The United Nations General Assembly has declared 2012 to be the International Year of Co-operatives (IYC) and Trent Bartlett, for the last 10 years CEO of Capricorn Society Ltd and a founder of Social Business Australia,has taken on the job of chairing the IYC 2012’s Australian Secretariat. We talk to him about Capricorn, IYC, and his vision for the co-operative movement.
Capricorn is an AU$ billion business that distributes its profits to more than 12,000 shareholders (also members) annually, giving them a consistent 25 per cent average return on their equity. Entirely by invitation, it has now extended its operations to New Zealand and South Africa. Quite a record for an organisation that started in 1975 as an informal alliance of independent car repairers struggling to compete against the big OEM distributors and artificially inflated spares prices.
The founders of Capricorn took some wrong turnings in the early days—what CEO Trent Bartlett calls the black eyes and bloody noses that are turned to positive effect if you learn from them—before developing a successful model. “You could describe us as the PayPal of the automotive repair industry,” he says. “One in three independent motor repairers in Australia is a member of Capricorn. We aggregate their purchases and transactions, send them one bill each month and guarantee their debt to the suppliers, who happily distribute the products to them knowing Capricorn will pay them.”
For the typical family-run service station, this cuts out the hassle of running multiple accounts with the OEMs and parts suppliers, credit issues, and above all, time. “Capricorn negotiates preferred trading terms with the suppliers; we take a settlement discount off the top of the invoice, we run our business on that and all the profits we make go back to the members, who are our shareholders.” It is a neat model and one that would work well in other industries too: diversification is a strategy for the 36-year-old co-operative, though Capricorn will surely be forever associated with the motor repair industry it knows so well.
However, diversification has already happened. Not as in the top-down corporate world through aggressive expansion, but by responding to real needs of real people. That is how Capricorn got into New Zealand and South Africa after all. In New Zealand the motor trades associations had been trying to get a buying group together but realising they lacked the commercial experience asked Capricorn in to replicate the Australian model there. South Africa was a little different. “They came over to Australia for six weeks to study our model—we gave them our secret herbs and spices and wished them well but they came back a couple of years later in 1999 and said they couldn’t do it, but would open doors for us if we came in there. ‘Our membership needs you!’ they said.”
Expansion at home took place on the same principle. Some eight years ago it became clear that members were getting a bad deal from their insurers, explains Bartlett. “Our members are very good business managers and there is a high correlation between good business management and good risk management! We found through statistically valid surveys that our members were experiencing much lower claims and losses than the industry at large but that meant they were subsidising the cowboys in the trade.”
Capricorn decided it would set up a mutual insurance scheme, hiring Charles Taylor Consulting, an experienced UK company, to provide specialist expertise. Even for Capricorn members, cover with Capricorn Mutual is not guaranteed. Those with a dodgy record are supported in improving their risk management practices until they qualify—but nobody with a bad attitude towards claims is allowed to devalue the book, as Bartlett puts it.
For those who need it though, Capricorn Mutual is the place to be. Since it does not pay middlemen or brokers and does not wish to inflate the cost, it is able to pay claims quickly. And the surplus left over after claims have been paid belongs to the members as a reward for their good risk management practices.
The mutual covers all the states of Australia and the whole of New Zealand, so when Christchurch was hit by earthquakes and Queensland flooded, it was a lot more responsive than the large insurers, says Bartlett. “While a lot of insurance companies were running away from their policy holders we were running towards our members to get them back into business and back on their feet. We were paying claims very early and paying on estimates—supporting them psychologically as well as physically.”
After the initial five-year contract with Charles Taylor, Capricorn took over running the mutual but set up a joint venture company with Regis Mutual Management Limited UK to establish and manage other mutuals. Once again responding to need, it set up a mutual for some 34 of Australia’s universities, pooling their risk. And a few large companies that used to handle their own insurance matters realised that all the surpluses were going to brokers, so they brought in Capricorn to set up a mutual model for them that meant these surpluses came back to the policy holders instead.
As chair of Social Business Australia, an organisation formed to support and grow social businesses in the mainstream economy, Bartlett is the ideal person to lead Australia’s participation in the IYC. He is currently busy organising the country’s response to the IYC’s goals, which include increasing awareness of co-operatives and their contributions to socio-economic development and encouraging governments to support co-operatives.
“I think the International Year will create a greater awareness of a very successful model, both in commerce and the community,” he says. “It will raise awareness in government, academia, professional services, regulators and the community. The community is responding now to locally based enterprise that reflects the power of the people. Co-operatives and mutuals were formed for a social purpose and to pursue it using sustainable business methods. It is time people knew what we are all about!”
Capricorn is one of only two Australian members of the International Co-Operative Alliance (ICA), keen to champion co-operatives in the community and help the country celebrate the IYC. “The government has already agreed to issue commemorative coins and stamps. We are slowly but surely getting the recognition we want.” The model is gaining traction in Australia, he adds, with doctors banding together in healthcare co-operatives in some areas, and community schemes like Hepburn Wind, Australia’s first community-owned wind farm, emerging. Hepburn secured over $7.8 million of its $12.9 million project cost from 1,200 community member/owners.
Capricorn’s success shows how the co-operative model works to sustain small businesses against monopolistic corporates. It also supports the individual against big government and gives control back to local communities. “The importance of social businesses to the Australian economy and society is rapidly increasing and co-operative and mutual structures are seen as ideal structures for generating the right blend of social and economic ‘dividends’ to members and the community,” Bartlett believes.
“The UN-declared International Year of Co-operatives is our opportunity to show why co-operating in business is not just a good way to do business—it’s a business-like way to do good,” he concludes. www.capricorn.coop
