Case study

Qualglass Rework Ltd

Background

In autumn 1996, the workforce in the repack, resort and cullet section of United Glass, St Helens faced redundancy when the company decided to contract out the service from April 1997. They decided to try to form a co-operative in order to save their own jobs. They contacted their union,
the GMB, nationally. The GMB put them in touch with Malcolm Lynch Solicitors (MLS) in Leeds, who in turn contacted Lancashire Co-operative Development Agency (LCDA).

The options

United Glass were determined to contract out the repack, resort and cullet services. None of the potential bidders for this contract were local to St Helens. The bulk of the workers involved were men in late middle age and as St Helens is an area of high unemployment, they feared they might never work again. Against that they would each receive a redundancy payments and were members of a well-established company pension scheme.

The process

On 10 January MLS and LCDA made a presentation to 23 United Glass staff about what would be involved in forming a co-op and the services we could offer. The meeting agreed to proceed with investigating the potential for a co-operative and appointed a Steering Group of five people to work with MLS and LCDA.

The Steering Group, MLS and LCDA then met with the Personnel Manager of United Glass. The company were willing to be co-operative, because they wanted 16 voluntary redundancies. They were willing to offer a time-limited contract, but said that in the medium-term they intended to phase out need for service through improved quality management. (The workforce did not believe this to be technically possible).

LCDA began working with the Steering Group on a feasibility study and outline business plan. Also a visit was arranged to a well established manufacturing worker co-operative, North West Precast Ltd. MLS worked on the contract between the new co-operative and United Glass. MLS and LCDA agreed on the appropriate legal structure for new co-operative - an Industrial and Provident Society with variable shareholding.

LCDA and MLS made a further presentation to 15 United Glass staff on 30 January 1997 - setting out a proposed business strategy and the state of negotiations with management. Following that meeting it was clear that there were sufficient committed people to proceed with the buyout.

The Steering Group, with one additional person, became the Board of the new co-operative. LCDA delivered training to the Board members on the duties of Directors, democratic management structures, business planning, industrial marketing and financial management and control.

MLS were able to negotiate a longer contract with United Glass and the business plan was finalised. The new co-operative, Qualglass Rework Ltd., started to trade with 17 employees on 14 April 1997.

Raising of the finance

LCDA identified finance through St Helens Training and Enterprise Council for retraining people involved in large scale redundancies - £750 per person. Together with £2,400 redundancy money invested by each new member and an agreement by United Glass to pay the first month's payment up front, this produced the necessary capital to start the business.

After The Conversion

In its first year of trading Qualglass has developed an excellent reputation with United Glass and United Glass's ultimate customers. They have also won contracts with other United Glass plants in the UK. The co-operative has expanded rapidly and by the beginning of April employed 39 people.