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Cooperation in Finland 2014

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Cooperation in Finland 2014

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Cooperation in Finland 2014

  1. 1. Co-operation in Finland
  2. 2. 2006 The introduction of co-operation in Finland was connected to the struggle for independence Finland autonomous in the Russian empire: • own administration, languages, laws, money February manifesto 1899 • russification • withdrawal of autonomy? Intellectuals mobilise • “We need an organisation that can serve as a means for the people to unite themselves” • Turn objects into subjects • Cultural organisation might be seen as too political – Russia wont allow it • Also, a purely cultural organisation wont interest or unite people enough -> has to be economically useful
  3. 3. Conditions in Finland in 1900 • 90 % of population bound to agriculture • In Finland feudalism was never established and serfdom did not exist, but tenant farmers (sharecroppers) were at a disadvantage • There had always been mills, seine’s (fishing) and other ways people cooperated • Gebhard: farmers' cooperation is the rock upon which the major social improvements and perhaps in the future nationhood and independence is possible to build up
  4. 4. 2006 The birth of the Finnish co-operative movement Hannes Gebhard (1864-1933) Hedvig Gebhard (1867-1961) • The Gebhards travelled abroad to learn about cooperation in Germany, France, Denmark, Sweden etc. • Book on Farmers’ co-operation abroad. • Pellervo was established to promote free co- operation in different agricultural sectors and to spread the co-operative idea in general. Gebhard’s and staff working at Pellervo”When the Finnish cooperative movement was established”
  5. 5. • Founded in 1899 • service organisation for all Finnish co-operatives and a forum for co-operative activities of all sectors • Non-governmental organisation • Goal is to make the co-operative business model more known to the public • Offer the co-operative model as a competitive alternative for those thinking about starting a business • Pellervo –name comes from the national epic of Finland Kalevala where Sampsa Pellervoinen is the patron of field and harvest Pellervo – confederation of Finnish cooperatives Hannes Gebhard (1864-1933) and Hedvig Gebhard (1867-1961) Pellervo Day at the Old Student House, Helsinki
  6. 6. TOTAL NUMBER OF MEMBERS IN PRIMARY CO-OPS in 1902–2006 in Finland 0 500 000 1 000 000 1 500 000 2 000 000 2 500 000 3 000 000 3 500 000 4 000 000 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2001 persons Forestry co-op Meat co-ops Co-op dairies Co-op banks Consumer co-ops
  7. 7. Why did cooperation spread so quickly?  Pellervo worked hard to spread cooperation. Spokesmen were sent all over the country.  Clear social demand for cooperation  No services or of poor quality, overpriced goods, weak competition and monopolies, no credit system, no market for agricultural goods  The cooperative network model was built in just a few years: central bank in 1902, central retail cooperative in 1904 (SOK), central dairy cooperative in 1905 (Valio) and also farm supply in1905  First Co-operative Act in 1901
  8. 8. Early development of the Pellervo Value System
  9. 9. 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Pellervo’s administration Founders Cooperatives/Central organizations Members Import protection Export subsidy Wartime economy/Agricultural produce pricing act Beginning Upswing Supply of food for people/ Reconstruction/ Regulation Upswing/ Consensus/ Regulation International- ization/ Competition Development phases of Finland and Pellervo cooperation
  10. 10. Co-operatives in changing economic systems throughout the years 1900-1920 Free market Rapid foundation of cooperatives in Finland 6000 co-ops in the 1930’s 1920-1980 Protectionism Cooperatives played a special logistic role Economic aspects of business were often disregarded in the closed economy 1980- > Market economy, globalisation Fall of the iron curtain Deep depression in Finland Finnish EU membership 1995
  11. 11. The cooperatives: some thrived, some survived, some died + managed to find competitive advantages and change their corporate culture + consumer co-ops and co-op banks + Valio-dairy cooperatives and Atria-meat cooperatives (formation of hybrids to gain capital) Those who began their developing processes in the 90’s had some difficulties, but found their way (HKScan- meat cooperatives) - Bad economy and structure developed during the closed period - Corporate governance = top driven by managers and unskilled administrators unable to see or accept that times are changing - Bankruptcy (small dairies, Novera) or debt restructuring (workers’ consumer cooperatives, one meat cooperative) THRIVED SURVIVED DIED
  12. 12. Number of co-operatives in Finland • 4500 • 5200 (according to Trade register, but ~700 not operating) • 2461 (Statistics Finland business register, 9/2015) • Statistics Finland excludes all smaller enterprises • Business is included if: • It has been operatign over six months and empoyed more than half a person or has a turnover that exceeded the statistical threshold defined each year (10 846 € in 2013). • Balance over 170 000 €
  13. 13. Co-operatives by branch of industry 0 100 200 300 400 500 600 700 800 900 1000 1 Water supply, sewerage, waste management and other remediation activities
  14. 14. Co-operatives by size
  15. 15. 2014 Amount Members Personnel Turnover Mill. € Market share % Meat Co-operatives 4 6 595 12 058 3 431 85 Dairy Co-operatives 22 8 103 5 010 3 256 97 Egg Co-operatives 1 148 81 33 38 Vegetabel Co- operatives 5 300 60 50 Forest Co- operatives 1 121 941 10 410 4 970 39 Animal breeding 1 10 095 383 34 100 Tradeka (Restel) 1 255 705 5 370 466 19 Electricity Co-ops 7 35 168 140 87 Phone Co-ops 10 100 000 2 520 514 Retail Co-ops (S-group) 29 2 156 828 40 292 11 182 46 Co-op Banks 217 1 563 972 13 008 2 832 41 Mutuals 26 2 573 933 5 254 2892 45 1) 3) 4) 2) 7) 6) Total number of cooperatives in Finland according to Trade Register was 5 051 (October 2015). 1) Meat from producers 2) Milk from producers 3) Eggs from producers 4) Share of market logging from private forests 5) Consumer cooperatives sales 6) Deposits (incl. S-Pankki) 7) Premium income 5) Cooperation in Finland Facts and Figures
  16. 16. 0 50 100 150 200 250 300 Number of cooperatives founded each year since 1987- 1987 57 1988 36 1989 52 1990 83 1991 77 1992 61 1993 69 1994 76 1995 123 1996 174 1997 262 1998 272 1999 221 2000 257 2001 131 2002 142 2003 243 2004 201 2005 186 2006 198 2007 193 2008 158 2009 172 2010 173 2011 213 2012 228 2013 208 1-9/2014 179 4445
  17. 17. Increasing number of memberships in Finland 84 % 56 % 26 % 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% At least one membership At least two memberships At least three memberships Average 2,1 memberships per person Farmer: average 4,1 memberships
  18. 18. 73% 40% 25% 16% 8% 7% 5% 1% 2% 0% 20% 40% 60% 80% 100% Mutual insurance Most members in consumer co-ops and co-op banks Forest (Metsäliitto) Local insurance Water, energy and telephone co-ops Co-op banks/OP-group Consumer/S-group Co-op banks/POP-Group Others Small new co-ops (worker, social care) Survey 2007 TOTAL (n=1113)
  19. 19. Summary – Co-operation in Finland The most co-operative country in the world 7 million memberships 1950s: 9 000 1990s: 1 000 2015: 5000 84 % are members in at least one cooperative Co-ops count for 12 % of the turnover of 500 largest companies in Finland Co-ops employ 17 %
  20. 20. consumer forest meat dairy consumer meat consumer consumer
  21. 21. Cooperation in a changing world Work and entrepreneurship • Employee-owned coop • Coop owned by the retailer • Network of entrepreneurs • Team business at a school • Cradle of entrepreneurship Part of everyday life • Consumer coop • Producer’s coop • Coop bank • Mutual insurance Technology for community use • Broadband coop • Energy coop • Water coop • Electricity coop • Phone coop
  22. 22. The Finnish Co-operative Act • In force since January 2014 • The fourth cooperative law in Finnish legal history • First Law on Cooperation in 1901 • Second in 1954 and third in 2001 • Changes in these laws can be summarized as relating to securing sufficient capitalization of cooperatives • Terminology as close to the Limited Liability Companies Act as possible • Improve the competitiveness of cooperatives by facilitating their foundation (1 member only required), access to financing and their management, while preserving the minimum cooperative standards • By-law autonomy is great, a co-operative can depart quite a lot from what is suggested by the Act
  23. 23. Co-operative business advice and support  31 start-up agencys in Finland (for all business forms)  Efforts in strengthening their knowledge on co-operatives  Coop Finland Ass. (at discretion)  Tampere Region Co-operative Centre since 1998  Publicly funded in Tampere for 10 years but ended in 2015  Were free of charge but now are paid (for entreprises only)  Public employment and business services (TE)  Isolated projects and training  Pellervo offers advice and support
  24. 24. Co-operative responsibility: development steps The Co-operative magazines’ analysis based on annual reports from 2014: - turnover, number of emplyees, avarage age of employees, sick leave (%), frequecy of accidents, income tax, investments, (renewable) energy consumption etc. Good business practice - Most SM co-ops - Small co-ops Stakeholder value - POP banks - most bigger co- ops Voluntary responsibility - S-group (retail) - HKScan (meat) - Muna Foods (egg) Responsibility as competive advantage - Metsä Group (forest) - Valio (dairy) - Atria (meat) - OP Cooperative (bank) - LocalTapiola (insurance) 1 2 3 4
  25. 25. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 The Co-operative Decade in Finland Project on Co-operative Entrepreneurship Yhdessä yrittämään Taxation Representation in the ICA board (Santamäki) Project on Co-operative Education (Yvi) Virtual environments on co-operative knowledge (MOOC) Professorship on Co-operative Management Co-op Network Studies Working groups for the IYC and the Co-op Decade Hedvig 150Hannes 150 Co-op Law Journal of Cooperative Organization and Management Blueprint for a Co-operative Decade Governments’ Plan of Action 2015-2019 Representation in the board of Cooperatives Europe (Näsi) Targets for the governmets’ plan of action 2011-2015 IYC The Finnish Co-operative Council Supporting co-operative education and research
  26. 26. Presentations of different co-operatives in Finland • Co-operative hybrids • Meat co-operatives (Atria and HKScan) • Dairy co-operatives (Valio) • Egg and vegetable co-operatives • Forest co-operative (Metsä Group) • Consumer co-operative (S-group) • Co-operative banks (OP Cooperative)
  27. 27. The cooperative hybrids • Model with primary cooperatives controlling a plc (limited company on the open stock market) • Formation of hybrids to gain capital • The plc is vital for the function of the primary cooperatives • Control managed by shares with graded voting rights • Hybrids occur: • Atria and HKScan in the meat sector. Controlled by primary cooperatives • Metsä Board in forest and paper industry. Controlled by primary cooperative Metsäliitto • Pohjola-Pankki. Central bank for primary cooperative banks and controlled by them.
  28. 28. Meat cooperative hybrids • Two cooperative groups in the meat sector with a public limited company (plc) on the open stock market • Atria plc is controlled by three northern primary cooperatives. Atria´s turnover 1 400 million euros. Members in cooperatives 6000. • HKScan plc is controlled by one southern primary cooperative. HKScan has a turnover of 2 500 million euros of which a mayor part comes from the activities abroad. The cooperative has 1400 members. • The plc:s process and market the farmers´ produce.
  29. 29. HKScan: public company controlled by a cooperative. Has meat prosessing companies in Sweden, Denmark, Estonia, Latvia and Poland. Sales companies in Lithuania, Germany and England + representation in Russia. Atria: public company controlled by three cooperatives. Operates is Sweden, Denmark, Estonia and Russia. Atria. Turnover €1,3 Bn Finnish meat cooperatives have internationalized HKScan Turnover € 2,5 Bn Meat markets Estonia 35 % Latvia 18 % Lithuania 10 % Poland 10 % Sweden has lost most of its meat processing to the Finnish co- operative-hybrids
  30. 30. Valio Group • 8 000 milk producers • 8 dairy cooperatives • Valio Ltd, 100 % owned by cooperative dairies • turnover EUR 2 billion. More than 1/3 abroad • Personnel 4600 • Invesments in 2013: 118 million euros • functional foods • Subsidiaries in 5 countries (Sweden, Estonia, Russia, China and USA), exports to over 100
  31. 31. Eggs & Vegetables Small in turnover compared to milk and meat • Eggs. one cooperative Munakunta with 220 members. Market leader with a 40 % market share. Turnover 60 million euros. • In June 2014 Danish HEDEGAARD foods acquired 50% of the shares of Munakunta. A new company will be formed called Muna Foods Oy. All business activities in Munakunta will be transferred to the new company. • Eggs are protected from import because Finland is salmonella free. • Vegetables. Two major cooperatives one specialized more on tomatoes and cucumber, the other on open-field cultivation (leek, lettuce etc.). Small potato cooperatives. • Total turnover 60 million euros and 350 members.
  32. 32. Forest sector Metsä Group  124 000 forest owners as members in the cooperative Metsäliitto  Once the largest producer cooperative’s in Europe, now 5th  Metsäliitto controls Metsä Board plc on the Helsinki stock market  Tissue and cooking papers, board, pulp, wood products and wood supply  Turnover EUR 2 billion (2013)  Employes 3100  9 production units in three European countries
  33. 33. Consumer cooperatives The S-Group - consists of 20 independent, regional cooperatives and the SOK which is owned by them - 8 local cooperatives are also included in S Group - market share in daily goods 44 % - biggest hotel and restaurant owner in Finland - second largest in petrol stations - S-bank has 2,8 % of deposits - first and only in-store bank in Finland - in 2014 S-bank and LocalTapiola Bank merged The Tradeka cooperative - one cooperative with 270 000 members - strong in hotels and restaurants; turnover 580 million euros - has no retail anymore
  34. 34. The S Group in brief, 2014 • SOK (Suomen Osuuskauppojen Keskuskunta) operates as the central firm for the cooperatives and produces procurement, expert and support services for them • SOK is also in charge of S Group's strategic steering and the development of the various chains • S Group has operations throughout Finland, in the Baltic Countries and in St. Petersburg, Russia • Retail sales: EUR 12 billion (excluding VAT) • Profit before exceptional items: EUR 212 million • Bonuses etc. paid: EUR 420 million • More than 2 million members • Over 1 600 outlets • 47 400 employees
  35. 35. S-Group business structure S Group Grocery Trade Chain management Cars and automotive goods Hotels and restaurants Service station stores and fuel sales Grocery sales Agribusiness Department stores and speciality goods Other S Group’s restaurants S Group’s car dealerships S- bank
  36. 36. Cooperative banks and insurance • Cooperative banks • two competing cooperative bank groups • 1,5 million memberships • OP Cooperative, including Pohjola Bank plc, biggest Finnish owned finance group • market share over 37 % of the deposits • increasing bonuses • S-bank ltd owned and run by consumers´ coops has 2,8 % of deposits • Mutual insurance • mutual fire insurance started in 1660s • strong indemnity (damage) insurance • nearly all obligatory pension insurance is mutual
  37. 37. The OP Cooperative in brief • Finland's largest financial services group • Consists of some 180 independent member cooperative banks and OP Cooperative which they own, including its subsidiaries and closely related companies • Cooperative bank federations are member banks' regional cooperation bodies. There are 16 federations, taking the form of registered associations. The federations nominate their candidates for the OP Cooperative Supervisory Board • OP Cooperative carries out control and supervision duties from its position at the head of the financial and insurance conglomerate formed by OP-Pohjola Group. It also acts as the Group's strategic owner institution.
  38. 38. The Corporate Governance of OP Cooperative
  39. 39. Housing in Finland • Around 100 housing co-operatives • First one in 1906 in Vaasa (Framtid) • In resent years no new co-ops • 2/3 of Finland's housing stock consists of owner-occupied homes • Instead of a housing co-op, Finland has housing company's • legal entity that owns one or more residential buildings (non-profit Ltd) • Owned and managed by the residents. • The obligation to ensure proper maintenance of buildings and apartments is shared between the housing company and its shareholders.
  40. 40. Thank you!

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