For years, Mountain Equipment Co-op (MEC) was a giant in Canada’s cooperative landscape, and something of a business success story. At its peak, it had about 5 million members, and around $700 million in annual revenues. 

That was all possible because MEC was a cooperative, owned and controlled by its members, for their needs. The cooperative was freed from making profit, because its only mandate was to serve the membership.

For years, MEC operated in a way that broke in significant ways from profit seeking, prioritizing world-leading environmental practices and a cooperative right-to-repair mindset. In the early 2000s, for example, a member could buy hiking boots made from recycled materials at a reasonable price. If the boots wore out after a few years, they could go back to the same energy-efficient, passive-solar store and get them repaired or replaced for free. 

But in the 2010s, the board made big moves to distance itself from member input, putting up barriers to participation and requiring approval to run for the board. 

And one October morning in 2020, members woke up to shocking news: MEC had, in secret, declared bankruptcy and sold all of its assets to a California-based private equity firm. It is now the “Mountain Equipment Company,” run for profit and no longer owned by its members.

In response to the news, thousands participated in a last-ditch effort to save the cooperative. Kevin Harding, a Vancouver-based public policy professional who works with cooperatives and community enterprises, was at the centre of the spontaneous mobilization which occurred online during the height of the pandemic.

The Breach’s Dru Oja Jay spoke to Kevin via video conference from Quebec. This transcript has been edited for length and clarity.

MEC headquarters in Vancouver. Around 2010, the cooperative put distance between its leadership and its member-owners.

The Breach: So what happened at MEC, from your perspective?

Kevin Harding: Mountain Equipment Co Op—MEC—was formed in 1971 by a group of students at the University of British Columbia who were members of a hiking club. They couldn’t buy climbing gear in Canada, and the easiest way to get it was to drive down to Seattle and buy it from REI, the American cooperative. They built a buyer’s club, essentially—they’d collect order sheets, go across the border, and probably smuggle it back, to be perfectly honest.  

Over the years, they built up this organization into Canada’s largest consumer cooperative, a multi-hundred-million-dollar business. When they started in 1971, they very consciously built it as a co-op, with a solid intention to meet needs and not put profit above access. 

They started by selling out of a VW van, they would park and people would come and shop from there. The first tents that they sold were made by members—it was cooperative labor and production. They started out in an attic in someone’s house in Kitsilano. And over time, they bought a store, and put in a workshop, still making equipment. 

As they grew over time, they put principles into their purchasing—eliminating waste, sourcing sustainable materials—but they also looked at human rights. There were ups and downs with those policies throughout their history, but that was core to their business. As they grew, they connected with other businesses and other provinces, they merged with other cooperatives and grew themselves into a pan-Canadian organization. 

Democracy was in the heart of the business. At certain points, members had actually a fair bit of influence in the way that the co-op was run. There were debates over whether or not things like products from occupied Palestine should be sold in stores, or whether products connected to arms manufacturers should be sold in stores and, and members made their voices heard. 

It was fascinating—an alternative way of doing business. But around the 2010s, the business took a really significant turn in how it managed itself, its principles and its commitment to cooperativism. And it ended in 2020, in that really heartbreaking manner.

“This new store serves members, not customers”: a 2009 advertisement for a new MEC store in Longueil, QC. Photo: Blogue de MEC

So there’s a typical story in cooperatives, where expansion leads the co-op to look for experienced staff, who of course are likely to come from the mainstream business sector and are really geared toward maximizing profit, so you have a shift in culture. Is that how the shift in MEC that led to the selloff happened, or was there something else?

The expansion of MEC was a bit of an adventure. You often had examples of growing pains. In the late 1990s, when MEC started carrying things like kayaks or canoes, or bicycles, some of the earlier members were really upset at that point, because they saw that as a diversion from the core principle of the cooperative, the first word in the name. Members had a debate, the board had a debate. 

The idea that prevailed in these discussions was that the core purpose of a cooperative is to meet members’ needs, not to generate profit. If members of the co-op have a problem—an access-to-market problem, an access to resources or finance problem—the best way to solve it is by working together and supporting each other. 

So when MEC went in the direction of carrying things like kayaks, it was because members couldn’t access something and decided to provide those services and those products to help each other out. But it seems to have been around the 2010s that there was a shift away from growing to meet members’ needs and toward growing the membership to meet the business’s needs. 

It’s a nuanced shift, but it was fundamental, because you go from “what do our members need” to “how many members do we need to grow our business?” At that same time, they started hiring from the private sector. They hired executives from large retail businesses to drive their product strategy and their marketing strategy. 

There were little signals that people saw from the outside. One was the abandonment of the name Mountain Equipment Co-op for the logo MEC. Some saw that as a hint of problems to come. There was a really significant restructuring of the internal democracy of the cooperative.

I once considered running for the board, and I had experience on the board of university, a multi-hundred-million-dollar public institution. And even then the people assessing board memberships determined I didn’t have the background that was the minimum criteria to be considered for election to the board. These little things added up to start to create problems.

Once you narrow the range of perspectives and opinions that sit around the board table, your members are not being heard. The direction of the business goes in one direction while members want it to go in another. That’s the beginning of that chasm.

“This canoe is for canoeing, not profiting”: a 2009 advertisement for MEC near Montreal. Photo: Blogue de MEC

I appreciate how structural that analysis is. It’s not like an individual failing, but more of a systemic look at what happened there. Even from that perspective, it’s hard not to look at what happened and think that there’s a nefarious thing that happened—like somebody made a decision at some point: “we’re gonna keep this secret and sell it off, we’re gonna hoodwink the members.”

Yeah in 2020, we’re able to look back and say, “okay, in 2016, they did this and in 2013, they hired this person.” They hired some people from mass market jewelry and clothing chains to be senior executives. You can point to that, but those individuals and their values were, I think, symptoms of the bigger thing. 

There were bigger strategic issues, a change from their initial strategy as an organization to “let’s grow the members as much as we can by throwing everything we can at them.” So one vision is mass market retail, where you can walk into a big box store and not walk out for a week, because it’s full of products that you never knew you needed. 

The root business problem here was that MEC went into this expansion phase, like you’ll see with a lot of other businesses. They thought, “you know, Calgary needs three MEC stores, Saskatoon needs two, Vancouver needs four.” 

And the alternative is fewer smaller, focused stores with a curated selection of products founded on understanding the member-owners rather than growing the customer base. 

It’s that shift. Individuals enabled that shift, and then a narrowing of perspectives cemented that shift.

You were on the frontlines of this sort of battle—when the cooperative announced it was going bankrupt and selling all its assets to a private equity firm in California, there was a legal challenge. Thousands of people gave time and money to help with the effort to stop the sale. What did that effort look like?

I still look back and think about how, at the height of the COVID pandemic, we managed to somehow pull together tens of thousands of Canadians who connected the only way that we could online—through WhatsApp and Facebook—to oppose this giant corporate sale. It was bizarre, but it was also the spirit of the co-op trying to assert itself. 

It started with this surprise announcement on CBC radio that the co-op was being sold. I remember being heartbroken because cooperatives are core to where I see society needs to go to build a better possibility. I wanted to get out there and just share with people that this was probably a business failure—you know, numbers on a spreadsheet were wrong, somebody made a poor strategic decision—it wasn’t a failure of the co-op model. 

And it turned out that there were hundreds of people talking about that when I woke up in the morning because the news had already hit in the east. There was a Zoom meeting where there were organizers with lots of experience in political party organizing or union labor organizing. A great group of people was convened and, and really everyone pulled together. I’d had experience with co-ops in the past, helping with business development. We had communications experts, people were translating everything into French, we had an online campaigner who gave us the tools and the framework to run a campaign. People behind the scenes were pulling together experts and lawyers—everything came together. 

It was really the heart of what a co-op is supposed to be. We had a problem that we wanted to solve—this organization that we owned, and that was ours, was being sold out without notice, without consultation—and we needed to organize. It was just an astounding thing to experience.

As a cooperative, MEC sponsored countless outdoor amateur sporting events, and contributed financially to building trails as well as environmental intiatives. Photo: Blogue de MEC

Can you just sketch out like how that played out? Do you feel like you ever came close to being successful?

It’s such such a good question—how close did we get? It’s fascinating. This group of people existed on Slack and Zoom meetings for weeks. We pulled together tens of thousands of people, received advice from large cooperative financial institutions. We were remarkably close to being able to save the co-op. 

What ended up hitting us was the legal system. 

MEC was in a position where the money that it owed was bigger than the money that it had. The pandemic had hit them really hard, so they weren’t generating a huge amount of revenue. They had been secretly sort of shopping around to get a lease or a loan, and it was hard to do that. 

They were talking to banks, and banks didn’t want to do this for them. Their financial advisors told them, “you really need to start looking around to sell.” And then this US capital firm showed up and said, “we’ll buy it.”

Part of that agreement to sell the business assets was that they’d go under the Canadian Companies’ Creditors Arrangement Act—federal bankruptcy legislation dating back to the Great Depression—that allowed them to circumvent all the bylaws of the co-op and all the provincial laws. So you have a judge stamp a piece of paper that says, despite everything else, you can sell the business.

MEC executives then went to the Supreme Court in British Columbia to get approval to start the sale. That was when members first heard of it, and started organizing—we started a petition, started an email list. We were just outraged people meeting together. But some law firms stepped up, with pro bono support. 

We felt it was important to pay them for some of the hours, and members across the country and around the world stepped up and put money into a GoFundMe. 

Lawyers told us they had a lot of experience with these kinds of bankruptcy arrangements, which allow companies to walk away from pension obligations, from unpaid wages and deliver assets to other corporate buyers. 

They told us that the only way we’d succeed is if we pitched another way to satisfy the loans, allowing the cooperative to continue. So we pulled together advisors from the co-op and credit union financial sector from across the country. 

There was a very real possibility that had there even been five business days worth of time to look at the books of MEC, that the credit unions and the financial institutions would have been able to meet their due diligence obligations. A credit union is owned by members—it can’t just risk money, because that’s people’s homes and savings. 

But if they’d gotten enough time to look at the books—the company still exists, it’s still doing business. There was a valid case to be made. They could have been able to put up sufficient funds to bridge the co-op through the challenging time, and we would have been able to pull together a board of experts that could have stepped in and run the co-op and rearrange things keeping jobs and activities going. 

But this law from the 1940s is not written to allow that. It’s designed to satisfy banks and lenders. It’s not designed to prioritize social capital or communities. And because of the way that law is written, and because the judge is duty-bound to follow the law, that reasonable five day pause to look at the books wasn’t permitted. 

Vancity headquarters looms over a Vancouver skytrain station. If MEC had done its banking with a member-owned Credit Union instead of the Big 5 banks, it probably could have avoided being sold off,

There are obviously critiques of the big cooperative financial institutions. But the fact that all of this cooperative infrastructure could have been mobilized to keep MEC alive, if only the co-op’s executive had any inkling or intention of operating in a cooperative context, as opposed doing a fire sale is pretty remarkable.

Yeah it was eye-opening! 

Their loan was from the big five banks in Canada. The credit union sector had always been a little bit upset that MEC—Canada’s largest retail co-op—hadn’t done loans through the credit union sector, because there would have been aligned interests and principles. The banks just want their bills paid. 

Credit unions want to support communities in their members in a different direction. So that was another opportunity, in the 80s, or the 90s, or the early 2000s, that should have been taken because you can build the system in a different direction. 

At some point MEC people were saying “well, you can’t just stop growing when you’re that big, because of various financial imperatives.” That was the justification for them opening up all these urban boutique yoga shops. What do you make of that case that was being made at the time?

This is a core question to a lot of co-ops right now, in the country. There’s always going to be some degree of growth that a cooperative business needs. Members may resign their membership, they may leave the country, they might not need that business any longer. So you need to have that base of core members interacting with you to sustain your business. 

But one of the core differences between a co-op and a private company is that the members or the owners and members are mainly interested in having a place they can buy their hiking boots or get their bike repaired. They’re not investors that are looking for a 3.5% annual dividend. When you’re in an investment-oriented firm, you need to generate growth to satisfy the investors. 

But when you have a leadership team at a retail co-op that doesn’t understand that growth isn’t actually the imperative for a co-op as it is for a private business, then you get into the zone where you need aggressive expansion and expand your product selection massively. Growth is something that you can plan for carefully, but that’s not your core imperative, as a cooperative business.

David Eby was Attorney General in the BC NDP government, but an election was called a few days after bankruptcy filings began, so Cabinet Ministers with cooperative experience were powerless to act to save the cooperative. Photo: Province of B.C,

So coming back to the Supreme Court—B.C. has an NDP government at that moment, and David Eby is Attorney General.  So was there nothing he could do, or is there a lack of motivation to do it?

This is one of these moments of utter heartache. When the members came together and started to organize, there were immediate connections to the provincial government in British Columbia. A number of cabinet ministers and elected MLAs had been on boards of credit unions or boards of co-ops. They know the history of the NDP as the Cooperative Commonwealth Federation, which had a core philosophy of replacing the economy with cooperatives. So they get the idea. 

But unfortunately, three days after this started happening, the Premier called an election. And so at that point, there was literally nothing the province could do. The government goes into this zone of no commitments, just maintain the ship of state. 

There was something the province could have done. We were at the height of COVID, all levels of government were throwing billions of dollars at businesses to sustain economies. This was like a $300 million loan that MEC needed to solve itself. And the products that MEC makes, a lot of them that could be made in British Columbia. This would have made a perfectly reasonable economic case at the height of COVID. We had lines of communication with cabinet ministers, but they all had to stop because the election was called. The timing was unfortunate.

A local depot of the Seikatsu Club Consumer Co-op federation in Japan. The food cooperative network, which also serve as community hubs, sees about a billion in annual sales and has used those revenues to found worker-owned cooperatives to supply its stores. Photo: Seikatsu Club

That’s a great point. Why can’t a consumer co-op—like Seikatsu did in Japan—go upstream and say “okay, let’s start using this $700 million in revenue that we have, and channel some portion of that to worker coops”? Can you say more about those possibilities?

From 2013 to 2016, I was working in the co-op sector, and I actually did a fair bit of work with MEC. It was always an adventure, because I’d hear from members and old people organizing around the democracy in the co-op. 

And I can remember being at the MEC store in Quebec City and the staff members there had shirts that said “membre et équipe”—member and staff. On the English side, there was none of this dual terminology—that connection to cooperativism. 

One of the criticisms that members had organized around, is that a lot of MEC’s production had been moved overseas into potentially quite exploitative environments. There had been a push to either improve working conditions or to meet human rights standards. MEC had been working on that—if you believe their reports. There was also a lot of research into innovative product design—new ways of designing clothing, new fabrics that meet outdoor conditions. 

There’s a government program to support that kind of innovation in B.C., and in other provinces and federally there are tax benefits and other incentives for bringing production back to Canada—to employ people who reside in Canada to design and build these products and then sell them through a cooperative. There was a lot of potential there. That was something that people in government had been interested in. 

But timing was our enemy here, because the board did all of this in secret, and didn’t ask anyone their opinion before they sold.

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