New Contract to Operate Cleveland Clinic Laundry Drives Expansion
by Jessica Rose
On May 10, I stood with city dignitaries, hospital executives, and over 100 shop-floor employees to witness an historic ribbon-cutting ceremony, as Cleveland’s Evergreen Cooperative Laundry (ECL) announced it was taking over operation of the Cleveland Clinic’s massive industrial laundry facility. The mood in the dressed-up loading dock was joyous, reflecting the pride of the multiple partners who have worked for nearly a decade to develop the Evergreen Cooperative Initiative, a nationally celebrated network of employee-owned companies designed to create good jobs and build community wealth in Cleveland’s historically disinvested neighborhoods.
As one of those proud partners, I too felt the pride and joy.
Smart Model for Addressing Poverty and Inequality
I first learned about the Evergreen Cooperatives nearly eight years ago, while venting to an activist friend, over drinks in a small town in Florida. Like so many of the community leaders I work with today, I was starved for new solutions to address systemic inequality.
“You know what you’d be really into?” my friend slurred, and then proceeded to rave about the Evergreen Cooperative Initiative. He explained how this group of employee-owned companies was creating jobs by incubating industrial-scale businesses that could serve supply chain needs at large institutions like the famed Cleveland Clinic. “Wait,” I said. “You mean the project addresses poverty without perpetual reliance on government or charity?” This was the smartest anti-poverty model I’d ever heard of. Eight years and an MBA later, it still is. But even more impressive than the design has been witnessing the execution.
Since moving to Cleveland to work at The Democracy Collaborative, which helped design and launch the initiative, I’ve observed ECL perform time and again as efficiently as any Silicon Valley start-up. ECL has beat the failure odds by overcoming operational obstacles, finding its place in the market, building a profitable business, and growing to the scale required to serve institutional buyers. One cannot underestimate the talent, dedication, and discipline that was required of ECL’s original employee-owners to build their company into a sophisticated provider capable of meeting cost, quality, and service standards for the nation’s fourteenth largest health system, while remaining true to their participatory culture and democratic ownership structure.
Opportunity for Expansion
One key challenge for ECL was finding a way to transcend the size and capacity limits it inherited from its original facility. That’s what makes this new operating partnership with Cleveland Clinic — in which ECL will manage a facility whose assets are owned by the hospital system — such a brilliant expansion option.
One cannot underestimate the talent, dedication, and discipline that was required of ECL’s original employee-owners to build their company into a sophisticated provider capable of meeting cost, quality, and service standards for the nation’s fourteenth largest health system, while remaining true to their participatory culture and democratic ownership structure.
“In 2009 when the original ECL Glenville neighborhood plant opened, the founding partners determined that it was too small to handle what would have been over 20 million pounds of laundry a year from the partnering hospitals,” recalled Cleveland Clinic’s Executive Director of Patient Support Services Ralph Turner at the ribbon cutting. No longer. “As we [Cleveland Clinic] determined that we needed a new partner to run our Collinwood neighborhood laundry plant,” continued Turner, “we put out a Request for Proposal. We received about seven, many from nationally and internationally operated companies, but Evergreen stood toe to toe with them… and won.”
I glanced at my friend Claudia, a worker-owner who has been with the firm since it first opened and is now second in command, in charge of onboarding the new class of future employee-owners. She was beaming
The contract to operate the new laundry facility will triple the size of Evergreen Cooperative Laundry, from 50 employees to 150. The result could soon be a $12 to $14 million impact on the local economy. “The Cleveland Clinic’s decision to partner with Evergreen immediately preserves more than 100 jobs in this neighborhood. And together we hope to double that workforce in the next couple of years,” Evergreen CEO John McMicken told the crowd.
Benefits of Employee Ownership
What’s more, these 100 new Evergreen employees may choose an accelerated path to ownership, with the opportunity to become full owners after six months. With ownership comes multiple benefits, including profit-sharing and a first-time homebuyer program that helps workers pay off homes within four to six years. Starting wages will also be 15 percent higher than under the former operator.
Done right, employee ownership can be a practical, market-based approach to improve family economic outcomes and create economic development in communities struggling in the wake of deindustrialization.
The economic impact is significant. But for employees of ECL the benefits go deeper. As Charles Cowlin, a veteran with a felony conviction, who had once been unable to find a job, told Next City, ECL gave him the chance he needed. Becoming a worker owner “changed my perspective on life,” said Cowlin. “It gave me another purpose, coming from wanting a job to now being part of something, being a co-owner of a business.”
Cowlin has been able to buy a house through the ECL homebuyers’ program. “I never dreamed anything like it,” he says. “The community I was raised up with, now they have this business and I’m a part owner in the same community that I grew up in. That’s a wonderful thing.”
Closing the Wealth Gap
No model is perfect. There are no silver bullet strategies to undo decades of economic decline and institutionalized neglect. But done right, employee ownership can be a practical, market-based approach to improve family economic outcomes and create economic development in communities struggling in the wake of deindustrialization. Evergreen Cooperative Laundry has proven this.
As my colleague Brett Jones, executive vice president at the Evergreen Cooperatives, said in the press release for this announcement, “This expansion validates the core idea at the heart of the Evergreen model — that businesses owned by workers can succeed and thrive in the market, helping close the wealth gap.”
Jessica Rose is cofounder of Fifty by Fifty, and CFO and director of employee ownership programs at The Democracy Collaborative.