University of Wisconsin Center for Cooperatives
Rural Cooperatives, March/April 1998, pp. 12-16
Published by the Rural Business and Cooperative Development Service
The Triumph of Dawson's Textile Workers
Left without jobs when their mill closed down, Georgia textile workers formed a co-op and re-opened it as its new owners
For 31 years, the people of tiny Dawson, Gal, depended on Almark Mills for jobs.
The fabric cutting and sewing plant employed as many as 900 people during the 1980s, turning out finished products for such well-known brand names as Ralph Lauren's Polo, Sara Lee Underwear and Hanes. And though the number of workers dropped to 200 by the mid-199Os, Almark Mills remained the third largest employer in Terrell County, where Dawson (pop. 5,300) is located.
All that, however, came to an abrupt halt in early October 1997, when Leeds Manufacturing Co., the New York-based company that bought the plant a year earlier, defaulted on a $770,000 loan. The owners abandoned the mill, leaving 200 people without jobs.
But just two months later, a remarkable turnaround was made. The padlock chains that had barred entry to the plant were removed and the plant was back in limited operation. This reversal of fortune was made possible thanks to a concerted community effort and financial and technical assistance from USDA Rural Development and other agencies. The former employees of Almark Mills are the new owners of the textile plant and have put the operation back in business.
How the employees of the Dawson Workers-Owned Cooperative (DWOC) reversed their fortunes, formed their own co-op and re-opened the mill is a success story that has left even the participants still catching the* breaths.
"We all have a new attitude toward life," says Dianne Williams, DWOC's board chairperson, who has worked at the plant for 29 years. "We can now say, 'We own what we do.' For us, the future is bright because we have something to look forward to. We never thought we would become owners of anything."
"Persons in this community doubted that women and minorities could make this work where it hadn't succeeded before," says Robert Albritten, the mayor of Dawson. "But we've made believers out of them."
"The new owners have pride and determination, they've become somebody," says Gregg White, Cooperative Services coordinator for USDA Rural Development in Georgia and South Carolina. "Their dreams can come true."
In the days before Almark Mills closed, Marcus Lemacks desperately searched for ways to keep the plant running. As president and general manager of Almark Mills, Lemacks knew the company inside out, and the bleak picture facing it.
Terrell County already had the third highest unemployment rate in Georgia. Its 1995 per-capita personal income of $14,417 ranked 143rd in the state. While farming peanuts and cotton was an important part of the local economy, even those crops had diminished in the past five years.
There were a handful of other major employers in Dawson: Tyson Foods (chicken), Dawson Manufacturing (rubber components for automobiles), Cargill (peanut processing plant) and the Terrell County School System. But most of the employees of Almark Mills had worked at the textile plant for 15-20 years. Their job skills were limited to apparel manufacturing. There were no textile jobs in the two closest towns: Albany, 25 miles away, or Columbus,60 miles away.
"This is a rural community," Lemacks says. "To try
and find work would have been impossible. There are only so many jobs in
fast-food restaurants or stores. We had two choices: unemployment or try
to retrain 200 people who averaged age 40."
"If the mill had closed permanently, there would have been 1,000 people- employees and their families-affected directly," says mayor Albritten. "Then there would have been several hundred more indirectly affected through stores where people shop, bank loans, you name it."
He adds: "Once people are out of jobs, an increase in crime can be expected. As a father of the community, I had to be concerned."
The Trouble With NAFTA
Furthermore, Dawson and much of the U.S. textile industry were facing another problem-the North American Free Trade Agreement (NAFTA). While this trade pact has created thousands of jobs across the continent, some localities-including Dawson-have been hurt by changing trade patterns.
"NAFTA has had a devastating effect on Dawson," says Lemacks. "It just opened the floodgates for everyone to run to Mexico and Canada."
The 1996 legislation removed trade barriers among the U.S., Mexico and Canada. Before NAFTA, a manufacturer might ship its goods overseas to take advantage of cheap labor, but it would have to pay a duty tax when the goods re-entered the United States. With NAFTA, duty taxes and quotas were eliminated.
"NAFTA eliminated the duty tax, and that's 30 percent of the value added," says Lemacks. "Here in the United States, we might pay employees an hourly rate of $8 per hour. That's competing with 35-40 cents an hour in Mexico."
Terrell County had been identified as one of 11 Georgia counties suffering job losses as a result of NAFTA. Since the enactment of NAFTA, Dawson's only other textile mill, Oxford Manufacturing Company, had closed down. Almark Mills' business had dropped sharply and its labor force had shrunk to less than 200 employees.
"All the textile mills within a radius of 50 miles
of Dawson have closed since NAFTA went into effect," Albritten says.
Finding a new job wouldn't have been difficult for Lemacks. He had 36 years in the apparel industry, most of it in management and consulting positions ranging from marketing to industrial engineering. He'd worked at Almark Mills for 16 years, where he was president and general manager.
But Lemacks couldn't let the mill- and its jobs-disappear. "When you work with a group for 16 years, you become like a family," he says. "We have feelings for each other, know each other's children."
By Oct. 3, 1997, Lemacks still had no solution. That day, the Bank of Terrell took possession of the mill and sealed its doors with a chain and padlock.
"The day the mill closed, I went home and thought, 'Now what am I going to do?"' remembers Williams, who'd gone to work at the mill when she was just out of high school.
Then, in a stroke of luck, Lemacks heard of a small but successful textile operation in North Carolina that had restructured itself as a co-op several years before. Through it, Lemacks first heard the name of Frank Williams of the Boggs Rural Life Center, a non-profit organization in Keyesville, Gal, that helps rural areas with economic development.
"I tracked him like a bloodhound until he agreed to meet with me," says Lemacks.
He and mayor Albritten met with Frank Williams and
learned what it would take to restructure Almark Mills into a worker-owned
co-opt Then they contacted Greg Garland, their local accountant, to put
together a business plan. By Oct. 6, they had formed the co-op, calling
it Dawson Workers-Owned Cooperative. Employees soon elected a board of
However, says Lemacks, "The one thing we weren't short on was determination."
"We had a meeting and all the employees decided this co-op was something that could work," says Dianne Williams, who was elected DWOC's board chairman by a large margin. "What we had to sell-all we had to sell-was our labor. We thought this could be great. I didn't even go look for another job."
With their business plan in place, Lemacks and his team applied to Georgia's Regional Development Center (RDC) for $150,000 in state emergency funds to start the mill operating again. Furthermore, each of the 200 workers pledged to pay $7.16 from future weekly paychecks (for a total of $1,500 each) until the loan was paid off. That investment would represent each employee's share in the ownership of the mill.
They waited for nearly a month to hear whether or not they qualified for the funding. But they remained hopeful.
"Here we had a 147,000-square-foot Marcus Lemacks, president and general manager of Almark Mills, played a key role in getting the textile plant back open building full of equipment," says Lemacks. "I knew with all the experience and contacts we had we could re-open the plant and make it a viable operation."
Finally, to their surprise, they got the money, with the RDC check arriving on Nov. 27.
Lemacks and the people of DWOC were further helped by Jack Tuck, the president of the Bank of Terrell, which held the note on the mill. Tuck realized that keeping the mill open would benefit the bank as well as the community. Tuck offered his support.
"Jack had a lot to lose if the co-op closed down," USDA's White says. "His bank not only financed the textile operations but it financed employees' homes and cars. If they lost their jobs, he would've lost everything too. He took the risk."
"The whole time the bank had the mill any eyes will
be upon us. We will not falter and we will not fail."
In addition, the area's utility companies -telephone, electricity, water-worked with Lemacks and the mill to keep those services running with little more than a promise to pay.
White had a further idea for the Dawson mill. "Saving jobs for the people of Dawson is a key issue," says White. "If we're going to reform welfare, cooperative development is one of the key instruments we need to use."
White began working through USDA channels to see about DWOC's chances for securing a Business and Industry (B&I) loan guarantee from the Rural Business Cooperative Service, an agency of USDA Rural Development. Under its B&I loan guarantee program, USDA enters partnerships with local lenders all across rural America to help finance businesses that will create or preserve rural jobs.
Funding available through the B&I program was expanded this year under the Community Adjustment and Investment Program (CAIP), the Clinton Administration's plan to offset job loss in the United States due to NAFTA. Under this program, USDA is authorized to make loans to businesses in up to 50 rural communities adversely impacted by NAFTA.
White was certain that DWOC was more than qualified for a USDA loan under the terms of CAIP. Applying for it would mean submitting more financial and paperwork, including a new business plan. But the effort might be worth it. White, Garland and the DWOC team went to work.
On Dec. 8, with RDC's $150,000 emergency funding,
DWOC resumed cutting operations with six to eight people. Then
The Christmas holidays came and went, with no heat inside the plant in an effort to cut costs. Lights were never left on unless someone was in the room. The new owners had decided there would be no wasting of time or money.
'We didn't buy anything we didn't need, only what was required to go in the cutting and sewing operation," Lemacks says.
The USDA Loan
Then, as winter was finally slipping away, Lemacks received the long-awaited news: USDA had granted DWOC a $1.4-million loan guarantee.
"That day, March 1, 1998, was the high point of the whole process," says White.
The loan is the first made in Georgia to a textile co-opt Its terms are 20 years at a 10.5 percent variable rate. CAIP funding was made available through USDA, partnering with the Bank of Terrell to finance the loan. If DWOC should default on the loan, the federal government would repay 90 percent of the debt. The other 10 percent would be made by Tuck's bank-after selling the plant to recoup the loss.
"The loan to DWOC was a project that represents the best of everything we have to offer," says Laura Meadows, Georgia State Director for USDA Rural Development. "It means sustainable development for rural Georgia."
With the USDA funds, DWOC immediately paid off its $150,000 RDC loan.
"That was a happy day," Lemacks remembers.
DWOC also bought the textile building and its equipment. Tuck sold the mill for a price sufficient only to recover his losses from Almark Mills.
"It was a very good purchase," says White. "DWOC paid much less than the $3 million it was worth."
DWOC got an added boost when Georgia Power Co. agreed to reduce the plant's power bill by 25 percent for two years.
"The way the community came together to support this was amazing," says White. "I've seen other scenarios where people walked away. The desire of this community to succeed and not give up was the best and most encouraging thing from day one. They were fighting for their lives and their jobs. Everyone, from the mill manager to the mayor of the town, was willing to do what it takes to see that this succeeded."
Gearing Up for the Future
Today, DWOC roars to a start every day at 7 a.m., just as it's always done. Except that things are done a little differently now. Employees bring their own coffee, paper towels and toilet paper to work. They don't take vacations, collect benefits or receive raises.
But every sacrifice brings the 169 employees a step closer to their dream of paying off their loan and becoming the free-and-clear owners of DWOC. So far, their plan is working.
"The eagle still flies every Friday," says Williams. "We still get that paycheck."
Like the other employees, Williams handles a variety of duties. She sews, inspects, checks quality, even sweeps and cleans.
"I will do whatever is necessary to get the work out," she says.
Among the employees, 25 have extensive management experience, whether with Almark Mills or other mid-sized apparel firms. Ten have engineering training and extensive experience in setting up and operating production lines. The company bulletin board states, "One Employee-One Share-One Vote." With the weekly payroll deduction of $7.16, it will take about four years for each person to purchase a share. If an employee should quit, the funds will not be given back.
"Becoming the owners of this plant has been a tremendous step forward," Lemacks says. "It shows the determination and dedication of these members."
DWOC now produces sportswear and lingerie for major U.S. retail chains, department stores and specialty retailers. (Lemacks won't divulge the names of DWOC's customers.) The co-op ships the goods to distribution centers or directly to customers.
"We are very versatile," says Lemacks. "We didn't want to be a factory that made only one product because that would limit us."
If all goes well, DWOC expects to increase its sales by 50 percent next year, Lemacks says. Sales for 1998 are expected to reach nearly $5 million, and $7.5 million for 1999. In fact, one of DWOC's management goals is to become the largest sportswear-sewing contractor in the Southeast. The group plans to continue to expand DWOC's labor force, with a goal of 350 employees over the next two years. The co-op also plans to manufacture its own sportswear item with its own label in the next year.
"All the worker-owners will have input in that decision," Lemacks says.
"We have also pledged that if others can use our expertise in forming a co-op, we'll help them," he says.
More To Learn
Still, there's a lot for the new owners of DWOC to learn.
"Yes, they've made the transition from employees to owners but now they have to realize what it takes to run a company," White says. "They've got to be aggressive, professional and innovative in management, research and development, quality control, and efficiency. They've got to be to get those name-brand contracts from the large corporations."
Most agree that learning to run a co-op will be hard work. Much will start with the board of directors. DWOC's board consists of eight directors, plus bank president Tuck and mayor Albritten as non-voting advisory members. Garland, who donated much of his time to help develop the financials for DWOC's loan packages, serves as the co-op's accountant.
"We want to get the board trained as soon as possible to function with proper management techiniques, so the organization will be competitive in the world market," White says. "The board will set policy - the road map for this company. The employees are going to drive the car."
For board chairman Williams, DWOC's transformation has meant new doors of communication among employees. "Before the women were always worried the plant would close," she says. "Now I can tell them anything they want to know. I will go as far as I can get them an answer."
"This cooperative is giving people investment and ownership where they have their destiny in their own hands," says White. "They're in the honeymoon stage now. But when the honeymoon's over, they can't sit still. They'll have to get down to the nitty-gritty."
"We will succeed," says Lemacks. "And when we do, we can be a model for others in the apparel industry to use to save jobs in other communities and states. We want to be the brightest of the shining stars. We realize there will be many eyes upon us. We will not falter and we will not fail."
On March 31, 1998, an official celebration was held at the DWOC plant to commemorate the rebirth of the mill. It was a sunny, beautiful day in Dawson. The event was attended by more than 300 persons. To the disbelief of DWOC's employee-owners, there were numerous federal, state and local officials and politicians also on hand to mark the occasion. There was laughter, plaque giving and applause. Jill Long Thompson, USDA Under Secretary for Rural Development, presented Lemacks and Williams with an oversized replica of the $1.4 million loan check. "It was an indescribable, glorious day," says mayor Albritten.
"We were in an ecstatic mood," says Lemacks. "We were happy, grateful. We had accomplished the first step toward climbing some very tall stairs."
But perhaps nothing symbolized the celebration or the new owners' pride more than one brief segment of the ceremony. In their hands, the employees held the chain once used to lock the doors of their mill. Now the links had been painted gold. In a jubilant moment, the new owners of DWOC proudly returned the chain to bank president Tuck, who took it back with a smile.