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The ICA Group History

At a meeting on August 18, 1977 at the offices of the American Friends Service Committee in Cambridge, Massachusetts a diverse group of academics, community organizers and activists, seeing the effects of deindustrialization on their local communities, decided to form the New England Workers Cooperative Association.

In March 1978, the organization changed its name to the Industrial Cooperative Association and selected one of its founders, Steve Dawson as the first Executive Director. The founders of ICA were inspired by the “Mondragon experiment” in Northern Spain. This unique ownership structure and entrepreneurial development model had succeeded in creating a rapidly expanding industrial complex that was creating good jobs within a relatively egalitarian and democratic organization. ICA’s founders wanted to bring this model to the United States.

The Early Years: 1978 to 1983

During its early years, ICA concentrated on education and advocacy work, introducing the concepts of the Mondragon Cooperative model to the US through educational materials and the publication of the ICA’s Model By-Laws. In 1983, ICA successfully introduced corporate legislation in Massachusetts that enabled firms to incorporate internal capital account cooperatives for the first time in the US. Versions of this law have subsequently been enacted in Maine, Connecticut, New York, Vermont, Washington, Oregon and Ohio.

In the early 1980’s as information on the Mondragon model spread, ICA, as the principle promoter of the idea, was increasingly being asked to provide direct assistance to workers and community groups who wanted to create their own worker cooperatives. As ICA gained direct experience in creating worker cooperatives, we soon identified the need for “friendly capital” as a significant hurdle to the creation of new cooperatives. As a consequence, in 1983, we created the ICA Revolving Loan Fund (now renamed the Local Enterprise Assistance Fund, LEAF) as a support corporation to ICA.

Home Care, Troubled Companies & the Democratic ESOP: 1983 to 1994

The passage of a major overhaul of the tax law in 1984 encouraged the growth of Employee Stock Ownership Plans and the ESOP became the dominant form of employee ownership in the US. The challenge with ESOPS is that because the shares are held in trust for workers, their ability to control the company is uncertain. In response, ICA developed the concept of the “Democratic ESOP” and added this mechanism to the range of tools it would consider using to build democratic worker owned companies. It was during this time that we changed our name to the ICA Group.

The 1980’s and 1990’s continued to see enormous shifts in the economy away from manufacturing towards a service economy – hundreds of communities were ripped apart as the major employer closed up shop. Across the country in industries such as textiles, aluminum, paper, steel, and rubber, ICA worked with state, local, and tribal governments as well as labor unions to stem this tide through employee buyouts. While many of the dozens of companies ICA helped transition to employee ownership continue to flourish, this strategy did not lay the groundwork for a broad and expansive worker ownership community in the US. In many cases, employee ownership staved off closure for a time, but in a globalized economy, often the best we could hope for was enough time for older workers to retire and younger workers have some time to figure out how to retrain and move on.

In 1985, ICA helped develop the business plan for Cooperative Home Care Associates – today, the largest worker co-op in country. This effort would not only lead to the development of one of the most successful democratic businesses in the country, but shape ICA’s approach to enterprise development as a means to address poverty and income inequality.  After the success of Cooperative Home Care, ICA in partnership with CHCA and its new affiliate PHI, sought to replicate CHCA’s success in numerous cities. In Pennsylvania, Massachusetts, Connecticut, New Hampshire, and North Carolina, ICA helped start home care companies. While many of these firms were unable to survive drastic cuts in government payments, the lesson was clear – to make a difference in workers lives required a concerted strategy built of a deep expertise of a particular industry and market.

The Rise of Social Enterprise: 1994 to 2007

The rapid expansion of the temporary staffing industry in the early 1990’s caused ICA to explore ways it’s successful strategy in home care could be replicated as a way to address the inequalities this rising contingent workforce had on the country. ICA helped start five social purpose staffing firms focused on providing support services to people with barriers to employment. By the early 2000’s the “Alternative Staffing” sector had grown enough to warrant the Ford Foundation to sponsor a national study of alternative staffing service providers. Subsequently, with funding from the Charles Stewart Mott Foundation, ICA explored the idea of establishing a national network to support this emergent sector. With funding from Mott, ICA launched the Alternative Staffing Alliance in March 2007 with 13 charter member organizations. Today, the 60 ASOs across the country provide employment opportunities for over 30,000 people with barriers to employment annually.

ICA continued to support troubled companies throughout the 1990’s and early 2000’s, conducting research and providing technical assistance to the Employee Ownership Centers of New York, Ohio, Vermont, Michigan and jointly administering the office in Massachusetts with Ownership Associates until funding was cut due to the Great Recession in 2008. It was during this time that ICA began to approach conversions to worker cooperatives. Some of ICA’s early conversion initiatives included South Mountain Company, Big Timberworks, Los Flores Metalarte, Chroma Technology, Once Again Nut Butter, Marland Mold and many others. Today, ICA continues to support small and medium sized businesses looking to cement their legacy through selling their firm to their employees.

An Industrial Focused Theory of Change: 2007 to Today

While employee ownership does hold enormous promise to address the issue of income inequality, to start moving the needle on making systemic change requires a thoughtful and long term approach rooted in a deep understanding of an industry. Unless and until democratic firms control a significant portion of the market we will not be able to influence employment practices and public policy on a broad scale. What is required to meet that goal is an approach that works to develop firms that are of a scale that can demonstrate to the broader business community that democratic ownership is not only a viable business model, but the best choice for broadening economic prosperity.

Unfortunately, although perhaps understandably, to date most cooperative development organizations have taken a different tactic: using a neighborhood-based approach to pursue multiple ventures across a wide array of industries, all located in the same geographic area.  While this approach may appeal to local funders and political leaders, it structurally limits the ability to build firms that can achieve significant market share.  It also reduces the chances that any one of the different ventures will be successful by stretching resources, partnerships, and business acumen in many different directions at once.

“Place” is critical, but without an approach that accounts for the realities of an increasingly competitive national and global economy, local businesses are put at a structural disadvantage.

As ICA has demonstrated in the home care and temporary staffing sectors, an industry focused replication strategy holds much more promise for achieving success on a scale that can actually realize social change, making a real difference to the most number of people. Business replication, especially in sectors that are capital intensive or employ large numbers of people, requires in-depth expertise, where the fine details of markets, operations and supply channels are thoroughly understood. By taking proven business models from a few carefully selected sectors and adapting them to a variety of local markets, we apply a development process across several new communities which continually builds on the learnings of previous projects. In many ways this is actually a better strategy for achieving the goals of neighborhood-based development as well, because the businesses that are developed in this manner will have a much higher chance of succeeding and actually creating lasting jobs.