The WBO is an innovative national instrument used when workers acquire ownership and control of a company in case of crisis/generational turnover.
The Workers Buy Out is an innovative national, regional and local instrument whereby workers acquire ownership and control of a company which is facing closure. By creating a cooperative, the employees wear the clothes of cooperative entrepreneurs, going from simple employees to company managers. Successful WBOs help avoid unemployment and create new jobs; they preserve wealth, professionalism and skills. The business stays on the territory. The cooperative is a form of company based on distinctive procedures, features and values.
Legacoop Emilia Ovest is the reference association of cooperatives in Reggio Emilia, Parma and Piacenza. It supports workers in the process and provides for business analysis and risks analysis, it informs about the financial support instruments, it evaluates innovation needs, it offers reskilling and upskilling for employees, and it develops a new business plan.
The WBO can be implemented:
1. In case of company crisis: a crisis situation usually leads to a “guided” liquidation procedure of the production facility. The workers of the company decide to protect their job by investing their unemployment benefit and establishing a cooperative that could continue the activity with new strategic objectives and corporate governance.
2. In case of generational turnover: in family-run businesses, the company is sold to its employees who have acquired specific competences over years of employment rather than competing companies or multinationals.
• Advances of social shocks-absorbers and unemployment benefits;
• Coopfund resources, a mutual fund for the development and promotion of cooperation of Legacoop;
• Resources from Law Marcora 49/85 which finances the CFI, a cooperative society that supports cooperative enterprises.
Evidence of success
The ideal target group is represented by companies with:
- 8/9 employees and 1/2 million turnover;
- 80/90 employees and 20 million turnover.
On the territory of Legacoop Emilia Ovest, a dozen of WBOs have been tested, 300 jobs saved, and 50 million turnover preserved; In Emilia-Romagna Region, the WBO concerned 25 new cooperatives, 600 jobs in the following sectors: 64% in the manufacturing sector, 12% in the construction sector, 16% in the services, and 8% in the retail sector.
• Developing an entrepreneurial/cooperative culture, that transforms workers from simple employees into “entrepreneurs and partners”;
• Lack of businesses transparency;
• Criticality in insolvency procedures;
• Critical issues in finding the financial resources for the restart.
Potential for learning or transfer
Every single aspect of a WBO program can be replicated both in case of corporate crisis and generational change. However, a context of adequate “support” is needed, which is built through the assistance of business associations, financial institutions and cooperatives, public authorities, and mostly the determination and conviction of the employees of these companies.