President, Concerned Capital
Based in Los Angeles, Concerned Capital, Inc. aims to save and grow quality jobs in the city’s blue-collar communities by transferring ownership of small businesses from retiring owners to long-term employees and community stakeholders. Its grassroots approach creates opportunities for workers to take charge of their economic destiny and preserves a traditional path to the middle class for low to moderate income residents: manufacturing jobs. Research has shown that employee-owned businesses can also perform better than their peers and provide higher quality jobs when combined with a supportive corporate culture.
A certified B-Corporation, Concerned Capital provides business planning, access to capital, and succession planning to employees and business owners seeking to avoid business shutdowns and job loss in their communities. In 2016, Tomás Durán and his team developed the Transfer of Ownership Program, which “recycles and repurposes community-based small companies.” Since the start of the program, Concerned Capital has saved or helped create over 200 jobs, supported wealth creation for dozens of employees-turned-owners, and helped stabilize communities across Los Angeles that might otherwise have lost local manufacturing jobs.
There are several ways in which job quality is a priority for Concerned Capital. First, Durán notes that its Transfer of Ownership Program focuses on manufacturing due to the industry’s higher than average wages for workers without a college degree. Durán also points to how worker-owned businesses promote job quality, noting, “Employee ownership fosters inclusion in ownership and decision-making,” describing factors he says are “essential for true job satisfaction.” Concerned Capital has a long-term goal to further improve job quality in businesses that transition to worker-ownership by helping worker-owners improve the workplace experience for employees.
Business Ownership in Action: Ariza Cheese
Ariza Cheese Company Inc. is a Los Angeles-based manufacturer of artisanal Mexican cheese founded in 1970. Following its founder’s death in 2018, the company was drifting toward being shuttered as the family worked out what was next for the business. Legacy and concern for the workers kept the business going but dwindling resources limited operations to three days a week. The owners worked with Concerned Capital to find a way forward that honored the family legacy and saved workers’ jobs. Using Concerned Capital’s transfer of ownership method, four enterprising employees purchased the company.
Concerned Capital helped the worker-buyers write a business plan and secure the sale of the company. For the owners, Concerned Capital structured the sale so that the founder’s family was paid market value for the business and reduced its tax liability during the transition. The sale saved 24 jobs. “We knew we could buy the company, but we didn’t know how to do it. Concerned Capital gave us a roadmap,” says owner Pablo Gonzalez. In its first 60 days of employee ownership, Ariza Cheese Company, Inc.’s new owners increased production to two full time shifts, raised salaries by $1.50 per hour, increased sales by 40%, and hired three new employees. By mid-2019, the owners estimate they will hire another six people to support their continued growth.
Durán points to the “silver tsunami” of retiring business owners as an opportunity to help more employees buy the small businesses they work for, noting that over half of business owners do not have a succession plan. Retiring owners often sell their businesses to outside buyers who may lay off workers before reselling the company or liquidate the business and sell off the land – particularly in areas with high property values, such as Greater Los Angeles. But converting private companies to employee ownership is not just about saving companies – it’s about re-inventing economic development by creating a bottom-up approach that directly benefits workers and their communities.
Concerned Capital’s Transfer of Ownership Program invigorates manufacturing by bringing in new management and saves and creates living wage jobs. Employees turned owners are able to build wealth and reap the benefits of their labor, which is especially valuable for those who could not otherwise afford to own stock or buy a home in Southern California. Moreover, as Durán notes, “broadening ownership strengthens democracy and democratic institutions overall.”
Tweet “The way to address the income gap, the way to address gentrification, and the way to address the wealth gap in this country is by giving people access to quality jobs.” -Tomás Durán (@ConcernCapital), #JobQuality Fellow
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