This blog provides up-to-date news of goings on at South Mountain Company and occasional musings from John Abrams (and others).

Economic Crisis

Silver Linings

By John Abrams |

Photo by Timothy Dewitt for the Vineyard Gazette.

Several years ago, I read an article in The New Yorker called “Estonia: The Digital Republic”. It named the small Eastern European country “most digitized government in the world”. In Estonia, government services – like legislation, voting, education, justice, health care, banking, taxes, policing, driver’s licenses and registrations – transact online in a fast, easy, secure, reliable, and effective system available to everyone. I remember thinking at the time, “This wired-up nation is providing a glimpse of what a more rational and inclusive future could look like.”

I was reminded of this last week when Joe Tierney, who runs our local building department, notified us that building permits are now available online. No more driving to town hall hoping to find Joe or his assistant Jeff. No more paper to copy, collate and deliver. One silver lining of our pandemic-hammered newly shuttered socially-distanced society. No way that’s going back to normal when this is all over. Yes, some personal contact will be lost. But more will be gained. Progress never comes without consequences.

We are no longer at the beginning of this pandemic. We are nowhere near the end. With many lives lost, others threatened, and all of ours fundamentally different than they were a few months ago, it might seem too early to be looking for the silver linings.

But it’s never too soon for that.

In many ways, our lives today are more stressful than ever: Widespread illness and death. Massive job losses and economic disruption. Deficient federal leadership (the silver lining here is that Trump is clearly taking himself down and all the way out.) Those who are already poverty-stricken endure even more hardship. The curtailment of freedoms we treasure. The confinement. The constant veil of uncertainty. Walking around in masks like it’s Halloween (you can’t even recognize friends and neighbors in the grocery store aisles).

But in other ways, you could say our new life has picnic-like qualities (although it does seem a bit like a dog came by and swiped all the sandwiches when nobody was looking).

In mid-April, I scribbled a note to myself: “I love the Vineyard roads during these shelter-in-place times. Mostly empty. Like the winter of 1975 – nearly half a century ago – when we would drive from home in Chilmark to Vineyard Haven. Often, we wouldn’t pass a single car during the 20 minute trip. It’s kind of like that now. Instead of staring at the car in front of me, I can watch the road ahead and look left and right as I drive. I appreciate the signs of gratitude for the grocery and hospital workers. The cherry tree in front of Edu-Comp is in full bloom, at one of the busiest intersections on the island, now quiet. As I head up-island, I enjoy the living tree canopies that reach out over the road – for light – and join with their counterparts on the other side.”

Silver linings.

Here at South Mountain, as in so many other companies and households, we spend our time gathering and collaborating on Zoom. We’re getting used to it. And better at it. So much so that the idea of meeting in a room sitting around a table is starting to seem old fashioned, like making a call standing in a phone booth after putting a dime in the slot. You’re right. . . it’s not that good of a replacement, but virtual meeting comfort and competence will surely serve us well, far beyond this pandemic. And when the time comes that it makes sense for certain meetings to be face-to-face, it will be all the sweeter.

Silver linings.

Here are a few witnessed on MV, from the mundane but poetic, to the lifesaving and essential:


• Kim’s puzzle exchange at the end of our road. She and Livey do puzzles. They ran out. She said, “Let’s make a puzzle exchange.” I sketched a crude drawing and got some old lumber from the SMCo yard. Our friend Rob built a sweet little shed. Kim and Livey made signage and instructions for use. When Kim announced it on the “Islanders Talk” Facebook group, 200 people responded with likes and comments. Countless puzzles came and went.

• Civil engineer Chris Alley waking up the morning after his office closed with nothing to do and deciding to walk Barnes Road, every day, bit by bit, picking up trash, including 400 discarded nips bottles in one stretch.

• Parents faced with their childrens’ at-home education discovering new ways to relate to their kids and new respect for the teachers they sometimes criticized. By the way, March of this year was the first month without a U.S. school shooting since March 2002. Eighteen years.

• Breaking free from the traditional political handcuffs caused by six different towns co- existing on one small island. One town wants this, another wants that. Regionalization used to be rejected by parochialism. But now, like never before, the towns are collaborating and acting in concert. Selectpersons, health agents, hospital – all on the same page. One island, one town at last.

• An outpouring of support for essential community institutions – non-profits that serve those most in need and iconic local businesses in trouble.

Silver linings galore.

More than anything, maybe, this time is a rest for the planet – a vivid testimony to the importance of consigning the sacred growth-at-all-cost economy to the dustbin of history. Overcoming the pandemic foreshadows the real work ahead: the long and hard but fully negotiable road to an absolute reckoning with climate change. According to the New York Times, the United States is on track to produce more electricity from renewable power than from coal for the first year on record, a milestone that seemed all but unthinkable a decade ago. Accelerating the transition to renewable energy is the sure path to restoration of the economy (that has been ransacked by the pandemic) and healing the planet (that has been ravaged by our insatiable appetites). Maybe, just maybe, we will look back on this as a hinge point that straightened our crooked path.

We may be developing a new sense that we are truly all in this together – that what I do, affects you, and what you do, affects me. And that each choice made affects the home we share. Columnist David Brooks calls this “a hidden solidarity, which I, at least, did not know was there.”

To assert that there is good news could seem insensitive to our current collective troubles. But there’s a door opening. And if it’s possible to walk through that door and use the good news to inspire transformation, it would be a terrible mistake to overlook it.

Our resilience is remarkable, as is our transcendent ability to create joy in the face of tragedy. The strength of our collective will to work together is tangible and unshakeable. Maybe it leads to renewal.

Yes, every cloud truly does have a silver lining, even this tragic and frightening pandemic cloud. Especially this one.

The Flip Side of Mitch

By John Abrams |

Sometimes we are fortunate enough to catch glimpses of progress within our federal government (yes, there is some – despite Mitch McConnell’s relentless efforts to assure that nothing positive happens in Congress, he does not always succeed!) I had this chance several weeks ago.

In August of 2018, Trump signed a 788-page defense bill which authorized $717 billion for the military. Hardly anyone noticed that New York Senator Kirsten Gillibrand slipped in a provision to help workers own their companies – a modest attempt to tackle wealth inequality, and a timely one.

As baby boomers reach retirement age, we are undergoing a “Silver Tsunami” – several million small businesses in the U.S. stand at a crossroads: What will happen to them when their founders move on? Some will be passed down to family members. Some will be absorbed by larger companies (and likely, moved out of town). Some will close their doors. Others will explore the increasingly popular notion of selling the business to those employees who helped build it.

There are obstacles. It’s not uncomplicated. Gillibrand’s bill – the Main Street Employee Ownership Act of 2018 – was designed to help employee-owned companies gain better access to technical assistance and capital. On February 12th of this year, the House Committee on Small Business held a hearing to examine how the bill is working, how it’s not, and how it can be improved.

I was invited to testify as a representative of the worker cooperative model, along with two individuals who represented ESOPs (Employee Stock Ownership Plans) and one who represented a cooperative bank.

The experience was an eye opener.

The room held a significant sampling of the Democratic and Republican representatives who comprised the Committee. Chairwoman Nydia Velázquez of New York opened the hearing with this remark: “At a time when income and wealth inequality are at record levels, real wages for middle class workers are nearly stagnant, and retirement security is no longer guaranteed, one way to combat these problems is through the employee-owned business model.”

She displayed a firm grasp of the issues and a strong commitment. She knew her subject. I was impressed.

Each of us had five minutes to testify. My peers were knowledgeable and passionate advocates.

Mark Gillming, senior vice president at Messer Construction in Cincinnati, praised the tax advantages (passed by congress 45 years ago), which have caused the ESOP model to become widespread:

When I began working at Messer Construction, it was a medium size, family-owned construction company with a long history and a good reputation; but, like most companies in construction, it had little in the way of employee benefits.

In 1988, the last son of the company founder died, and we found ourselves with an uncertain future. The grandchildren of the founder wanted access to their wealth and, having no connection with the employees, were not committed to maintaining employment at the company. In 1990, the Messer employees were able to buy their future from the Messer family, using the ESOP structure. We could not have purchased the company if not for the important tax advantages that the ESOP model afforded us.

Our country’s investment in ESOPs allowed ninety-nine Messer employees to purchase their future; and the engagement that opportunity created, has resulted in growth. Messer now provides quality jobs and predictable retirement for over 1,200 individuals and has company-funded retirement assets for those employees totaling more than $400,000,000.

R.L. Condra, VP of Advocacy and Government Programs at the National Cooperative Bank in Arlington, Virginia, spoke to the changing nature of cooperatives and those who stand to benefit:

A prohibitive policy requirement by the Small Business Administration (SBA) is hindering the growth of the cooperative business sector. If this issue is resolved, lending institutions, like the one I work for, will be able to make loans that will help to grow small businesses, create quality jobs at increased wages, and provide healthy food and grocery options for communities throughout the country.

Cooperatives have evolved since the 1960’s when the SBA recognized them as buying clubs. There are now over 40,000 cooperatives in the US and the top 100 generated $222 billion in annual revenue in 2018. Some notable cooperatives include REI, ACE Hardware, Ocean Spray, Land O’Lakes, and Congressional Federal Credit Union.

Since the great Recession, worker cooperative numbers have doubled, and have become a business option for young people, women and minorities. According to the 2019 Worker Cooperative Economic Census, 50% of owners of worker co-ops are Latino and African American, and 62% of women make up the majority of the workforce.

Daniel Goldstein, President and CEO of Folience, a media company in Iowa, advocated for regulatory clarity that would lower the risk for businesses making the employee ownership transition:

I submit that the biggest obstacle to the formation and expansion of ESOPs is the chilling effect of the U.S. Department of Labor’s (DOL) actions. DOL has perpetuated an absence of formal regulatory guidance, while simultaneously pursuing a litigious approach to oversight. The effect has been a deep chill on the market.

Every year, hundreds of business owners who want to learn about ESOPs attend educational events hosted by The ESOP Association. And once exposed to the lack of clear guidance, many turn away out of fear that some unknowable misstep will invite never-ending DOL scrutiny.

Those fears are not unfounded.

Today, more than 45 years after ESOPs were established with the passage of ERISA, the Department of Labor has yet to finish its rulemaking process. They started. They nearly finished in 1988. But they never issued final regulations.

Operating without clear guidance is a risk ESOP companies should not be forced to bear; it is a risk that negatively affects the wealth and security of the 10.6 million employee owners DOL has been tasked with protecting.

But here is the travesty: It is impossible to prove how many American workers have lost the opportunity to become employee owners as a result of this chilling effect. And, due to the rapidly escalating retirements of baby boomer business owners, there is urgency to reduce the chilling effect this lack of regulatory clarity is causing.

And then it was my turn. I emphasized the value of employee ownership in our culture and the importance of sharing what we have learned:

I believe that owning our work is as essential to a good life as it is to own our homes. As former Treasury Secretary Lawrence Summers once remarked, “In the history of the world, no one has ever washed a rented car”. When employee owners are making the decisions, it is more likely that companies will stay rooted in place and be positive forces in their local communities.

Economist Richard Wolff says, “if our workplaces had been democratized, long ago, would the workers have stopped raising their own wages? Hardly. Would they have destroyed their own jobs by moving production overseas? Doubt it. Would they have employed technologies that pollute the local environment? No, they live there. Would they have allowed some to earn astronomical salaries while the rest got no raises? No way. Our economic history over the last thirty years would have been radically improved if we’d had a different way of organizing our enterprises – with a more cooperative community-focused method that is democratic at its core.”

Growing the worker cooperative approach has the potential to positively affect the economy, our democracy, and the quality of working peoples’ lives. It is not a stretch to say that the benefits of the democratic workplace may even aid and influence the essential repair of our battered civic landscape – it could change, in effect, the chemistry of our culture. If you spend your days working in an environment of collaboration, mutual respect, and shared power, it is bound to spill over into other parts of your life – better parenting, more civic engagement, kinder relationships.

The value and benefits of employee ownership continue to fly under the radar, and you can’t take this important step without knowing the option exists. So perhaps the greatest need is extensive education and publicity – the stories of employee ownership successes need to be shared and celebrated. Employee ownership “ambassadors” should be funded to visit companies who are considering transitions – to teach, train, advise, and inspire. Widespread technical assistance should be made available. Employee ownership should be the number one business succession planning option.

But it’s not. I hope this committee will build on the good work it has begun and I am grateful for the opportunity to make this request.

After our testimonies, the representatives asked questions. Good questions. Engaged questions. It felt worthwhile.

Government can work. We know that; we can remember when it did. My experience in Washington amped up my resolve to work hard this year to elect a real president, help democrats take back the Senate, and increase the number of voices involved in decision making. There’s never been a moment when it mattered more. Not in my lifetime.

As for South Mountain’s commitment to employee ownership: we make our Operating Policies, Bylaws and Employee Ownership Toolkit available online and are always happy to help other companies find their way. If you have questions, feel free to contact me at jabrams@southmountain.com – but please read our Toolkit first. It may answer some of your questions. Or it may answer some and provoke others.

Local Sustainable Economies…And Way More Than That

By John Abrams |

My colleagues and fellow owners Deirdre, Rob, Siobhán and I just returned from a conference in Boston called Local Sustainable Economies. It was a national gathering, hosted by the Sustainable Business Network of Massachusetts, of people and organizations working to localize economic activity and encourage the long haul shift from the extractive economy of the present to a generative economy of the future.

Read More about Local Sustainable Economies…And Way More Than That

Victory at Hand

By John Abrams |

Spring has sprung.  It’s a good time for good news.

When Paul Gilding’s book The Great Disruption was published in 2011 it had a profound impact on me.  In September of that year I wrote that it was, for me, the most accessible and full-bodied treatment to date of the effects of climate change on our planet, our economies, our lives.

Still is – although Gus Speth’s superb new book America the Possible is a knock-out that in many ways expands the vision further.

Gilding has a blog called “The Cockatoo Chronicles.”  It has been inactive for some months, but recently he made up for lost time when he posted a 2500 word essay that argues for a new reality:  the economy is now aligned with the environment and there is evidence that we can – and will – win the climate change battle.

That’s a big thing to say.

Read More about Victory at Hand

Good Year for Worker Co-ops

By John Abrams |

On the last day of 2012 our 25th year as a worker cooperative (and 37th in business) ended.  It was an extraordinary year – rich, full, profitable, demanding, restorative, and uplifting.

It was a year of many “first-evers”.  On November 1st we welcomed three new owners at SMCo – the most ever at one time.  When DonE Turnell, Marc Rosenbaum, and Aaron Beck became owners, it meant that 21 of our 30 full-time employees are now full owners.   DonE worked here for 20 years before taking the buy-in plunge, our longest journey-to-ownership ever.  And it goes back further – I can remember him as a 14 year old skate punk back in the early eighties. He hasn’t changed much.  After his first SMCo Board meeting, he said, “It was kind of like a road association meeting but with less stupid people.”  Less stupid people?  Hey DonE, what are you trying to say??

Read More about Good Year for Worker Co-ops

B-Corps on the Move!

By John Abrams |

On July 31, the last day of this summer’s legislative session, Massachusetts became the 11th state in the country – along with California, New York, South Carolina, Louisiana, and 6 others – to pass legislation enabling businesses to register as a new type of corporate entity:  Benefit Corporations, or B-Corps.  Benefit Corporations are companies which consider the public good – factors such as environmental sustainability and community benefit – in their corporate decisions rather than financial return only.

According to the Boston Globe, “To rein in the excesses of capitalism without losing the dynamism that makes it hum, a variety of thinkers have begun looking for ways to re-imagine the corporation itself, restructuring it to encourage businesses to pursue not only profit, but also positive social impact. One of those innovations will hit Massachusetts December 1st, when companies here will be able to register as a new entity called a ‘benefit corporation.’ ”

Read More about B-Corps on the Move!