CICOPA

France: as many as 10,000 SME could become Worker Cooperatives in ten years

Local government officials, accountants, lawyers and recently the Social and Economic Council... Social and economic actors are gradually recognizing worker cooperatives as an alternative solution that should be developed to confront the challenges of transferring businesses and creating lasting employment in the territories.

24 June 2005

According to Scop Enterprises, the re-opening of businesses as worker-run cooperatives could reach as many as 1,000 cooperatives per year. After having experienced a steady decline from 48,000 in 1993 to 40,000 in 2003, the number of transfers of businesses to new owners increased slightly and stabilized at 42,000. This is clearly the first visible effect of the aging of business owners, 700,000 of which were over age 50 in 1999.

Chambers of commerce and industry, professional associations and various local groups decided to become involved in solving this problem by creating tools for sensitizing and accompanying both the persons that take over the businesses in crisis and owners that may cede their businesses. However, the market continues to be marked by the seal of confidentiality that characterizes the conditions of sale of a business by its owners.

The future Jacob Law on businesses should contribuye to clarifying this situation. It should provide financing for a phase in which the owners assist and advise the new leaders of the business, and also create a specific market for them.

A Recognized Solution

The risk of seeing numerous businesses disappear is quite real, since few business leaders over 50 are prepared to deal with the idea of organizing their withdrawal. Jean-Yves Gouttebel is President of the General Council of Puy-de-Dôme. He fears that, “The sale of a business to a competitor, to a person outside the firm who takes over during a crisis, or an outside provider, could create the risk that with time, the businesses become transformed into simple establishments whose decision-making center is located somewhere else.” The worker cooperative formula, though not a universal solution, allows businesses to anchor the company in its territory. But transfers to workers “rarely is considered by the owners as an efficient alternative, when surely it is the most safe and calm way to transfer their business,” said Yves Fouchet, President of the Commission of Business Transfers of the Superior Council of the Accountants Association. This opinion was confirmed by the recent report on SME transfers released by the Social and Economic Council in December 2004 that commits to the notion of “promoting the reopening [of businesses] by the workers,” with transformation into a cooperative one of the suggested solutions.

Priority: SME with 3 to 50 Workers

How many businesses could be transformed into worker cooperatives? Of the 550,00 that require reactivation, only four to six percent have between three and 50 workers, the main target group for transformation into cooperatives. And of this number we must subtract the businesses that are “not sellable” for reasons related to the evolution of their markets, technical obsolescence, or lack of preparation for the transfer. To further define the profile of businesses that could reopen as worker-run cooperatives, the Regional Union of the Worker Cooperatives of Rhône-Alpes recently did a study that revealed that worker cooperatives could reach approximately 15 percent of the businesses with three or more employees, and especially those with 20 to 50 employees. Taking into account the 42,000 annual re-openings of businesses registered in France, 7,000 of which have at least three employees, around 1,000 businesses per year could continue their activity and potentially guarantee their sustainability as the result of converting into a worker cooperative. This number is sufficient for transfer to become one of the priorities of the worker cooperative movement. The White Book, published by the Executive for the 2004 National Congress, foresaw an ambitious action plan in this regard: “Initially we must sensitize accountants and lawyers regarding the advantages of re-openings by workers, and present them the worker cooperative statute,” said Patrick Lenancker, Vice President of Scop Enterprises and White Book coordinator. In the process of transfer, "we should become complementary to those opinion leaders and improve our capacity to evaluate businesses, imagining, for example, remuneration for those people who bring us business,” he added.

International Organisation of Industrial, Artisanal and
Service Producers' Cooperatives

Secretariat: C/O European Cooperative House - avenue Milcamps 105
1030 Brussels, Belgium
Tel: +32 2 543 1033, fax: +32 2 543 1037
E-mail: cicopa[at]cicopa.coop

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