How a Worker Cooperative Factory is Helping bring Textile Manufacturing back to North Carolina

October 20, 2014

NOTE: Images in this archived article have been removed.

Opportunity Threads is a worker cooperative cut and sew factory in Morganton, North Carolina. Started in late 2008, it’s an inspiring example of how democratic ownership in manufacturing can create jobs, empower workers, and even rebuild the value chains that sustain a community economically. To find out more about their story, we talked with Molly Hemstreet, the organizer, developer, and now worker-owner who got the ball rolling.

John Duda: Can you tell me a little bit about the backstory, first—where did Opportunity Threads come from?

Molly Hemstreet: Opportunity Threads is based in Burke County in western North Carolina. This is the county I grew up in—I’ve lived most of my life here. We’re kind of the edge of the Appalachian mountains, and really, in many of our communities, we’ve been makers. We can produce just about anything, especially textiles and furniture.

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Those industries are the lifeblood around which our economy has developed. I see them as sister industries—they’ve supported the growth of each other because for so much of furniture making, there’s a lot of sewing involved. The heart of furniture making in the United States has always been here in the Carolinas for various reasons.

So coming out of school—I went to Duke—I came back home and I became really interested in alternative labor models, because at the point when I was coming back (I had gone into teaching) this was when a lot of the offshoring started happening and a lot of NAFTA was hitting the fan, so to speak.

And we were feeling the effects of it. In our county, it seemed like almost every day there would be a plant that would close. But not just a plant of 25 or 50 people—it’d be a plant of 1200 people or 500 people. People were leaving work on Friday and then not going into work on Monday. All these workers—the people who had built these entities for years after years after years—they weren’t told that this work was leaving. They didn’t have another plan. When something is sold or offshored, those people who have worked those machines for years have no access to the wealth that’s been built up—there’s no capital left for them.

I was seeing that happening again and again and again. Because of this kind of ownership structure, even in a bad economy where these companies are offshoring, the owners are potentially becoming wealthy. But still it’s that workforce that’s always left behind. And it’s the workforce that has the skills, the workforce that has the vision, and it’s the workforce that’s often left with nothing even though they’ve built multi-million, billion dollar companies for people.

We just saw that happen over and over again, and it became a question for me, coming back into my community, what does something different look like? And how do you scale something that’s different? How does it not just remain a cottage industry? It’s the same question that I think a lot of people are asking, and I think those are healthy questions.

So that was the question I asked. I came back to my community, I taught school for a while, then I started doing community organizing in rural Appalachia, thinking about these questions of how you can build economic power, particular in marginalized communities. We tried a lot of different things. But it all came back to the question: how do you build, not just secondary incomes like you might in a farmer’s market, but how do you build primary income? How do you build structures around primary income? And how do you do it in entities like manufacturing, in a plant? Because you know, manufacturing is very scalable—it’s where there’s more access to capital on a lot of different levels.

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John Duda: And how did this all lead you to start a worker cooperative?

Molly Hemstreet: When I came back to North Carolina, I became interested in this model of worker ownership. We worked a lot with the Highlander Center out of east Tennessee, who helped us start to think about these questions: what does worker ownership look like, and can it be scaled in something like manufacturing?

At the time, Frank Adams, who wrote Putting Democracy to Work, and who is very well-known in the worker-owner movement, was living up in Asheville, so I sat down with him. And what he said was, “You know, the best way to try to understand this model is just to try it.” He had been working with Maggie’s Organics, who had started a cooperative in Nicaragua, and he told me that they were looking to do some domestic work. So I reached out to them, and they said they would like to try something domestically.

My husband had been doing labor organizing—he had been working a lot in the poultry industry and the meatpacking industry—so I was looking at this from a labor perspective. I knew how hard it was to do organizing in a place like North Carolina, where you’re not going to necessarily unionize because we’re a right to work state. We just started putting the pieces of the project together. We knew workers that had some consciousness about labor, and some workers that had stood up in the workplace, and so we pooled together an initial group of people. We had this market with Maggie’s, and this leadership with Frank, and so we were able to put these conversations together, and start in on the idea of building a cooperative.

We looked at our assets, our communities’ history—what is it that our communities can do? The answer was sewing and textiles—that’s what we can do. Even though that industry had taken a real hit, it was still what people had the skills to do, and it was still the infrastructure we had. The building we’re in now was a textile factory when I was growing up, and then it sat here empty for many years. And the workers that we had, whether they were immigrant or non-immigrant workers, a lot of them had that textile skill.

There’s a significant Guatemalan community that has come into Morganton—there’s actually a pretty cool book called The Maya of Morganton about what drew the Mayan community here. A lot of them in their home countries had worked in textiles, sewing or weaving. Many had come through LA, and had a background in the textile industry. And their parents and relatives back home had even been part of artisan cooperatives, so they understood this idea of collective ownership. This immigrant history merged with our own history of textiles in North Carolina—it’s a neat story, and it was the base for building Opportunity Threads.

We launched the project in 2009. We incubated in a Workers’ Center and we had one sewing machine and we were all volunteers. But since then, we’ve been able to gain a lot of traction. I stopped doing other organizing work and came on as a worker and an owner: I’m one worker-owner, one vote as well. We have 20 full-time people now, and we’re in about 6,000 square feet. We need about 10,000 square feet and we’re actually looking right now to potentially build some of our own facilities.

John Duda: Can you talk a little bit about the kind of work the business takes on?

Molly Hemstreet: We work with people from all over, sewing mainly sustainable products and lot of upcycled products, but crucially we help people with scaling that kind of thing. We’ve found really good ways to work with entrepreneurs and have been able to help them scale: we’ve had a lot of learning about that. Someone might have a great idea, might even have some capital, but they have no clue on how you scale. We’ve made a lot of mistakes and I think we’ve figured out a lot of things as well.

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John Duda: Who are the 20 folks working in the project? How do they become worker-owners?

Molly Hemstreet: Right now we have 20 people. Eight of those people are part of the ownership—there are six that are full owners and then we have three people that are what we call pre-members. And then we have everyone else, who are kind of en-route—we have a long vetting period. It’s up to about two years, and people also have to buy in at $5,000, so it’s a pretty significant commitment—and that’s what we want it to be.

Again, everyone comes on as an employee. They’re usually employees between nine or ten months, and then they’re voted in by their peers as pre-members. And then after pre-membership, they’re voted in as full members of the cooperative. That’s also when they pay in, they put down their payment. That part is pretty standard in the cooperative movement.

John Duda: It’s a really great model. Are you able to pay at or above the industry average?

Molly Hemstreet: Yes, but it depends on where people are in the process. When they’ve made it to cooperative level, their pay is above industry average, and includes benefits that they’ve been able to elect themselves. When they come in as employees, they’re more at industry average. We want to have that carrot for people to become part of the cooperative: we don’t want to just have people, we want people to be part of the cooperative. We don’t want to create some people that are cooperative members and then some that are not cooperative members. We want everyone to be part of the cooperative.

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We’re also working with Self Help, which is our cooperative credit union. They’re coming in two weeks to help us set all of this up—cooperative members are going to have 529 plans for their kids, which is a college savings account, as well as a retirement fund. And we’re trying to figure out a health benefits plan as well. These are the three types of benefits that the current workers elected that they wanted and that’s where we are right now.

John Duda: How about the business end of things? What does the future look like for the business?

Molly Hemstreet: We are in a place of profitability, so hopefully at the end of the year we will either turn that back into dividends to people, or we’re also in this growth phase, so we might really take that next leap and purchase more machinery and grow the business. We are basically out of debt, so that’s a good thing. In two months we’ll be completely out of debt. So we don’t have any debt that we’re servicing—we’ve been able to really be a strong business at the end of the day.

And that’s what we want to do. It’s great that we’re a cooperative, but that alone isn’t going to change this industry. First and foremost we have to be good at what we’re doing, particularly because this industry is so cutthroat. It’s so hard, particularly with so much that’s offshore. We have to really find those pieces that we can onshore or that we can be competitive on—a lot of it is about customization, a lot of it is about quick turn-around work. A lot of it is about how you take something that’s very handcrafted, and then make it at scale, but produce it so that it’s still very unique and still one of a kind.

That’s something that we’ve really gotten good at—the mass production of customization. A great example of this is a t-shirt blanket project that we have with Project Repeat, where each t-shirt blanket that comes out at the end of the day is different and unique, but at the end of the week we can make up to 300 of them. We’re scaling, but still doing customizations.

John Duda: To what extent are you able to tell this story about your mission—revitalizing an industry and building cooperative wealth—to the consumers who eventually buy the things you manufacture?

Molly Hemstreet: That’s an interesting question. Sometimes it’s tricky and we have to walk an interesting line with that. We have a Highlander fellow here with us this year, and part of her job is to tell our story—she actually used to work at Appalshop, a documentary filmmaking project that’s told a lot of the story of Appalachia. So she’s helping us tell our story.

But quite honestly, what we’re trying to do, day in and day out, is get our product out the door. We can’t just be a cooperative and think people will be drawn to us. What we have to do is be good at what we do. We have to be on time. We have to have high quality. We have to meet deadlines—if we say we’re going to ship something today, it has to be shipped out.

So first and foremost, we have to be just a good sew shop if we’re going to be competitive. Our hope is that then being a cooperative and really having the authenticity that comes with our model is the icing on the cake. A lot of the entrepreneurs we’re drawing in are coming to us because of our story, and we have to be very careful about how we market that—we’ve gotten burned quite a few times. The movement now is that you should tell the story of your makers and your relationship with them, but it also has to be deeply authentic. We’ve gotten burned a lot of times when people will make something and they’ll say they’re working with us, but they’re really not. Or they market us and they market our pictures—but this can be just another form of extraction—our product is also our story. We’ve worked hard to build a model that’s very unique within this industry and in this region. It’s working well; it’s not just a cottage industry. So we think that our commodity right now is our story, and we’re just trying to be very careful about it—we don’t want it just to be anybody’s story to tell. The only people that should be able to tell it are people that really earn our respect and build an authentic relationship with us.

So we have to just be careful about how our story is sold, because it’s selling other people’s products. We want to be sure that if we’re benefitting somebody else, we’re sure that there’s reciprocity included in that. Reciprocity looks like people honoring payments due to us, for one thing. If we’re building volume for you and you’re getting more traction because of our story, we want to be sure that volume is coming back to us. So we just have to be sure that someone else using our story doesn’t become another form of extraction—contract work in and of itself has somewhat of an extractive quality to it already. We’ve just got to be sure that if somebody’s telling our story, it’s on our terms.

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John Duda: It’s exciting that you are thinking not just about your business, but about transforming and rebuilding a whole industry, on different terms. Can you tell me a little about your involvement in the Carolina Textile District?

Molly Hemstreet: We helped start the Carolina Textile District. What we did is realize that so many people that were coming in were just not organized. They have a great idea, they’ve gotten some traction, but often their supply chain is not 100% together. What was happening to us was that we would get into production, and then there would be problems because they hadn’t used a good pattern maker and they hadn’t figured out the right amount of fabric, so we’d have 500 t-shirts cut and no fabric for the sleeves because they didn’t estimate right.

So I helped start the Carolina Textile District as a way to get entrepreneurs ready and really hoping that it would benefit us in production. And that’s what we’ve seen. In the past, we might have gotten 20 samples and 5 of them would have actually made it to production. Now, we have five or six samples and all of them will make it to production—because we’re sending these entrepreneurs through the District, and the District is helping to organize them. When they get to us, they’re more successful in production and they’re having a lot more success in the marketplace.

The District now has its own staff, and I’m trying to kind of spin it off more and more. To some extent, it kind of lives in Opportunity Threads often because we’re willing to take on those entrepreneurs. We’ll just have them come in for several days and spend time with us so they get to really see the process—the benefit is that the entrepreneur understands that leap from them sewing this in their house to putting this into a production facility. We’re small enough where they can experience that, but we’re sophisticated enough where it really is true production.

Because of this pipeline, right now our capacity is basically full—we’re taking on clients for January, February, March because we’ve fast-tracked a lot of these clients that came through the Carolina Textile District. And instead of coming back to us for 200 or 300 units, they’re coming back for 1500 and 1800 units, or they’re coming back with new orders very quickly. The nice thing about that is just the consistent flow of opportunity all the time. But the problem is that we’ll get five or six calls a day from people wanting to work with us, and we don’t have the capacity to do it. We’ve ended up actually passing work to other mills because in the past, they’ve passed us work. And so we’re trying to build more connections with those other mills, so at least if somebody comes in, we can try to not just say, “No, we can’t help you,” but, “Hey, this other mill has capacity. They could take you on.” It’s trying to build a collaborative industry versus one where everybody is just in it for themselves.

John Duda: That sounds really fantastic! What are the big challenges? What do you need to keep doing the work that you’re doing? What other things do you wish you had had when you were getting this off the ground? Building these value chains across the whole sector, regionally, what are the needs there?

Molly Hemstreet: A big problem for us is the way our industry is framed. What we’re always up against is “textiles is dead, textiles is dead, textiles is dead.” Well, if it’s dead, why did all these people call us this week? Why are we booked six months out?

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The other thing is we’ve learned, more by trial and error and really just by complete chance, is who the good clients are. The bottom line is that our workers are the best that there possibly are. They’re good at what they do, they’re exceptional sewers, they can sew anything, and they also understand the versatility of what they need to do. Nobody ever just handed us a giant contract. We had to scrap for it and we had to learn how to work with entrepreneurs— the demand is coming from entrepreneurs, but that’s not necessarily where volume is. So we had to learn to cash in on entrepreneurial demand. There’s a lot of education that needs to happen for entrepreneurs, especially around costs. They need to know that they’re going to have to pay, because we’re taking a great risk that they might not be able to scale. Even though they’ve sold 200 cute little things, that’s just two days’ work for us—so we’re taking on risk bringing them into our shop.

But if they understand the value we bring, particularly if they come and spend time with us, see what we do, get outside their heads and understand that they’re passing their product onto us and that we need to know how to make it—when they develop this kind of relationship with us and see the quality of work that we do—then there’s a lot more value. They understand that they’re going to pay us at an hourly rate. They understand that there’s a value to the hourly rate.

We’re up against an old school industry that we’re trying to infuse with new ways of working. In the past you would never, ever charge anybody for a sample. But we always charge people for the sample. We have to reinfuse this idea of valuing labor, you know? That’s why I got into this—it was about valuing labor. There’s a lot of education that needs to happen in the entrepreneurial community about interfacing with manufacturing. There needs to be a reciprocal conversation about exchange of labor and exchange of capital. It could be said in different language—but basically you’ve got to value the people that are going to be the muscles that are going to drive your business’s bottom line.

On our end, I think people have to see that we need more storytelling about what we’re doing in this industry—it’s not just a resurgence of a trend, it’s really a kind of reclaiming of our ability to make things. There’s a new generation of makers, but it’s not just the people that design and maybe make something. The real makers in my heart and my book are the people behind the machines all day. They’re like the kingmakers and the queenmakers, and they make beautiful products for other people to sell. I think those people need to be included in the conversation because, at the end of the day, they’re driving a lot of the worth. We need to infuse this whole maker conversation with the context of labor—that’s really, really important.

John Duda: That sounds key. How did you raise the capital to start Opportunity Threads? Especially when you said, “Hey, we know textiles are dead, but we’re going to start a worker co-op to do manufacturing”? Did you have problems raising money to get this off the ground?

Molly Hemstreet: We originally started working with Maggie’s Organics, who we still sew for. I’m sitting here right now looking at their skirts that are about to go out to Whole Foods. They gave us $5,000 to get started. At the time, I was working with a community organization, the Center for Participatory Change out of Asheville and western North Carolina, and so my time was covered as I did a lot of the initial organizing. But then people just donated time—a lot of it was donations of time. We incubated in a donated space, and then we had a $30,000 startup loan that got us into the building where we are now.

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From the beginning we were just very cost-effective at what we did. We didn’t try to elevate salaries too high; people worked minimum wage just to get it off the ground so that we could not go into a lot of debt. We’re not debt averse, but we want to be sure we could keep our debt in check. I was able to get a few strategic grants, which is difficult because a lot of people won’t grant to cooperatives because they are businesses—we are an LLC, not a 501c3. But one of our biggest supporters has been the Catholic Campaign for Human Development—they will fund cooperatives. We got three years of funding from them, and now in our third year we can completely stand on our own. We’re profitable and they really drove us to have that kind of cushion of funds to be able to do things like pay higher wages and buy machines and so on. Now we’re running on our own, and we’ve built good relationships with funders, both community development funds and more commercial lenders. Which is good, because we’re looking right now at potentially building our own space because the space we have just isn’t adequate for the type of volume we’re starting to draw. If we needed to draw down and pay higher loan amounts, we now have the relationships. We’ve been building those relationships.

And actually, through the Carolina Textile District we were able to build a loan fund from that same startup loan that we got initially—we used ourselves as a model and a pilot. That loan was Golden Leaf money—North Carolina tobacco buyout money—provided through a local loan pool called VEDIC. We had this $30,000 loan, which we were about to pay off about 18 months early. And I went back to them and I said, “You know, what we need is a line of credit. It’s great to have a loan, but I’d rather have a line of credit. If we needed to buy a machine or we need to bring on an influx of workers before we know that we’re going to have the payment on the back end, we’ll need a line of credit.” So we actually worked with them and the USDA to build a more flexible loan pool, and we have now about $1.2 million that can be loaned out just to people in the District or people that are in textile-related companies. That’s a great success, too, because at some point you just have to build your own system of funding, because you’re not going to be able to go to a bank for all of this. So we just built our own lending system. That’s just happened in the last few weeks, but it’s good. We already have people signed up that are getting into it.

John Duda: Wow, that’s incredible to hear, congratulations! It’s really helpful to understand where you’re coming from, and a lot of the questions around scale really resonate with what we’ve learned in Cleveland with the Evergreen Cooperatives, especially about having to be good at what you do as the first and foremost concern—you don’t get a magic pass on being a successful business just because you’re a cooperative. Do you have any thoughts on worker cooperatives and manufacturing in general?

Molly Hemstreet: I think there’s this interesting question of scale. One the one hand, you can scale by getting bigger and bigger as an entity: Opportunity Threads can get bigger, and it’s important that it does. But beyond that, you can scale by transforming an industry: you can create change, deep change, throughout an entire industry. I think we’ve seen that with the cleaning cooperatives like WAGES [Editor’s note: WAGES is now Prospera] in the Bay Area: they started changing their industry because they begin to assert the control of labor within an industry.

The textile industry has such deep roots here. This is where the national guard was called in to quell labor unrest. If we can look back 30 years from now, and see that most of the companies—whether they’re making fabric or they’re dye houses or whatever they are—are owned by the workers themselves, I think that would be an incredible shift of just consciousness in an industry. We’re starting to see this transformation. We’ve been a really good pilot as a startup, and now we’re starting to work with producers that are also transitioning to worker ownership, as are a lot of the clients that we’re bringing in.

If you can interface with somebody that’s really educating you, then you can start to adopt these more democratic models—even if it’s two or three workers that own the company or they’re an LLC with a cooperative operating agreement or something like that. This kind of dialogue needs to be happening. What we see is the people that are really successful are those entrepreneurs that we work with that know us really well and know their supply chains really well. There’s less friction—it’s like the lines between client and producer start to merge a little bit, and I think when there’s more transparency there everybody has more success. There’s got to be more people that inventing and dreaming and designing, getting their hands a little dirtier.

And that’s why on our social media, we’re trying to tell the story of what it is to live in a manufacturing facility—that it can be fun and it can be creative and it can be energetic. It can have a lot of the same dynamics that somebody in design sees themselves wanting. We’re trying to say that this is the kind of life that someone inside a factory all day can have, too. How do we start to see those stories, and have more transparency and more dialogue between designers and producers? It would be great for you all to come and start to interview the workers here—come at a time when they can participate. Hearing them articulate their own stories is very powerful.

John Duda: One of the things we’re working on right now is a report on folks who have managed to take different kinds of cooperatives and other community wealth-building projects to scale, and looking specifically at the role that education has played. It’d be great to hear what your strategies have been for how take people who have been hired and bring them up to the point where they’re able to take a full ownership stake in such an exciting, transformative, worker-owned business.

Molly Hemstreet: I think that’s a really good question. I think that’s probably where we could still use a lot of help on—it’s really like you never get there. Learning is just something you’re always, always, always doing. A combination of just some luck and some real searching too has given us the benefit of having really good mentors. Hilary Abell has been a really good mentor for me—if we have questions, we can look to her, she’s been really awesome. We also have one of the best cooperative development lawyers in the United States, Thomas Beckett. He’s been with us since the very, very beginning. We have great people that understand the accounting, not just the consensus model, but really the nuts and bolts of cooperatives, and they know our folks and they’ll come and sit down with us.

I also think, however, that a lot of folks that we work with have a real innate ability to understand kind of this idea of consensus and working together. I don’t know if it’s because a lot of people we work with are Mayan—they’re indigenous Guatemalan. And I think sometimes we bump up against the tendency that in the southern, traditionally white community—you’re kind of in it for yourself, you’re in it for your production numbers. There’s this whole culture that has to be developed around what it means to really be collaborative at something, and that’s a skill you work at and it’s a skill you monitor and it’s a skill you learn.

What you have to do is kind of build a core group of people that can provide something like positive peer pressure. That’s a lot of the training we have—it’s just you have your leaders and they’re all on the same page. You see this group of people that want to start to emulate them and you give them the tools to do that. We have a lot of folks that they don’t read and write very well, but they have incredible decision-making powers and abilities to sit in a conversation and weigh positives and negatives. How do you build cultures of cooperatives? That to me is more important than reading a financial statement. Now we do all that too, and we’ve found people within the cooperative that really want to take on that skill. But you know—I’d rather have our folks here than most people that have been through cooperative development boot camps because our folks live it day in and day out, day in and day out. We’ve found the best training is just the longevity of somebody being in our permeated culture. If you have a good group of people at the top—well, not at the top!—but if you have a good group of people leading this process, a very self-sacrificial kind of leadership that says, “We’re in this and even though maybe we’ve been here the longest, we’ve got to push from the bottom and work the hardest”—that’s the kind of culture you want. And if you can set that culture up, I think then that’s the best training ground.

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Then what we do is strategically bring these experts in that can teach us how to do awesome operating agreements that are understandable to somebody that has a fifth grade education. We bring those people in that just are awesome allies. So you build this culture, you create these leaders, they permeate the next group of people coming in, and then strategically you bring in these awesome allies—the best of the best. That’s what we’ve tried to do.

John Duda: That’s really helpful—I especially like the part about people who have been there the longest needing to recognize that they have to work the hardest.

Molly Hemstreet: Yeah, it’s funny because we’re training this new woman. She said, “You know, I thought the workday ended at 3:30, but then I noticed that nobody stopped working. Why is that?” And we explained, “Okay, they’re going to work until they’re done. And that’s not to say you have to do that, but they understand that they’re the owners of this business. It has to get out the door. They’re going to put in an extra 15 minutes.”

We have this little bell that rings and nobody stops working—and it’s not exploitation. It’s different than when you work and you’re looking over your shoulder, because we have no supervisors. This is something we do in orientations—I don’t do the orientations, the workers do the orientations themselves and I’m just at the table with everybody. We explain how you’ve got to inculcate yourself with this idea of being your own supervisor—you have to understand your quality measures and you have to understand your productivity measures.

The workers have some really interesting tools that they’ve developed to help here. They go around on an hourly basis and check everybody’s productivity. Everyone is paid by the hour, but everyone also gets an hourly check-in on their productivity and they get a daily score, and this goes on this big whiteboard: are you making your productivity or are you not? This isn’t just telling people you have to be productive and you have to watch quality, but actually helping them do that by giving them the tools they need. Really, it’s just simple feedback on a regular basis—and it’s all imperfect. We’re learning, you know? We make mistakes all the time, but we sit down every week for an hour and a half and we hash through it all. We’re just making it up as we go, honestly.

John Duda

John Duda is Communications Coordinator for Democracy Collaborative.

Tags: new economy, worker cooperatives