truly a shame in all this is that there isn't more information about anarchistic or even collective forms of self-management for workers to study. The original amount of employees in the new Uniontex s.p. was only 30 people - wouldn't it have been possible to inspire a different way of trying
to create workers' self-management? Maybe not all people would agree with that form of self-management, but still, some very important principles of anarchism, if known, could have helped guide people and warn them when
things were going wrong.

The anarchist movement is very much involved in protecting the rights of workers not to be abused and fired. It's a worthy cause. But ultimately, the biggest thing we could have given to people like Kaczmarek is not a protest to get his job with the capitalist bastards back. An important thing we could give to people is before they are fired, and that's not even the know-how about becoming a union leader, but what are principles are and how anarchist cooperatives and self- management is different than this bullshit
capitalist pretend workers' management. Of course, after reading so many accounts of the "worker-owned" Uniontex, I understand that anarchists need to help other anarchistics understand this as well. :-) Of course, these ideas, not being a "concrete" form of workers' protection, are even often
dismissed as being theorizing of less intrinsic value than standing outside
the factory gates with leaflets calling people to join a union.

I hope that some people have some comments on this, in particular pratical advice. Please be informed that I know that self-management is not necessarily anti-capitalist, and I have some ideas about how an anarchist
cooperative could work. What I'm curious about is whether or not people know of more horizontal, democratic and economically level examples of worker buy-outs or have any ideas on that issue?

PS: The follow-up is that I heard that the majority stake in Uniontex was sold to an Australian company and that they want to move some production to Ukraine.