Co-operative Limited

Cambridge Bay, Northwest Territories

A commercial arctic char fishery was started in the late 1950s and marked the beginning of the co-operative movement in Cambridge Bay, a community on the southeast coast of Victoria Island. More than thirty years later, the Co-op is thriving and operates a number of businesses in the town: a retail outlet that sells groceries, dry goods, and hardware; a twenty-four room hotel; a large commercial fishery; an arts and craft outlet; a taxi and freight service; a commercial bakery; and a cable television service. During the peak summer season, the Co-op employs forty-five to fifty full-time staff and is a major employer of Native people in Cambridge Bay.
William (Bill) Lyall has been involved in the operations of the Co-op store in Cambridge Bay since 1974. He was elected to the board in 1981 and now serves as president. Bill attributes the success of the Co-op to the support of the community, which has grown over the history of their operations. He feels that the personal service he and his staff are able to offer to family, friends, and neighbours in the community of 1,000 people makes all the difference. The Co-op has been able to return a healthy proportion of its savings, when annual profits were available for distribution, directly to their customers as dividends, in recognition of their dedicated support.
The Cambridge Bay Co-op is a member of Arctic Co-operatives Limited (ACL), an umbrella organization which serves forty-one member co-operatives operating in the Northwest Territories. A history of the co-operative movement in the territory and the Co-op in Cambridge Bay is presented in the following section.


Co-operatives began over 150 years ago in Britain and have grown and even flourished in some parts of the world. They are a means for economic activity to be controlled by the workers or co-op members and they operate on significantly different principles than those followed by private enterprise. Co-operatives adhere to six main principles described in a brochure entitled, "The Co-operative Movement in the Northwest Territories: An Overview 1959-1989":
1 Membership in a co-operative is open to anyone who uses its services and willingly accepts membership responsibilities.
2 A co-operative is administered by people who are elected or appointed by the members and are accountable to them.
3 Members are issued shares but receive little or no interest on those shares.
4 When a co-operative has a surplus of earnings from its operations then this surplus may be reinvested in the business of the co-op, invested in common services, or distributed among members in proportion to the value of their transactions with the co-op.
5 Education of its members, employees, executive and the general public in understanding co- operative principles is a priority.
6 Co-operation among co-operative organizations is encouraged on a local, national, and international basis.
A co-op exhibits a number of unique features, which differ from a privately owned business. A co-op is owned by its members, who are often its employees.

Profits are distributed according to the directions of its members, and a percentage is usually returned to its members in the form of patronage refunds. Each member has one vote, and co-operatives thus provide a means to introduce democracy into the decision making process. As other parts of rural Canada successfully establish co-ops, the federal government introduced co-ops to the Northwest Territories in the late 1950s. It was an attempt to establish an economic base for the indigenous population.
In 1972, twenty-six of the existing NWT co-ops became founding members of the umbrella organization which later became Arctic Co-operatives Limited. ACL is a central organization which provides services to member co-ops, including accounting and auditing functions, purchasing and marketing assistance, management support and advisory services, and training and education for managers and directors. Its mission statement is: "To be the vehicle for service to, and co-operation amongst, the Northwest Territories co-operatives; hence, providing leadership and expertise to develop and safeguard the ownership participation of the northern people in the business and commerce of their community, to assure control over their own destiny."
Assets and equity in ACL reached an impressive $14 million and $5.9 million respectively over the ten-year period from 1980 to 1989. Revenues have grown steadily to more than $35 million in 1989 and net earnings have reached more than $1.6 million.
It is clear, however, that the major recession experienced in the Canadian economy had a great impact on the financial health of ACL in the three-year period from 1982 through 1984. In order to meet this challenge, ACL consolidated operations, moved its headquarters from Yellowknife to the less expensive city of Winnipeg, and sold several buildings. These decisions helped reduce operating costs by more than one-third. In October 1986 the Government of the Northwest Territories wrote off more that $1.4 million in debt owed by ACL. Many member co-ops organized aggressive membership drives to ensure the survival of co-operatives in the territory. ACL has regained financial stability and is set to continue growing in the future.
Its minimal financial resources created difficulties for ACL and its members in raising funds to meet the capital needs of member co-ops. To deal with this situation, the federal and territorial governments provided $10.2 million in capital contributions to the Northwest Territories Co-operative Business Development Fund in 1986. The fund is itself a co-operative, owned and controlled by Northwest Territories co-ops. Loans are made available to member co-ops for expansion, refinancing existing debt, and short-term financing for annual resupply of inventory. Interest from the loans goes into the fund and patronage dividends are issued to its members. For example, for every dollar of income received by the fund in 1989, $0.64 was issued as patronage dividends. There have been no loan defaults in the history of the fund, which grew to $11.4 million in 1989.

Mountain scenery in the North.

They are clearly an important source of revenue and employment for Northerners, with revenues of $44.6 million in 1989. In 1989, ownership by individuals in their local co-operatives was at 27.4%, which indicates a reasonable level of equity invested in the co-operative movement in the Northwest Territories. On an individual basis, the Ikaluktutiak Co-op has built up a healthy group of successful businesses. As previously mentioned, the fishery was the first co-operative endeavor. It led the way for the construction of the hotel by local labour in the mid-1970s and then the retail outlet in 1981.
Bill Lyall was hired by the Board of Directors in 1974 to manage the Co-op, improve services, and reduce pilferage. At that time, Bill has closed his taxi company because he had been recently elected as a member of the territorial legislative assembly. He recalls, "We only had four meetings a year in those days so I had lots of time on my hands to get involved with the Co-op."
Bill has taken an active role in the community at the local, regional, territorial, and national level. He is president of the local Co-op. He represents six communities at the ACL Board meetings and sits as President of the Board. He is also president of the territorial Co-operative Business Development Fund. Bill sits on the board of Tuttavik, a joint venture between ACL and La Federation des Co-operatives du Nouveau-Quebec, wholesaling northern arts and crafts to southern Ontario. He is also a member of the board of Northland Utilities and Canadian Airlines North. He is a past member of the Water Board and Native Economic Development Program Fund board and past president of the Arctic Coast Tourist Association.
Bill was elected president to the board of ACL in 1981 when 80-85% of the co-ops were on the brink of bankruptcy. One strategy to deal with the crisis, and one, which worked for the Cambridge Bay Co-op, was a membership drive. The Co-op now has approximately 460 active members, close to 50% of the community and 90% of the adults.
Bill recalls, "We tried to get more interest in the store but it wasn't working. In the beginning, people used us when they couldn't charge anymore at the Bay. We finally got through to quite a few people that this is their own business and profits stay right here. We proved that with the dividend payments." The majority of co-ops survived the three-year slump in the early1980s and have gone onto accomplish many of their goals. This has brought Bill a great deal of personal satisfaction.
Bill enjoys his various positions especially his involvement in ACL. "There's always some new thing that comes up so it's an interesting job. I am also very proud that the whole organization of co-ops is the second largest employer of native people in the Northwest Territories, after the territorial government. I think one of the biggest thrills Eskimo people have with our business is that it's our own business. Generally native people in the communities own the co-op, but we hire white people to run the biggest part of it for us. People see at last, we're not working for the white man, but the white man is working for us."


A lifetime membership in the local Co-op is available for $15 to anyone over eighteen years of age with no residence requirement. As previously mentioned, there are approximately 460 active Co-op members in Cambridge Bay. Once a member builds up his equity through store purchases to $1,500 then he is eligible for dividends based on proportion of total purchases. Equity is allowed to build up to $7,500 and then the member receives cash for any excess equity that is earned above the ceiling. Each member receives one vote and may attend the annual board meeting.
There are nine board members from the community who are elected for one, two, or three years at the annual meeting. The board executive includes the president, first vice-president, and the secretary-treasurer. There are no honoraria because membership is a volunteer service for the benefit of the community. The board guides the Co-op's operations and recently drafted a five-year plan incorporating suggestions from the membership. Bill notes, "This is one of the new things that we try to encourage all the co-ops to adopt so that they can continue their success."
The board meets once month and handles complaints, policies, planning, and other issues of interest. With management handling the follow-up of these matters. Bill states, "I might talk to drivers going too fast or to a kid who is stealing stuff out of the store. The board of directors give a lot of direction to management."
The major source of revenue is generated from the retail grocery outlet. In 1989, retail sales were 69% of total sales, with the hotel revenues at 15%. The fish plant generating 9%; and general contracts, including the cable service and delivering mail between offices and the airport for the government, accounting for 7% of total revenues.


Retail Outlet

John Senow, a merchandising specialist with ACL, is the temporary general manager in the retail outlet. He has thirty-six years of experience in the wholesale and retail sales and store engineering. He freelances for ACL when a store needs his help, for example with staffing, cash flow, or low sales. He expects to be in Cambridge Bay until September 1990, when they hope to have hired a general manager and produce manager for the Co-op.
John is streamlining operations. "I will do a stock relocation which means relocating all similar products together and generally improving the functional end of the business." The retail outlet is 10,000 square feet and carries groceries and dry goods. It has a loading dock, storage space, an office, an arts and craft outlet, and a sewing centre. It is the second largest retail co-op in the territory.
Any Co-op member may have an account with the store. The usual amount charged is $150 every two weeks. Very few people have accounts over $500 and Bill monitors account levels very closely. He says, "We do not send bills that accounts are overdue the way that Northern Stores does. It is a personal touch, because if you keep sending somebody bills marked overdue they won't pay. If someone is slow paying then I go personally and see what payment plan can be worked out. Generally they respond positively."
The craft shop is handled by the administration office. Two staff people order crafts from Canadian Arctic Producers for the tourist market. (Canadian Arctic Producers is the arts and crafts wholesale marketing arm of ACL and Northern Images handles the retailing of these goods.) There are four local carvers but they do not create a large number of items. Bill notes, "The government tried to start carving here with the attitude that all Eskimos are carvers. That's not true. They soon found out that we weren't all carvers. We hire women to do some sewing in the wintertime."

"We don't mass-produce products like we used to because it tied up a lot of cash. What we do now is produce smaller items, for instance, lots of duffel bags that can be sold quickly." John adds, "Right now we have quite an inventory of fabrics and skins. We've already got some ladies started on using sealskin for men's vests and we'll see how they turn out. [The vests] don't require much time and there is a demand for them. Now, with the weather turning colder, we can go into more products such as seal skin slippers, mitts and gloves. We also buy finished products from the community if we think that there is a market for them."


Bill manages the fishery, which operates seven days a week from the first week in July until the first week in September. He is the only person with the expertise to maintain the equipment, so he is on call throughout the whole season. Seven to ten fishermen are hired to net the arctic char. The fish are gutted and gilled before being flown to the fish plant and trucked in to be weighed, washed, hung, and freeze-blasted. After freeze-blasting, they are graded according to size: two to four pounds, five to seven pounds, eight to ten pounds, and over ten pounds.
The fish are boxed in packages of seventy-five pounds each and stored until there is enough inventory to be shipped to the Freshwater Marketing Corporation in Winnipeg or to fill orders from other communities. The Freshwater Marketing Corporation is a Crown corporation that was formed to market all fish caught in the Northwest Territories for export to markets in Canada and the world. Orders are filled as promptly as possible due to high power costs associated with plant operations. The fishery provides seasonal employment for about seventy people in the community, including the fishermen. All age groups are hired to work in the plant, including students, as long as they can see over the sink to wash fish.