A Different Type of Development

A Different Type of Development

Henry Liefermann and Preston Quesenberry –H.L. AND P.Q.

Vol. 18, No. 3-4, 1996 pp. 19-21

It took a coalition of whites and blacks to win the only election victory at a local utility co-op during the original Co-op Democracy Project efforts in 1983. Working together, the reform coalition successfully elected five new candidates to the board of directors of the Dixie Electric Membership Cooperative in Baton Rouge, Louisiana. What has happened since that victory serves as an example of both the opportunities offered by cooperatives and the difficulties in maintaining full democratic participation.

Coalition and Change

Dixie EMC serves parishes circling the metropolitan Baton Rouge area, including both suburban and rural areas. Dixie’s suburban customer-members are a largely white population, while the rural areas are populated mostly by African Americans, who currently make up about a third of Dixie’s members.

In mid-February 1983, the Dixie campaign began with the usual meeting to inform local activists and community leaders about the Co-op Democracy Project and to enlist their support in the upcoming effort. Participants included representatives from the Louisiana Legislative Black Caucus, the Southern Cooperative Development Fund, and the Louisiana Hunger Coalition, along with a number of welfare rights activists.

Unknown to Project organizers, another group already had formed in hopes of changing the membership of Dixie’s board of directors. Its members — almost all white and residents of the Baton Rouge suburbs–had adopted the name “Dixie Watch.” Staff from the Co-op Democracy Project began meeting with representatives from Dixie Watch, and a loose coalition developed. Time was short because Dixie EMC’s board of directors election was scheduled for late April, two months away.

The Co-op Democracy-Dixie Watch coalition had one other rarity working in its favor. Unlike almost all other Black Belt co-ops, Dixie EMC’s election procedure was simple and direct. It took signatures from one per-cent of the customer-members (or about 450 members at that time) to nominate a candidate for the board. Voting was done by mail, and the infamous use, usually misuse, of voting by proxy was not allowed, meaning the incumbent board could not re-elect itself simply by gathering proxies from hundreds of disinterested customers and co-op members. Finally, the directors were elected by district, and not through at-large voting.

Dixie Watch agreed that its voters would support two candidates backed by the Co-op Democracy Project in election districts where some of its mostly white supporters lived. In return, the predominantly black Co-op Democracy Project participants agreed to support three Dixie Watch candidates in districts where they lived. When the votes were counted, all five new candidates backed by the coalition were elected to the board of directors of Dixie EMC.

At the first meeting of the Dixie board following the elections, two incumbent board members resigned. They were replaced by an additional two new directors, and the seven new members of the Dixie EMC board totalled a majority. To symbolize the change, the new board officially changed their co-op’s name from Dixie EMC to DEMCO in 1984.

“Quiet” Aftermath

Presently, four of the candidates elected in 1983 are still serving on DEMCO’s board; of its thirteen members, eleven are white and two are black.

Each year between 1985 and 1989, anywhere from two to five new candidates ran against incumbent DEMCO board members, and one to two new members were elected each of these years with the exception of 1989. A quorum was not reached, however, in any of the elections between 1985 and 1988, since DEMCO’s bylaws require fifteen percent of the co-op’s members to mail in ballots for a quorum and an average of only 12.5 percent of members did so. Still, because a quorum was reached in the candidates’ specific districts, the elections of the new board members were valid.

In the 1990s, things have been even more “quiet,” according to DEMCO’s head of marketing, Mark Bonner. Incumbents have not been challenged and quorums have

Page 20

generally not been reached. After a quorum of 18.6 per-cent of the members mailed in ballots in 1990, an average of only 7.6 percent of members mailed in their ballots over the next five years. While the number of mail-in ballots has been unimpressive, the turn-out at DEMCO’s annual meetings has been far worse: in the 1990s, less than two members on average have showed up at annual meetings.

Eugene Traylor, one of the five reform candidates elected in 1983 and president of the DEMCO board since 1990, admits the new management has not been able to bring about a marked increase in democratic involvement, but says it has attempted to do so by changing the co-op’s bylaws. Although Dixie’s election procedure was already simple and direct relative to most co-ops, DEMCO’s new board of directors made it even simpler. Before 1984, for example, candidates needed to get signatures from one percent of the members to get their names on the ballot; because of bylaw changes made by the new board only fifty signatures are required now. In addition, candidates in 1983 could be validly elected from their district only if their was a quorum in every district, including their own. Since 1985, candidates have only needed a quorum in their own districts. Finally, in the interests of gender equity, new bylaws clarify that both husband and wife are members who can cast their household’s one vote, while previously each household could have only one member as well as one vote.

Traylor says the board has also been able to come through on its central campaign promise–lower rates. DEMCO’s residential customers saw their rates fall from 10.5 cents per kilowatt-hour to just under eight cents.

Incubator for Development

Traylor also included economic development initiatives among his list of the board’s accomplishments. In 1992, DEMCO secured a $100,000 zero-interest loan from the RUS’s loan and grant program to help a hospital furniture company based in St. Helena Parish expand its operations, creating ten jobs in the process. A fire truck assembly company based in Baton Rouge also needed to expand its operations and was planning to relocate out of state; instead, a $400,000 no-interest RUS loan secured by DEMCO encouraged Ferrara Fire Apparatus Company to relocate to the tiny Louisiana town of Holden (population 500). The company transferred seventy-five employees from its old site and hired seventy-five new ones from Holden and the surrounding area.

DEMCO is not particularly extraordinary among co-ops in the extent to which it has taken advantage of RUS loans and grants, nor in many of the specific ways it has used them. More unique is DEMCO’s Dixie Business Development Center (DBDC). The center is one of only about 500 to 600 such “business incubators” in the country, very few of which are sponsored by utilities and fewer still by co-ops. In Louisiana, only one other co-op (South-west Louisiana in Lafayette) sponsors a business incubator and no investor-owned utilities sponsor one.

DEMCO started its own incubator in 1993, after it moved from its former facility. Now, the utility’s former facility is available for office, manufacturing, and warehouse space. Tenants in the center receive flexible leases, utilities, secretarial services, janitorial services, telephones, copiers, data and word processing, and marketing, business, and financial counseling. After anywhere from six to thirty-six months, tenants are expected to “graduate” into private sector facilities. The center also helps aspiring entrepreneurs set up businesses in other locations, by providing them with financial counseling and helping them secure bank loans.

In all, DBDC has helped thirty-six entrepreneurs to start up businesses, which, in turn, have generated 256 new jobs. Sixteen of these businesses are currently located at the actual development center in Livingston Parish, while the other twenty are spread throughout six parishes in Louisiana and one county in Mississippi. Three of these businesses are owned by women and another three are owned by African Americans.

Aspiring entrepreneurs throughout the state hear about the incubator largely through an A.M. talk radio show called “Spotlight on Business,” hosted by DBDC executive director Bob Fouchard. The show attracts hun-

Page 21

dreds of Fouchard’s listeners to his center each year.

Fouchard says he gives priority in the competition for DBDC space and services to those who have firm financial backing, some prior business experience, and a workable plan. “We go through a pretty good pre-screening process,” Fouchard said. “About ninety percent of the people who come in here don’t qualify to start up a new business, largely because they don’t have any money and they want someone to loan them a bunch of money. We’re trying to help people go into business who are logical to go into business.”

Recently, the RUS has approved a $400,000 grant (which DEMCO will match with $80,000) for the expansion of the DBDC–the first-ever RUS loan for a business incubator.

Rural Economic Potential

By providing the support services and counseling for some local residents to become entrepreneurs, incubators like the Dixie Business Development Center may represent a better strategy for rural economic development than more traditional strategies of industrial recruitment. With entrepreneurship, economic development is done by rural residents (if only a handful) rather than to them by outside developers who receive a generous package of “incentives” (tax credits, no-interest loans, free land) and a disproportionate share of the benefits. But, as Fouchard’s comments indicate, incubators can only help a small minority of the rural South’s residents–those who already have a significant amount of capital to invest in their own business.

In addition, there are no guarantees that the average seven to eight workers employed by the incubator’s local entrepreneurs will have more democratic control over their work environments than employees of transplanted businesses. Nor can one assume they will receive higher wages that provide an adequate family income. Finally, there is no guarantee that the businesses “graduating” from the business incubator–which will be run first and foremost in the interest of private profits–will necessarily work in the interests of the larger community of DEMCO’s customers-members who are helping to subsidize the DBDC.

If DEMCO’s members were to become more actively involved in their co-op, however, a different type of rural economic development might be possible–a type democratically controlled and specifically designed to serve the community’s needs as its members see them.