South Mountain Company

Martha’s Vineyard’s integrated design/build company

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

Politics

The Flip Side of Mitch

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.

Getting Out The Vote


During the last four days prior to the midterm election, my friend Kim and I worked to get-out-the-vote in the western suburbs of Richmond VA. We aimed for a congressional campaign that had the following characteristics:

• A great Democratic candidate
• A race too close to call
• A place we’d never been
• Easy enough to get to

Abigail Spanberger’s campaign in the 7th district of Virginia satisfied all four criteria (the cheap nonstop flights from Logan took care of the last one).

We contacted the campaign and told them we wanted to volunteer. Mackenzie, the assistant campaign director we were in touch with, asked, “Do you need a place to stay?”

“No,” I said, “we’re all set. Just tell us where to be, train us, and set us loose.”

“Perfect,” she said, “we’ll let you know where we need you.”

We flew down, checked into a small hotel in the old part of town, and went at it. Our first instructions were to go to a campaign center in Henrico County, which turned out to be a typical raised-ranch home in a middle class neighborhood fully adorned with blue and white Spanberger signs.

That local HQ was buzzing with cheery campaign volunteers including a 12 year old kid named Tyrell, who lived in the house and worked as hard as anyone. His bubbly personality and commitment exemplified the spirit of the place. He and the campaign operatives were organizing the volunteers and keeping track of comings and goings.

They trained us and gave us a voter list. The list had names, genders, ages, and addresses. Our job was to knock on doors and ask:
“Are you planning to vote?”
“Do you know where your polling place is?”
“Do you need a ride to the polls?”
“Are you planning to vote for Abigail?”

Over the next four days we found ourselves in a variety of neighborhoods, running from down-at-the-heels garden apartment projects to lower middle class to middle middle class. None were terribly prosperous, but some were a step up. We noticed that neighborhood behaviors seemed to be contagious. Positive care and negative neglect. In one neighborhood there would routinely be junk strewn around un-kempt yards while a nearby neighborhood of similar price point was tidy and well-maintained.

The first door we knocked on was in a neighborhood of 1200 SF post-war single family brick houses, the southern equivalent of Levittown. It was answered by three generations of an Indian family. They were happy to see us, they were planning to vote, they knew where to go, and they were voting for Abigail.

That was typical, but not all of our encounters were.

We spent most of the first afternoon in a subsidized housing project occupied primarily by African Americans. Rental units, two stories, 16 to a building, eight to a hallway, four off the second floor hall, four off the first. At least 75% of the occupants were single women, most with kids. Very few men. It’s not that the men weren’t home or out working, it’s that they weren’t on the voting lists.

Kim took care of the clipboard and checked off the boxes on the form: conversation concluded, not home, moved, deceased, inaccessible, refused to talk. I knocked or rang the doorbells and initiated contact, but mostly we shared the interactions seamlessly.

A 79 year old woman said she couldn’t get to the polls without help. We asked if we could give her a ride. She asked what church we went to. We said we’re not from here. She said she better not go with us because she doesn’t know us. We gave her the number to call for the campaign to arrange a ride.

A drunk, carrying a beer and wandering around the neighborhood trying to engage with anyone he encountered, saw us as his next prey. He asked what we were doing. We told him. He wondered what difference it would make. We went back and forth. (He liked the game.) Finally, we told him we had to get back to work. He left us alone.

A woman was walking home with three kids. Kim asked if we could give the kids Abigail stickers. She said sure, and we gave each kid a sticker and asked if she wanted one. She replied “Yes, and I can tell you that I’m sure gonna vote for Abigail!”. As we walked away the three little kids were all saying “thank you thank you” in sing-song voices as they proudly displayed their stickers.

A tall African American man was walking into one of the buildings and we asked him if he was planning to vote. “They won’t let me, although the constitution says I can.” A felon, we assumed.

“We hope you get your right back before 2020,” we said.

“I will,” he responded.

Even in the most rundown circumstances, there was plenty of heart. One apartment had a sign at the door that said, in Spanish, Arabic, and English, “No matter where you are from, we’re glad you’re our neighbor.”

The next day we were in lower middle class developments of vinyl-clad homes on quarter acre lots. There were roads, courts, terraces, and cul-de-sacs. It was a Monday so fewer people were home compared to the previous day. Each time we got no answer we left a campaign flyer on their door. We wrote in longhand their polling place address, and “Thank you!” There’s no way to know if some of those reminders made the difference between voting and not voting.

An African American couple about my age was sitting on their front porch smoking cigarettes. Their house was impeccably maintained, they were dressed nicely, and they wanted to talk politics. They were well-versed and had never failed to vote since coming of age (which would have been in the late sixties). They were centrists, big Obama supporters, and felt like the middle class was getting burned and shrinking.

Many people were very supportive of Abigail. A few said they were voting for her opponent, a few were still undecided, and a few said, “Not telling.” To the non-supporters, the undecided, and the non-revealers, we simply said, “Hope you’ll vote for Abigail; we think she’ll make a difference!”

Most people were very friendly, even though in some cases their door had been knocked on multiple times over the past few weeks by one of the campaigns active in the area. Women, especially African American women, were particularly enthusiastic. It was interesting to us that, in general, women opened the door wide and men opened it a crack.

On election day we showed up at HQ and were asked to help solve a problem. A polling location in Henrico County had been unexpectedly changed from a church to a school and it wasn’t clear that people knew. Most people we encountered had found out, one way or another, but at times our presence made the difference.

It all felt very real, and engaged. People from diverse backgrounds and ethnicities engaging in heartfelt conversations with varying points of views. People living their lives, caring about their futures, voting their consciences. We felt lucky to share some time with them.

And then, of course, there was the result. Abigail Spanberger triumphed over long-time Republican incumbent, Dave Brat. (Pictured above and to right you can see Abigail’s four year old daughter sharing the stage during her victory speech.) She was part of the blue wave of women and ethnic candidates that turned things upside down nationwide – or began to anyway. We are on our way to 2020. Trumpism is dead; it only remains to be seen how long and troubling the funeral will be. Better times ahead.

Local Sustainable Economies…And Way More Than That

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

Earth Day SunPower & SMCo Series Conclusion

SunPower’s final blog post about its collaboration with SMCo is focused on our commercial and affordable housing solar projects.

That’s it for this series, just in time for Earth Day 2017, which comes just in time for the planet. In “How The Active Many Can Overcome the Ruthless Few,” Bill McKibben says “We’ll either save or doom the planet during the Trump administration.” Today scientists will march on the National Mall. A week later, on Trump’s 100th day, there will be another major Climate Change march in Washington. Scientists are angry. People are angry. McKibben says, “Trump has pissed people off, and pissed-off people don’t ask for small and easy progress. They demand the shifts that reality requires.”

Now is the time. As the SunPower series demonstrates, we can effectively do what we have been unable to do in the past. The shift to renewables is underway, un-stoppable and irreversible, but time is the big variable. How fast, how soon, how much?

Link to the SunPower blog post here. Onward.

mv3-commercial-install

Transitions Followup…

Apparently my last blog post touched a nerve – I have been swamped with wonderfully soulful e-mails from a wide variety of people and places.  I can’t really post the responses – many are quite personal – but I will say this: there’s a whole lotta heart out there.  But we knew that, didn’t we?

My Dad died peacefully, painlessly, surrounded by family.  He charted his own course.  Many do not have this opportunity.

Not long ago, I read Atul Gawande’s extraordinary book Being Mortal  (don’t miss this one), and more recently Diane Rehm’s book On My Own.  Rehms, who plans to retire from her NPR show after November’s election (and maybe head for Canada with the rest of us if the unthinkable happens!) lost her husband to Parkinson’s disease.

Unlike my Dad, Rehm’s husband was not able to chart his own course.  The experience of his death caused her to become a strong advocate for Compassion & Choices[LINK], the right-to-die organization which was responsible for the first U.S. death with dignity law in Oregon.  Four other states have followed Oregon’s lead and there will be more.  I’ll be glad.

Anyway, to all of you who wrote, and those that might, thanks so much for the outpouring.  I will try to respond to each of you, over time.  But this brings up something that interests me: most people, when they respond to my blog posts, e-mail me directly rather than commenting on the blog for all to see.  I love getting responses either way, so don’t hesitate, but I am curious about why most people choose to do it that way.  I’d love to learn.  Let me know.

Thanks.

Vineyard Controversies

Most of the time, there are one or two raging controversies on the Vineyard.   The last few years, however, have been quiet.  The only polarizing conflict was a roundabout in the center of the island.  I never understood that one; it really didn’t matter much either way.  I thought it would be fine to have a roundabout, but I thought it would be fine not to, as well.  What’s the big difference?

Now it’s built.  It’s fine.  I like it.  Nobody really cares that much, as far as I can tell.  So be it.

But now there are two big controversies, and both seem important to me.  One is the Squibnocket Beach parking and access re-design in Chilmark.  The beach and its parking lot, and an adjacent roadway that is the only access to a number of valuable properties, are threatened by coastal erosion.

The town selectmen, together with the property owners, a land conservation non-profit, and coastal biology and geology experts, have fashioned a unique partnership and plan.  The plan has generated intense controversy.  I don’t know if it’s a good plan, or the best plan, but it makes sense to me.

Nobody knows what the precise outcome will be, but something is going to happen, because it must – it’s in everybody’s interest to solve this problem.  I’m particularly interested in the outcome because it foreshadows many such efforts to come.  This is about climate change adaptation and mitigation.  It is the future, right now.

The other big controversy is the efforts of Stop and Shop and its parent company, Ahold, to significantly expand their shabby downtown supermarket in Tisbury.  There are many issues – scale, congestion, community character, the need to raise the building to stay above the flood zone now and in the future  – and the debate has become highly emotional.  My knowledge about this plan is limited too, and I haven’t been inclined to wade into the  sea of accusations, wild inaccuracies, and finger pointing.

But then I read a letter in the paper from Henry Stephenson, the co-chair of the Tisbury planning board, a good thinker with a broad design background.  He quietly suggested important ways to make it a much better project.  His solutions rang true, and I had also been noticing something missing from the debate, so I wrote the following to our regional planning agency, the Martha’s Vineyard Commission, which is the primary regulatory decision-maker for the project,  and to the local papers:

It’s hard to imagine anyone who cares more about Tisbury than planning board co-chairman Henry Stephenson.  He thinks deeply about the town and he has a nuanced and practical sense of design.  His Stop and Shop letter several weeks ago was right on the mark, in my view.  

No hyperbole, no careless inaccuracies – just the most cogent and thoughtful alternative plan to date.

I hope the Martha’s Vineyard Commission will heed his specific suggestions about decreasing building size, increasing setbacks, re-designing the municipal parking lot, Water Street congestion, Union Street traffic flow, and added transportation services.  I hope the MVC will condition the project in the realistic ways he suggests.

I also want to call attention to something that has been sadly absent from the Stop and Shop discussion.  The Martha’s Vineyard Commission has a responsibility to promote appropriate economic development.  I hope the MVC will add to its conditions – if and when it approves a better, scaled down version of the plan that is before it – that Stop and Shop will be required to provide full time jobs with full benefits at Living Wages.  

We need good jobs.  Part-time jobs at low wages are harmful and unprincipled.  Stop and Shop and its parent, Ahold, can afford decency.  It is within the powers of the MVC to require such decency.  And we cannot afford to accept less.  Thank you.

I hope this letter brings support to Henry’s excellent suggestions and, at the same time, opens up a new – and very important – topic of discussion.

But aside from the particulars of these controversies, there are two things I particularly like about both of them.

First, it’s the passion.

The downside of passion is that it can bring out hostility – people attack, personalize, demonize, distort, and falsify.  But that’s part of the deal, part of the inherent messiness of democracy.

The upside of passion is that it brings people out.  People put themselves on the line.  I recently watched a good talk called Why Your Critics Aren’t the Ones Who Count, by Brene Brown, a researcher and author who studies vulnerability, courage, worthiness, and shame. She is the author of The Gifts of Imperfection (2010) and Daring Greatly (2012).

In it she says, in part, “Show up.  Be seen.  Be brave.  If you do show up, in the arena, there’s one guarantee:  You will get your ass kicked.  That’s the only certainty. “  My experience over decades bears that out.  Brown goes on to say that “if you’re not in the arena, getting your ass kicked like I am, then I’m really not interested in your feedback.”

Along with “showing up”, she honors the importance of vulnerability.  She points out that vulnerability is the gateway to love, belonging, joy, trust, empathy, innovation, and creativity.  Without vulnerability, she says,  you can’t create.  We need to enter the arena, and we need not hide our vulnerability.

I like seeing so many entering the arena, warts and all.

The other thing that interests me is the essential importance of the issues at stake.  In the scheme of things, these are minor controversies in small towns.  But they both have elements of two of the great issues of our time – climate change and income inequality.

Climate change is certain to test our democracy in ways we can’t foresee.  Nobody will be un-affected, nobody will be able to stand on the sidelines.  That much is clear, and here are two examples of the issues, in a nutshell, in our small outpost.  Such examples, close to home, may promote greater engagement in the larger arena of public policy that our future depends on.

And two sides of the income inequality issue are visible in these controversies.  At Squibnocket, land owners are showing what’s possible when it serves all interests for the wealthy to enter into public-private partnerships.  At Stop and Shop, we see a major multi-national affecting a small community in ways that corporations do, and the community exercising its will to make sure that local benefits come first.

In her book The Sixth Extinction, author Elizabeth Kolbert says,  “Chimps are smart, and can do all kinds of clever things, but they don’t have collective problem solving ability.  You’ll never see two chimps carrying something together.  Only humans do that stuff.”

Whatever the outcomes, Squibnocket and Stop and Shop are vibrant examples of humans fully engaged in collective problem solving.  Doing that stuff.  Good stuff.