What is Eureka’s Future?
Eureka’s Future, the first of many manufacturing cooperatives making renewables in Australia, will spring from the work of the first 100,000 members of the Earthworker Cooperative.
Eureka’s Future will manufacture solar hot water (SHW) systems. Through Enterprise Bargaining Agreements (EBAs) negotiated between unions and employers, workers can negotiate SHW systems as part of their wage outcome in the EBA. This facilitates the collective purchase of goods by workers, enabling them to start bringing their cost of living down by the use of solar power; cutting carbon emissions; and supporting Australian manufacturing jobs that never leave our shores. The profit from the sale of Eureka’s Future SHW systems will be distributed in a number of ways:
- An incentive will be paid to unions and employers for opening their EBA in a way which provides a better-than-cash deal to workers
- Money will return to the Eureka’s Future (and future Earthworker Cooperatives) to pay wages, invest in more work, and fund research and development
- A further 5% will go towards social justice projects
Partnerships and support base
Our most important partnership is with Dandenong manufacturer, Everlast, a loyal and active partner who will provide the product, assistance with the fit-out and finish of Eureka’s Future factory, and training of the first workforce, in return for a royalty.
Also significant is the relationship with Douglas Solar, who will provide the social enterprise with an approved system configuration and also support in training the system assemblers and installers.
Statistics
- In 2007 we commissioned a feasibility study which showed that 5.8% of Victorian union members have solar hot water systems
- According to ABS figures, only 3.5% of households in the Latrobe City municipality currently have solar hot water
- Around 3% of Victorians currently have solar hot water
- According to Sustainability Victoria, if all Victorian homes had a solar water heater, so far this year Victoria would have cut its greenhouse gas emissions by 1,452,850 tonnes. That’s the equivalent of taking 650,000 cars off the road for the period since 1 January
- Industry nominates that the average longevity of hot water systems is 12 years
- If we take that 3% of Victorians to 30% by the mid-2020′s that is over 50,000 installations per year. What a nice problem to have, filling that order!
Pricing
As a co-operative the business model has the advantage of not needing to pay dividends to share holders, which is estimated to reduce profit requirements by around 30% and cash outflow by 1.5 – 2%.
Currently the prices of competing products are inflated through margins which are placed on each component of the system as it makes its way through the private supply chain. We anticipate the price could be reduced by as much as 30% when the business is in a position to manufacture the solar collectors.
How much are people are willing to pay?
Market research (Strahan, 2007, commissioned by unions and Moreland Energy Foundation) conducted indicates union members were willing to pay $2500 for a system in 2006/2007.
Eureka’s Future gas boosted solar system = RRP $5916 – includes installation cost of $1800 (Conservative estimate: prices to decrease in the future)
Less:
- RECS 31 @ $35 – $1085 ($5 held onto transaction costs)
- Rebate Melbourne – $1500
- VEEC’s 64 @ $9 – $576
Total reductions = $3161
Complete price – $2755 or $2655 (with higher regional rebate)
PLEASE NOTE: These figures were current before recent changes in the Federal Government support for renewables, and before the change in Government in Victoria in 2010. We are yet to determine what these changes will mean to the figures.
However it is believed that as a price/tax on carbon is introduced, there should be monies available to support Eureka’s Future and other renewable energy ventures, and also Australians that want to purchase their products.
Marketing and sales
We need to sell 220 tanks per month to break even, or 2650 per annum.
The business plan assumes that manufacturing levels will increase each year, with the first two years resulting in 5610 tanks manufactured and installed, an average of 234 per month. Everlast currently manufacture well in excess of that.
For the first two years, there are two target markets for the Eureka’s Future solar hot water (SHW) system – members of Victorian trade unions and the local community in the Latrobe City municipality.
Enterprise Bargaining Agreements (EBAs) between unions and employers will be the primary means for distribution of the goods and services.
Key features of trade union market:
- Victoria has 452,800 trade union members
- Levels of home ownership / purchasing are relatively high
- These people tend to have older hot water services, with 53% of the Strahan sample having systems more than eight years old
- The vast majority would be open to buying a solar hot water system, so long as it met their needs.
Key features of the Latrobe City community target market
- Latrobe City has 27,284 households, as represented by occupied dwellings
- The vast majority of these households use electric storage hot water
- From 2011/2012, all of the electric hot water systems will need to be replaced with solar hot water systems or gas systems to meet regulatory requirements
- Very few of them are currently installing solar hot water systems as represented by less than 1% of households receiving available rebates in 2008/09.
Support for Eureka’s Future
As well as concerns around wealth-creating jobs for our country; what we produce, the way we produce it and where we produce it results in health problems for individuals, and ecosystemic problems for the planet.
Union supported, worker owned and controlled cooperatives manufacturing SHW units, and ultimately the full range of green technologies, begins a new stage in Australia’s labour movement history, which will see it return to a vision of a better world and not merely a bigger share of this one at the expense of others.
- Jobs which never leave our shores
- Training for our young
- Lifelong wealth-creating jobs
- Quality control and local access to a real ten year warranty
- 5% of all surpluses from viable factories towards social justice
- Purchase of housing, childcare, health, education and other social products for the Cooperative workforce
- A community-based answer to the Trans Pacific Partnership Agreement, the new “free” trade agreement threatening Australian jobs, communities, farmers and small-to-medium businesses.
How much do we need to become operational?
$4 million (aproximate – Business Plan has full details):
- $1 million for setting up the installation aspect of the cooperative
- $2 million for factory equipment and fit-out-and-finish
- $1 million working capital for the first year
