Ownership gives British workers a boost. How employee buyouts bring incentives and (welcome) problems
Six years ago when he was a herdsman on a Hertfordshire farm and unable to get a mortgage to buy a home, Peter Wills could scarcely have imagined how well he would be placed today. Mr. Wills is the perfect model of Prime Minister Margaret Thatcher's vision of a property-owning, share-owning democracy for Britain.
Not only has Wills secured a three-bedroom home, which has doubled in value, but he's also buying up stock in his company - the National Freight Consortium - in which he is employee, owner, and shareholder all rolle in one.
So, too, are the other workers at the National Freight Consortium (NFC), Britain's largest freight transport company - as a result of a remarkable management-worker buyout.
Michael Sweet, director of corporate planning at NFC, explains the significance of this particular brand of privatization:
``The big difference is that control of this company rests with the shareholders, which are largely employers and pensioners.... Control in other companies doesn't rest with the employers.''
The 1982 buyout of the National Freight Compnay Ltd., as it was known then, from the government for 53.5 million brought a dramatic reversal in the firm's fortunes.
One London banker says that prior to the buyout, the company was ``a complete shambles losing a lot of money and providing terrible services.''
Since the buyout, the company can scarcely put a foot wrong. Last year saw turnover increased 12 percent; profits grew 45 percent while earnings per share went up from 14.3 percent to 21.4 percent.
Initially only a third of the work force wanted to buy into the newly privatized firm. Since then the figure is climbed to 65 percent.
Many of the staff invested their life savings or remortgaged their homes to buy into the company. Practically none of them had ever held stock in a company.
Those who came in at the beginning to pay for the shares which could be purchased for a pound each have seen their investments increase 42 fold.
As a result, workers previously of modest means suddenly found they could buy more expensive homes, embark on world tours, and visit relatives in far-off places like Australia and New Zealand.
Wills, who is an office services assistant, was unwilling to reveal just how much he invested at the start, but he continues to buy stock even though the shares now cost 42 each.
Wills says things have worked out ``very well.''
``I'm very happy with what I've got. It's enabled life to be easier. I have a house now which I didn't have previously. Your capital is building up all the time and increasing all the time,'' he says.
One manager, more forthcoming on the return on his money, said he had invested 10,000 initially. Although, he said, he had disposed of some of his stock, his remaining investment was now worth 350,000.
``It transforms your life. It certainly transformed my life,'' the manager says. ``It gives you all sorts of problems, but what wonderful problems!''
Although the Transport and General Workers Union - to which most of the NFC workers belong - was adamantly opposed to the privatization because it believes national assets should remain in state ownership, other unions were less hostile. Their attitude was that if a firm was going to privatize, this was the way to do it.