the cleveland model: evergreen coops push 'buy local' model to extremes

"Compared to all the different community development programs we've tried over the years," says India Pierce Lee, Program Director with the Cleveland Foundation, "Evergreen Cooperatives leaves me more optimistic about opportunities for change than anything else I've seen. This is a paradigm shift in how to create community wealth in a way that will have a real effect on employees."

Essentially a buy-local campaign on steroids, Evergreen Cooperatives is launching multiple for-profit businesses that leverage the enormous procurement power of Cleveland's largest medical, educational and cultural institutions. What is already being referred to nationwide as the "Cleveland Model," the paradigm is creating living wage jobs while preventing billions of dollars from leaving the city. As a kicker, these new businesses operate using the latest "green" practices in construction, production and operation.

Despite being home to the region's premier hospitals, universities and museums, University Circle is surrounded by desperately poor neighborhoods. Programs designed to revitalize these adjacent neighborhoods have included job training, mortgage assistance, and infrastructure improvements. But without quality jobs, real progress is unattainable. The average household income in places like Hough, Fairfax and Buckeye is a woeful $18,000.

"Preparing people for eight-dollar-an-hour jobs as a strategy is not enough," says Lillian Kuri, also with the Cleveland Foundation. And neither, it seems, is attempting to attract large private corporations with the promise of tax breaks. "We needed a new model, and we believe we've come up with one that over time not only can stabilize Cleveland, but serve as an example for other regions to adopt."

Asked to help develop a strategy, Ted Howard, executive director of The Democracy Collaborative at the University of Maryland, zeroed in on the aggregated budgets of Cleveland's largest institutions. So-called anchor institutions like the Cleveland Clinic, Case Western Reserve University, and University Hospitals spend over $3 billion per year on goods and services. Almost none of that money stays in the community.

"The leaders of these institutions were very eager to do business locally," Howard notes. "But there were no suitable businesses present. We uncovered dozens of possible business opportunities that could be developed to prevent the money from leaking out."

Once those opportunities were identified, the team focused on the form those businesses might take. Employee-owned companies, they decided, would allow workers to accumulate real life-changing wealth and equity while providing the added benefits of higher productivity and lower turnover. The project team was fortunate to receive guidance from nearby Ohio Employee Ownership Center at Kent State University, the leading expert in employee ownership.

Making these companies "green," adds Howard, provides an added incentive for institutions to choose to do business with an Evergreen company. "These large institutions have all made serious commitments to shrink their carbon footprints," he says. "It is a competitive advantage to be able to say to them that by choosing an Evergreen company, not only will you get a competitive product and price, you will immediately shrink your carbon footprint."

Potential ideas were vetted to determine marketability, profitability and viability. Each needed to employ at least 50 workers, and, over the course of seven or eight years, earn each worker-owner about $65,000 of equity in the company. The intent is to create profitable businesses that not only pay back their start-up loans, but also contribute to a fund that seeds additional startups in the cooperative.

Offering the perfect illustration of the plan in action is the Evergreen Cooperative Laundry. When it was learned that the new Cleveland Veterans Administration Medical Center would require a commercial laundry facility, a feasibility study was conducted to evaluate the opportunity. It revealed not only that demand for laundry services is strong, but that these businesses generate healthy profits for their owners.

Since opening last fall, laundry business has leapt from 500,000 pounds per year to four million, thanks in no small part to new clients like Parma Hospitals and Marriot hotels. By the end of this year the company will be running three shifts a day, seven days a week, providing 35 people with living-wage jobs and a clear path to ownership.

Next to open was Ohio Cooperative Solar, which performs large-scale solar panel installations and offers building weatherization services. Since launching, this company has weatherized 180 homes and installed three very large solar arrays on hospital and university buildings. "This business became profitable in six months," notes Lillian Kuri. "It exceeded our expectations."

Green City Growers, which is slated to go live next spring, will begin to harness the vastly untapped demand for local foods. The 10-acre site near E. 55th and I-490 will feature a five-acre hydroponic growhouse that will be the largest urban greenhouse in the country. At a projected rate of four million heads of lettuce and 200,000 pounds of herbs per year, this is no boutique farmers market supplier. "This is commodity-scale production designed to compete with very large producers," explains Howard.

And that barely scratches the surface, adds Howard. Four million heads of lettuce per year is a mere 2.5 percent of the local lettuce market, illustrating how much room there is left to grow in local food production.

"This business illustrates perfectly Evergreen's model of creating for-profit companies that closely align to the needs of large institutional partners to provide products or services that do not currently exist in the local marketplace."

Within five years, Evergreen expects to have 10 businesses providing approximately 500 living-wage jobs. It isn't unrealistic to imagine the day when there is a network of 75 companies employing close to 4,000 people. A recent $15M grant from the Living Cities consortium simultaneously acknowledges Evergreen's progress while facilitating additional start-ups.

It wouldn't be unprecedented. This entire model is inspired by the Mondragon Cooperatives, an interconnected web of employee-owned businesses in the Basque region of Spain. What began some 50 years ago with one business and a handful of workers has mushroomed into a network of hundreds of companies employing over 120,000. To say that the cooperatives of Mondragon turned around an entire region of Spain would be an understatement.

"That area of Spain 50 years ago was poorer than Cleveland is today and had lower education rates," explains Kuri. "Much like they did in Mondragon, Evergreen is a long term proposition designed to stabilize an entire region."

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Read more articles by Douglas Trattner.

Douglas Trattner is a fulltime freelance writer, editor and author. In addition to acting as Managing Editor of Fresh Water, he is the Dining Editor of Cleveland Scene, author of “Moon Handbooks: Cleveland,” and co-author with Michael Symon on two New York Times best-selling cookbooks. His work has appeared in Food Network magazine, Miami Herald, Globe and Mail, Wine & Spirits, Cleveland Magazine and others. He lives in Cleveland Hts. with his wife, two dogs, five chickens and 20,000 honeybees.