History Relived: The Re-Birth of Paterson Manufacturing: A Contribution to the Greater Spruce Street Neighborhood Redevelopment Plan

History Relived: The Re-Birth of Paterson ManufacturingA Contribution to the Greater Spruce Street Neighborhood Redevelopment Plan

Michael P. McCabeCandidate, M.C.R.P., Edward J. Bloustein SchoolRutgers University, New Brunswick, New Jersey

[email protected]

AbstractCentral to the success of the Greater Spruce Street NeighborhoodRedevelopment Plan as an agent of community development will be

its ability to generate employment opportunities for localresidents. The recent national park status granted to Paterson’sGreat Falls is a useful contribution to this effort as it hasopened up new channels of capital and has sparked excitement

among community members and planners over Paterson’s future afterdecades of post-industrial trauma. The goal of this paper is to

contribute to these job creation efforts by exploring theEvergreen Cooperatives Initiative in Cleveland, Ohio, or the

‘Cleveland Model,’ as a viable approach to restored productivityin the Greater Spruce Street neighborhood. In doing so I focus on

the Cleveland Model’s form of worker-owner place-boundemployment, and its ability to simultaneously meet the goals ofcommunity and economic development as it pertains to the Greater

Spruce Street neighborhood. By drawing upon paradigmaticapproaches to restored productivity such as the Cleveland Model,

Paterson may again find itself as an innovative leader ofAmerican manufacturing.

Introduction

This paper is intended as a contribution to the

redevelopment plan for Paterson, New Jersey’s Greater Spruce

Street neighborhood (GSSN). Focusing specifically on the goals of

“restored productivity” outlined in New Jersey Community

Development Corporation’s (NJCDC) Great Spruce Street Neighborhood Plan

(2009), I suggest that Paterson’s rebirth as an economic engine

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lies in an innovative and paradigmatic approach to urban

redevelopment that borrows greatly from what is now popularly

referred to as the, “Cleveland Model.” By first challenging the

assumption that inner-cities lack competitive advantage, this

paper will then outline the Cleveland Model before exploring how

it may be incorporated into the GSSN redevelopment plan,

appealing to the plan’s interconnected goals of restored

productivity and transforming the GSSN into a “green incubator.”

Finally, this paper will address potential challenges and longer-

term goals regarding these efforts.

Competitive Advantage of Inner-Cities

Despite the relative decline of America’s inner-cities,

there exists a strong potential for their return as economic

engines. The same assets within these cities that have been

devalued – both objectively and rhetorically – are indeed the

assets that give today’s inner-cities their competitive

advantage; particularly with respect to restored productivity.

This section focuses on the most vital assets found in most

inner-cities, focusing specifically on those assets most

important for redevelopment efforts in the Great Spruce Street

neighborhood of Paterson, New Jersey.

Land

Standard development theory emphasizes the importance of

maximizing the exchange value of land and this is especially true

2

in cities where land is a fixed monopoly commodity. Running

counter to this thinking, however, is that suppressed land values

are an asset which lends inner-cities a competitive advantage

over places with higher priced real estate. Reasonably so,

cheaper land reduces the initial investment costs thus

benefitting a redevelopment plan that seeks restored productivity

via the creation of new enterprises.

The Greater Spruce Street neighborhood is no different in

this respect. It benefits from a diverse portfolio of vacant

spaces including 50 vacant retail spaces.1 Much of the land in

GSSN is privately owned; however a notable amount is owned by the

City of Paterson or other public entities that can potentially be

pursued for productive purposes. Paterson “owns a significant

amount of land stretching from the Stanley M. Reservoir, along

the Passaic River including the ATP site. Passaic County owns the

land around the Reservoir, the land between Hinchliffe and the

Passaic, as well as the County Prison facility between Main and

Marshall Streets. The New Jersey Department of Transportation

owns a number of small properties along I-80 and Oliver Street.

Finally, there are a few properties owned by CDCs including the

Great Falls Historic Housing Corporation, and two parcels owned

by the NJCDC including their offices and the new Community

Charter School of Paterson.”2 This, in conjunction with

suppressed real estate values and an abundance of vacant retail 1 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 67. Print.2 Ibid. 63.

3

space, presents a strong opportunity for restored production in

the GSSN.

Labor

Paterson, and the Greater Spruce Street neighborhood in

particular, has a labor force of predominantly low-medium skilled

workers, 38% of whom are currently employed in Paterson’s

manufacturing industries.3 Recent employment projections suggest

that by the year 2014 New Jersey will lose 59,900 manufacturing

jobs, 2,250 of them in Passaic County.4 Therefore, the Greater

Spruce Street neighborhood will likely see a growing pool of low-

medium skilled manufacturing workers in need of employment,

providing the GSSN with the competitive advantage of a semi-

skilled surplus labor supply. A redevelopment strategy seeking

restored productivity must emphasize this asset.

Complimenting this strategy will also include efforts to

attract current and/or prior residents as well as other

professionals who are formerly trained in business management. An

important part of this strategy should include partnering with

local universities to create a business school-community pipeline

for newly educated managers and alumni with greater degrees of

experience. Indeed, a challenge exists whereas incentive programs

will likely be required but failing to successfully attract

trained managers in newly developed enterprises could be 3 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 70. Print.4 Ibid. 69-70

4

extremely detrimental as “Inner city companies without well-

trained managers experience a series of predictable problems that

are similar to those that affect many small businesses:

weaknesses in strategy development, market segmentation,

customer-needs evaluation, introduction of information

technology, process design, cost control, securing or

restructuring financing, interaction with lenders and government

regulatory agencies, crafting business plans, and employee

training.”5 As such, this is a strategy worthy of comprehensive

planning.

Local History

Paterson has the added value of a unique historical

background that can be leveraged rhetorically and practically.

Both a leader in industrialization and “green” hydropower,

Paterson is quite literally the “original green city.”6 Most

recently, this distinct background has been popularized by the

status granted to the Paterson Mill as a National Park. Resting

in the center of the Greater Spruce Street neighborhood, this

unique history relived through the new National Park can be

leveraged for the purpose of restoring productivity. Today, the

GSSN has a unique opportunity to modernize according to its past;

5 Porter, Michael. "The Competitive Advantage of the Inner City." Harvard Business Review. (May-June 1995): 64. Print.6 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 152. Print.

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that is, to position Paterson as a leader in the new urban

economy of restored ‘green’ production.

Anchor Institutions and the New Urban Economy

A major lifeline of post-industrial cities is their anchor

institutions. As the Brookings Institute explains, “With the

declining importance of manufacturing as a source of jobs,

economic developers have increasingly been looking for other

growth levers … Eds and meds attract particular attention because

of the size of higher education and health care institutions.”7

Urban redevelopment plans should seek to incorporate local anchor

institutions as collaborative partners; particularly because they

have a vested interest in the success of their location, and as

such, are relatively place bound.8

Much attention is placed on anchor institutions as a source

of primary employment, but a growing interest in anchor

institutions focuses on their potential “multiplier effects” via

other capacities. This section explores these various roles of

anchor institutions as agents of inner-city economic

regeneration, paying particular attention to the “shared value”

framework presented by the Institute for a Competitive Inner City

7 Bartik, Timothy J, and George Erickcek. "The Local Economic Impact of "Eds &Meds": How Policies to Expand Universities and Hospitals Affect Metropolitan Economies." Metro Economy Series For The Metropolitan Policy Program At Brookings. (December 2008): 2-3. Print.8 "Inner City Insights: Anchor Institutions And Urban Economic Development: From Community Benefit to Shared Value." Initiative for a Competitive Inner City. 1.2 2. Print.

6

in their study entitled, “Anchor Institutions and Urban Economic

Development: From Community Benefit to Shared Value.”

Anchor institutions are a vital asset to inner-cities for

the purposes of redevelopment and employment. However, as a

primary employer, anchor institutions rarely employ large numbers

of inner-city residents.9 The Greater Spruce Street Neighborhood

Redevelopment Plan captures these nuances succinctly in its

discussion of the potential for anchor institutions –

specifically Saint Joseph’s Hospital – to make up for the

projected employment deficit in the city due to a continued

decline in local manufacturing. It notes that although the $300

million expansion of the hospital center could help to counter

the negative employment trend, “much of the growth in health-care

jobs will occur in positions that perform diagnostic and

therapeutic functions, which require a higher level of

education.”10 And, although the redevelopment plan also

highlights the potential for “openings in the jobs supporting

these functions” the study later acknowledges the need for moving

beyond the narrow confines of direct anchor employment suggesting

that “…there is also a great need for productive space both for

low-skilled jobs as well as creative industries. This planning

effort must identify strategies to better prepare residents for

employment, create new low-skilled jobs, and encourage creative

9 Ibid. 6.10 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 70. Print.

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industries including the arts to settle in the neighborhood.”11

Given the limitations of anchor institutions as a substitute for

manufacturing employment, it is important to explore other ways

in which anchor institutions can help regenerate productive

activity in struggling inner-city economies.

A study by Bartik and Erickcek for the Brookings Institute’s

Metropolitan Policy Program entitled “The Local Economic Impact

of “Eds & Meds”: How Policies to Expand Universities and

Hospitals Affect Metropolitan Economies” closely explores the

ability of anchor institutions to increase the local export-base

within the area in which they operate. In other words, the study

looks at how anchor institutions can stimulate a process of

import-substitution, particularly with respect to “customers.”

The underlying premise is that anchor institutions in a local

economy import consumers of their products/services who would

otherwise consume them in another geographical location. “These

new dollars for local industries in turn are in part respent by

the local industries on local suppliers, and in part respent by

the local industries’ workers on local retailers, resulting in

“multiplier effects” of the initial infusion of new dollars on

the local economy.”12

Whereas Bartik and Erickcek focus on anchors as producers,

the ICIC focuses on anchors as consumers. By introducing a 11 Ibid. 103.12 Bartik, Timothy J, and George Erickcek. "The Local Economic Impact of "Eds & Meds": How Policies to Expand Universities and Hospitals Affect MetropolitanEconomies." Metro Economy Series For The Metropolitan Policy Program At Brookings. (December 2008): 7. Print.

8

framework of “shared value,” the ICIC refocuses the import-

substitution model toward the prioritization of the multiplier

effects associated with direct purchasing by anchor institutions

of goods and services produced locally. Therefore, while Bartik

and Erickcek undermine the significance of redevelopment

strategies that capitalize upon the consumptive power of anchor

institutions, the ICIC counters this position by arguing that

redevelopment initiatives seeking restored productivity must

actively foster collaboration between anchors and local producers

because “Working collaboratively with key stakeholders in the

public, private and not-for-profit sector will almost always

yield the greatest value for the community and, usually, the

highest business value for the anchor.”13 Within such a regime,

“Anchors can help local firms compete by unbundling large

contracts or requiring prime contractors to use local

subcontractors. They can also encourage local firms to partner

with each other or with larger vendors and can provide business

advice and mentorship … Anchors can also use their clout to make

it easier for local firms to work with them.”1415 Furthermore, as

is the case in Cleveland, Ohio, collaborative efforts between

multiple actors can help foster entirely new clusters of

13 "Inner City Insights: Anchor Institutions And Urban Economic Development: From Community Benefit to Shared Value." Initiative for a Competitive Inner City. 1.2 4. Print.14 Ibid. 5.15 For a discussion of how anchor institutions can work with local business tohelp foster a model of import-substitution, with included examples, see: "Inner City Insights: Anchor Institutions And Urban Economic Development: FromCommunity Benefit to Shared Value." Initiative for a Competitive Inner City. 1.2 3-9. Print.

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enterprises that serve the needs of anchor institutions and

beyond. It is this latter model of community-anchor collaboration

that this paper will now explore for the purpose of highlighting

its potential as a model of restored productivity for the Greater

Spruce Street neighborhood redevelopment initiative.

Cleveland Model

The Evergreen Cooperative Initiative (ECI) is an outgrowth

of the failures of urban redevelopment initiatives in the Greater

University Circle area of Cleveland, Ohio where in 2006 25% of

the 43,000 of the residents were unemployed and the median

household income was below $18,500.16 As Tracey Nichols, director

of the Department of Economic Development for the City of

Cleveland explains, “In economic development you create jobs by

offering incentives to companies to relocate and a company is

here for 10 years and then moves away, and you have to ask

yourself, are these people measurably better off? They had a low

paying job for ten years and they paid their bills but they

didn’t build equity.”17 The ECI challenges the inner-city

economic development paradigm described by Nichols. Focusing on

the annual purchasing of the major anchor institutions within the

Greater University Circle, the ECI establishes worker-owned

cooperatives that have the ability to reorient a portion of

anchor-purchasing toward local consumption. This innovative

16 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 4. Print.17 Ibid. 4-5

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approach to inner-city job creation leverages the economic power

of anchor institutions in ways that stand counter to inner-city

job creation efforts hitherto while simultaneously utilizing a

business model that is, by its very nature, more place-bound than

traditional enterprises due to its structure of worker-ownership.

Evergreen Cooperative Corporation (ECC)

Further complimenting this approach are the safeguards put

in place by the Evergreen Cooperative Corporation – the umbrella

organization of the ECI – that help to ensure economic success

for these businesses and their worker-owners. The initial

evaluative process investigates market demand in “a growing

sector where “green” credentials could be leveraged to

competitive advantage”18 while also ensuring a sustainable degree

of profitability for worker-owners as a means of realizing the

community development goals of the Cleveland Model. As such,

these enterprises must be capable of hiring at least 50 worker-

owners upon reaching full operating capacity at a wage of at

least $10.50 per hour and with free healthcare. Additionally

meeting the need for personal asset building among inner-city

residents, these enterprises must also be profitable enough for

workers to receive $65,000 or more after 8 years of employment,

in their personal capital accounts.19 Of course, these benefits

come at a cost – cooperative members must invest $3,000 dollars

18 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 7. Print.19 Ibid.

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into the firm via modest payroll reductions of 50-cents per

hour.20 The ECC is crucial to the long-term sustainability of the

Evergreen Cooperative model, its commitment to “green” practices

and the Cleveland Models emphasis on community and economic

development. As such, it has been described as a “keeper of the

vision.”21 The ECC owns 20% of each Evergreen Cooperative and has

a position on their board of directors. Furthermore, and “Most

critically, it will have the right to veto any cooperative’s

attempt to exit the Evergreen system, either to sell out to a

private interest or liquidate, or to engage in other activities

that might put the entire system at risk.”22

Modeled as the umbrella organizations of the ECI, the ECC is

a 501(c)(3) holding company for current and future for-profit

cooperative enterprises; the Evergreen Land Trust; the Evergreen

Development Cooperative Fund (the CDFI specific to the Evergreen

Cooperative Initiative); and the Evergreen Business Services

infrastructure.23 It is governed by a 15-member board of

directors who include: worker-owners from each of the Evergreen

Cooperatives; representatives from the Cleveland Foundation and

other visionary organizations involved in the birth of the

Cleveland Model; executives from local anchor institutions; and

investors.24 Best capturing the long-term goals behind the

Cleveland Model is a self-description of the ECC found on its 20 Ibid. 17.21 Ibid. 14.22 Ibid.23 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 13-14. Print.24 Ibid. 14.

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website: “The intent behind establishing the ECC is to create a

new kind of “anchor institution” in Cleveland – an ongoing and

sustainable vehicle that will partner with the City’s major

anchors (such as hospitals and universities) to assist them in

conducting their business activities in ways that will benefit

Cleveland’s residents and neighborhoods. Thus, ECC is not a project or a

program – it is an institution that will work on behalf of Cleveland’s citizens for decades

to come.”25

Evergreen Development Cooperative Fund (ECDF)

Early on, the ECI moved away from its reliance on an

external, multi-purpose CDFI. The non-profit Evergreen

Development Cooperative Fund is a revolving loan fund designed to

grow Cleveland’s burgeoning Evergreen Cooperatives manufacturing

sector. It is also the body within the ECC that provides

management and technical support to infant firms. The ECDF is

structured as a favorable investment as it “offers lenders and

investors a means to invest in a portfolio of companies rather

than assume the undiversified risk of a single start up or coop

enterprise.”26 This investment appeal coupled with access to

grant money (initially, the Fund was capitalized with $5 million

dollars in grant money)27 enables it to leverage significant 25 "Structure and Leadership." Evergreen Cooperatives. Evergreen Cooperatives, n.d.Web. 12 Dec 2013. <http://evergreencooperatives.com/about/structure-leadership/>. (Italics added)26 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 15. Print.27 Howard, Ted, Lillian Kuri, and India Pierce Lee. "The Evergreen CooperativeInitiative of Cleveland, Ohio: Writing the Next Chapter for Anchor-Based Redevelopment Initiatives." White Paper Prepared for The Neighborhood Funders Group

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investment funds for continued expansion and support of the

Evergreen Cooperatives.

The ECDF offers long-term start-up funding to cooperatives

with 1% apr loans while also providing support to distressed

enterprises. These loans are reciprocated by an annual

contribution of 10% yearly earnings from profitable coops.

Therefore, the success of each cooperative enterprise contributes

to the growth of what may become the rebirth of a vibrant and

diverse manufacturing sector in Cleveland, Ohio. This model of

reproduction strongly supports the viability the Cleveland Model

as a sustainable method of urban redevelopment as “it is clusters

that drive economic development. They create new capabilities,

new companies and new industries … [because] The competitive

advantage of a location does not usually arise in isolated

companies but in clusters of companies – in other words, in

companies that are in the same industry or otherwise linked

together through customer, supplier, or similar relationships.”28

Cleveland in Paterson

Paterson’s legacy as a leader of both US industrialism and

green production must define its future. Exciting efforts such as

the Cleveland Model demonstrate that urban redevelopment can be

accomplished in ways that not only stimulate economic growth, but

productive “green” growth that benefits local residents and the

Annual Conference: Minneapolis, MN. (Sept 29-Oct 1, 2010): 8. Print.28 Porter, Michael. "The Competitive Advantage of the Inner City." Harvard Business Review. (May-June 1995): 57. Print.

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natural environment. The Cleveland Model should be considered as

a viable component to the Greater Spruce Street Neighborhood Plan because

it seizes upon the Greater Spruce Street neighborhood’s

competitive advantage of cheap available land, a semi-skilled

workforce and a burgeoning redevelopment initiative that has

recently captured national attention; this alongside Paterson’s

anchor institutions including Saint Joseph’s hospital and Passaic

County Community College that will both enable and benefit from a

redevelopment plan based on the Cleveland Model. Additionally, it

operationalizes the goal of ‘green’ restored productivity

outlined in NJCDCs Greater Spruce Street Neighborhood Plan with a model

of worker-ownership that looks to transcend the transient nature

of traditionally structured firms while also enabling workers to

develop personal assets in conjunction with wage earnings, thus

making this strategy both an economic and community development

plan.

Cities around the country are actively exploring adaptive

ways of implementing their own brand of the Cleveland model

including Baltimore, Detroit, Pittsburgh, Newark and numerous

other cities throughout Ohio.29 Paterson missed an opportunity to

redevelop in the 1980s;30 today, with an even greater repertoire

of paradigmatic redevelopment strategies to choose from, it

29 Howard, Ted, Lillian Kuri, and India Pierce Lee. "The Evergreen CooperativeInitiative of Cleveland, Ohio: Writing the Next Chapter for Anchor-Based Redevelopment Initiatives." White Paper Prepared for The Neighborhood Funders Group Annual Conference: Minneapolis, MN. (Sept 29-Oct 1, 2010): 3. Print.30 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 71. Print.

15

should join the vanguard that is looking to the Cleveland Model

as the path to inner-city redevelopment.

Supporting Infrastructure

Efforts to replicate the Cleveland Model in the GSSN benefit

from Paterson’s supporting physical and bureaucratic

infrastructure. For example, most job training in an Evergreen

Cooperative is conducted in the workplace.31 While useful, this

approach can be expanded upon by working with the local Workforce

Investment Board and Passaic County Community College.

Additionally, the Paterson Small Business Development Center can

conduct feasibility studies of potential cooperative enterprises,

exploring profitability models that include an analysis of

potential local and regional customers including Saint Joseph’s

Hospital, Passaic County Community College, nearby William

Paterson University, and other major purchasers including

surrounding nursing homes.32 It can also continue providing its

intended services of training people in business development and

in securing capital33 with specific attention being paid to

cooperative development. It is worth restating the overabundance

31 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 17. Print.32 Nursing homes surrounding the Greater University Circle have been a major purchaser of the Evergreen Laundry Cooperative as obtaining contracts from local anchor institutions has been initially difficult due largely to pre-existing contracts. Taking note of this expansion beyond anchor institutions demonstrates the economic promise of the Cleveland Model.33 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 158. Print.

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of vacant commercial property;34 building stock that requires

predominantly minor improvements;35 and land that is already

zoned for light industry around Grand and Spruce Streets.36

Finally, the recent designation of the historic Great Falls as a

National Park has sparked a general feeling of excitement

throughout the community while also opening up new streams of

capital in addition to other funds including HUD 108 Community

Development Block Grants that have been used for funding worker-

owned firms; the Paterson Restoration Corporation’s microloan

program; New Jersey Economic Development Authority loans/bonds;

etc.

Place Bound Employment

Paterson’s decline is rooted in deindustrialization. This

divestment from the manufacturing economy is directly related to

the transient nature of traditional, externally-owned firms. The

Cleveland Model grows out of the realization that productive

enterprises lacking a direct stake in the community they operate

in can too easily abandon those communities, harming workers and

residents. Creating an industrial model that builds collective

ownership into its employment model and its charter, the

Cleveland Model guarantees that the next generation of inner-city

manufacturing is accountable and committed to the communities it

operates in. By introducing the Cleveland Model of urban

34 Ibid. 6735 Ibid. 61.36 Ibid. 59.

17

redevelopment to the GSSN, the employment it generates will help

to heal the wounds of deindustrialization while helping to ensure

that it doesn’t happen again.

Community Development

In 2000 Paterson’s median household income was $32,778 and

only $30,675 in the Greater Spruce Street neighborhood. Combined

with a future projection of increased job-loss, these income

demographics should be expected to decline even more.37 Indeed,

the GSSN Redevelopment Plan addresses the need for more local

employment opportunities but it pays no attention to the need for

these jobs to provide residents with the opportunity to build

real wealth. The structure of the Cleveland Model ensures that

workers are hired locally and receive pay of at least $10.50/hour

(with regular raises), free healthcare and a personal capital

credit account that remains inaccessible until it accumulates

$65,000 or the workers retires or otherwise leaves the firm.38 As

such, the Cleveland Model not only responds to the need for a

living wage, it also enables workers to develop assets – a

personal and community value. Taking into consideration the

detrimental effects of a residential population that is 80%

renters, 51% of whom live in the GSSN for five years or less,39

37 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009): 69-70. Print.38 "Evergreen Cooperatives Field Study." Capital Institute Field Guide to Investing in a Resilient Economy. Field Study no. 2. 17. Print.39 New Jersey Community Development Corporation, , _Interface Studio LLC, and Value Research Group, LLC. "Greater Spruce Street Neighborhood Plan." (2009):

18

place-bound employment with a living wage complemented by wealth-

building opportunities may be the solution to a more stable

resident population.

Strong Economic Potential

Due to its initial success, the Cleveland Model has plans to

expand its number of cooperative businesses in the near future.

There is a large body of economic literature empirically

verifying the assertion that enterprises cooperatively owned by

their workers are equally or more productive and profitable than

traditionally owned firms.40 Furthermore, cooperative enterprises

have shown to be remarkably resilient throughout the business

cycle. This is true for several reasons: 1) viewing layoffs as a

last-resort, these firms first attempt to reduce individual pay

and/or asset accumulation; 2) if pay reduction is insufficient,

cooperatives with surplus labor transfer these workers to

expanding cooperatives and/or cooperatives with labor deficits.

Looking beyond the structural benefits of worker-ownership, the

Cleveland Model is a for-profit production model which means its

profitability translates to increased ratables in a city

desperate for revenue.

Perhaps most important, particularly with respect to the

long-term, is that the self-reproductive funding model of the ECI

provides the possibility of a manufacturing renaissance in some

102. Print.40 Alperovitz, Gar. America Beyond Capitalism. Second. Takoma Park: Democracy Collaborative Press, 2011. 87. Print.

19

cities and economic sectors. In other words, because the success

of existing cooperative enterprises helps to seed the development

of new firms via the annual 10% contribution to the ECDF by

profitable enterprises, there is the potential for exponential

growth.

Going Forward: Identifying Challenges

Paterson is approximately ten times smaller than Cleveland,

Ohio, with fewer anchor institutions as well. Of course, the GSSN

is even smaller. Furthermore, as the Greater Spruce Street

Neighborhood Redevelopment Plan notes, much of the land in the

GSSN that is suitable for manufacturing is held privately, thus

requiring a multitude of strategies to acquire it – mainly,

waiting… This latter challenge is true with or without the goal

of implementing an adaptive synthesis of the Cleveland Model in

the GSSN. Similarly, the size of Paterson in comparison to

Cleveland should not be viewed as an impediment, as there is no

clear reason for this geographical difference to have specific

implications for the GSSN adopting the Cleveland Model that

wouldn’t also be an issue for the GSSN pursuing other, more

traditional approaches to restored productivity. The greater

number of anchor institutions in the Greater University Circle –

which itself is an initiative that was created in large part by

those anchor institutions – than currently exist in Paterson is

also less of a challenge than it may initially appear. In fact,

although these anchor institutions were originally conceptualized

20

as the lifeline of the Evergreen Cooperative Initiative, their

role thus far has been quite limited; instead confined more to

broader redevelopment initiatives. Their limited participation as

consumer is largely attributable to 1) pre-existing contracts for

the same services that some of the Evergreen Cooperatives

provide; and 2) anchor institutions’ adversity to risk i.e.

contracting with newly established firms. Faced with these

obstacles, the Evergreen Cooperatives demonstrated their

entrepreneurial resilience by diversifying their business model

early on, serving institutions and other businesses beyond the

limited confines of anchor institutions within the Greater

University Circle of Cleveland; an example being linen service

for local nursing homes. Therefore, although anchor institutions

continue to be viewed as major future customers that will greatly

enhance the scale of the Evergreen Cooperatives, the Cleveland

Model ironically demonstrates that anchor institutions are

extremely useful but not entirely necessary for the success of a

redevelopment plan modeled off the of the Cleveland Model. Going

forward, plans to implement a Cleveland Model in the GSSN should

include consultation with local anchor institutions including

Saint Joseph’s Hospital and Passaic County Community College as

well as other major local institutions such as William Paterson

University, local nursing homes, local governments, etc. to both

identify which services can be import-substituted as well as what

the terms of pre-existing contracts are.

21

Closing Remarks

Indeed, the greatest challenge in implementing the Cleveland

Model in the Greater Spruce Street neighborhood, or any

neighborhood or city for that matter, is that it is a

redevelopment model particular to Cleveland, Ohio. The emphasis,

then, should not be on replicating the specifics of this model

but instead drawing upon its paradigmatic implications. It is for

this reason that this paper does not focus on the micro-dynamics

of the Evergreen Cooperative Initiative, but instead seeks to

expose the ways in which the Cleveland Model 1) expands upon the

economic potential of anchor institutions within the ICIC

framework of ‘shared value’; 2) reformulates the import-

substitution model presented by Bartik and Erickcek by

establishing a collaborative framework in which cities can

capitalize on the purchasing power of anchor institutions (and

other major purchasing institutions) to stimulate local

manufacturing; and 3) promotes a worker-owned business model that

is place-bound and provides asset-building opportunities for

those worker-owners.

The Greater Spruce Street neighborhood has an exciting

opportunity to incorporate a unique approach to restored

productivity into its broader project of redevelopment that is

already underway. This effort would have both community

development and economic development benefits while also ensuring

that Paterson does not again ‘miss the boat.’ Cities across the

country are taking note of the benefits of Cleveland Model,

22

replicating it in ways that adhere to the particular competitive

advantages and market opportunities within their local. There is

good reason to believe that cities like Cleveland, Ohio are at

the forefront of a manufacturing renaissance, standing in

defiance to baseless assumptions that US manufacturing is

antiquated. Indeed, markets change and economic actors must

adapt. This paper is a rallying call for the Greater Spruce

Street neighborhood to join the vanguard of cities working toward

fostering a new paradigm of economically sustainable, green

manufacturing in America’s inner-cities.

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