Employees take over 51-year old enterprise in Australia as worker co-op

Sydney engineering company C-MAC Industries went through succession process to become one of the country’s first worker co-ops.

A 51-year old engineering company in Sydney, Australia, has become one of the country’s first worker co-ops to be set up as a result of an employee take-over.

After being run for decades as a family business, specialist sheet metal manufacturer C-MAC Industries has converted to employee ownership, after being officially registered on 29 May.

The company was set up in 1966 by husband and wife Cliff and Margaret McMaster, who took out a loan to buy machinery and grew the venture to a business incorporating four divisions with more than 30 employees.

The transfer has enabled staff to not only save their jobs, but also become stakeholders in the business.

Rob McMaster said he came across the worker co-op model in 2008 when exploring succession options and decided it was the best way to preserve his grandparents’ legacy.

At the time the federal government was helping businesses to restructure, as an alternative to closure, through the Australian Employee Buyout Centre, an employee buy-in scheme.

Mr McMaster contacted Dr Anthony Jensen, then general manager of the scheme, and took part in an online global course on employee ownership with the Oxford University in the UK, on which Dr Jensen was a lecturer.

After familiarising himself with the employee ownership model, he decided to convert the business.

Dr Jensen helped C-Mac through the 18-month consultation process of becoming a co-operative, while Frank Webb CPA, a business coach from Business Clarity, acted as a mediator in the discussions between staff and Mr McMaster.

“C-Mac is here for the long haul that is why we created the co-operative,” said Mr McMaster. “Over the past 18 months C-Mac has been transforming itself into a co-operative, owned and managed by the workers. This has involved the employees running and managing the business for this time and I have moved to semi-retirement, only working three days per week.”

With the employees taking over the business, Mr McMaster will step down as general manager, although he will continue to work one day a week and sit as a director on the board, which includes two external directors, two internal directors, chief executive and a staff representative.

“I would like to take this opportunity on behalf of the McMaster families, to thank all our customers, suppliers and peers for their support over the last 50 years. I am hoping due to my retirement this succession model may provide another alternative for other business owners to consider,” he said.

Former manufacturing manager Steve Grylak, who has taken over as general manger, says the co-op model will secure the enterprise’s long-term future. 

“Staff need job security, unity, and they need to belong,” he said. “The co-operative will continue long term and cannot be sold easily. Succession needs to be implemented for its long-term survival, it doesn’t matter who leaves, the co-operative continues.”

Mr Grylak thinks that, in the succession process, mediators can play an important role in the conversion by negotiating with the two parties involved.

“You must have a mediator who can be a professional without any personal agenda. You cannot discuss business worth directly to your boss/owner,” he said.

Can the model be used by other Australian businesses? Mr Grylak argues that at a time when the manufacturing sector is losing skills, employee buyouts can help retain staff. 

“Employee buyout in the form of a co-operative sustains employment, skills and implements succession,” he said. “We in Australia are competing in the world market. Yes, we need to change, but if we lose our skill and ditch value quality products where do we go from there?”

He added: “The C-Mac Story was presented to the Family Business Association and this innovative way of dealing with succession was very well received.

“It was stated by a member that family business owners face a very big challenge in Australia over the next three years with finding a successor and the staff buyout could be a very interesting option with lots of potential. We have had a number of leads already.”

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