Mondragon

 Here is a glimpse of the world's most successful coop system and the nature of its access to capital. Imagine it also using its own bank to support local government structures as well. That is what I have envisaged to expand the human endeavor across the planet.

Much of what I have understood has already been evolved here and certainly needs to be replicated. Do notice that all this is immune to external financial manipulation as it is based on the credit and good faith of the whole active population. With 100,000 employed today, it is clear that well over 250,000 are participating fully in this enterprise. Besides it is also an engine for local growth and has made it all work.

Also notice just how naturally flexible this setup has to be. It soon has ample internal capital to launch a new enterprise and ample internal human resources to make anything succeed. It is also continuing to grow.

What is key is that it accesses manpower and preserves that access. This is what is fundamentally flawed about industrial agriculture. Manpower unavailability restricts you to a capital model and huge fields while giving up all other prospective opportunities. This is a terrible vulnerability that must fail as this type of regime is established.

Please note that this has grown steadily for seventy years and will continue to grow for thousands of years because it naturally grabs the talent. You are looking at our real future.

A Timely Visit to Mondragon

November 4, 2009 by Phyllis Robinson

The following article was written by Aaron Dawson, Equal Exchange Customer Service Manager and former Worker-Owner Coordinator.

http://smallfarmersbigchange.coop/2009/11/04/a-timely-visit-to-mondragon/

It seems somewhat ironic that exactly a week after I return from my St. Mary’s Master of Management – Cooperatives and Credit Unions study tour of Mondragon, Spain, where the world’s largest formalized network of worker co-ops lives, the United Steelworkers announced their collaboration with Mondragon to develop and grow manufacturing worker co-ops in the U.S. & Canada (click here to visit that announcement from the United Steelworkers Union). Had I known this announcement was coming, maybe I could have just waited a couple years and visited a Mondragon co-op somewhere in the U.S.

But let’s back up a little and ask: Why is the fact that some Spanish company is opening manufacturing plants here in the U.S. so exciting? Well, for one, we could certainly use more manufacturing jobs, but that’s just the beginning. Mondragon is exciting because it is such a large and complex network of worker-owned businesses, ranging from worker-owned auto parts manufacturing plants, worker-owned kitchen appliance manufacturing plants, worker-owned and consumer-owned grocery stores, worker-owned credit unions and even a worker-owned University where professors and university workers own the University.

What is also amazing about Mondragon is its history. The worker co-ops were started by a young priest, Don Jose Maria Arizmendiarrieta, who came to Mondragon in 1941. At that time, Mondragon was one of the most economically depressed areas in the Basque region of Spain. Soon after his arrival, he organized the community to help fund a democratically structured Polytechnic school to teach young people both the skills they needed to get work, as well as teaching them the overall dignity of their labor. Shortly after the opening of the school, a few of his early graduates found that working in a traditionally structured company was not enough. They wanted to work in a company that placed value on their labor above all else, empowered workers to not only share in the profits of the company they worked for, but also share in the decision making as well. Thus, five of the early graduates, with Don Jose Maria’s guidance and again, the financial help of community members, purchased a small factory, hired worker-owners and started manufacturing and selling small ovens. Soon after, again with the guidance of Don Jose Maria, a credit union was formed to help fuel the rest of Mondragon’s growth.

From these humble beginnings, we now have a co-operative network that has a total of $49.5 billion, with over 70,000 worker-owners and 92.3% of the share capital coming from those same worker-owners. Along with the types of organizations listed above, they also have a worker-owned insurance co-op, research and design co-ops and worker-owned distribution co-ops. On top of this, every co-op in Mondragon invests 10% of their profits toward the research and design for new products and services. Two percent of each co-op’s profits goes towards a solidarity fund for individual co-ops who may be struggling and need assistance. When looking at Mondragon 50 years later, we can see not only a powerful co-operative network, but also an area that, through Don Jose Maria’s guidance, went from one of the most economically depressed areas in the Basque region to one the biggest employers in the Basque Region. In the end, one could say that Don Jose Maria Arizmendiarrieta accomplished what most community developers can only imagine in their wildest dreams, all through the vehicle of worker-owned co-ops!

So, when the United Steelworkers Union announced that they would be collaborating with Mondragon to create worker-owned manufacturing jobs in the U.S. and Canada, it is an understatement to say that this is very exciting news for the Worker-Owned Co-operative movement in the North America. My own excitement was furthered when I heard that one of the people in attendance (via phone) for that announcement was the head of Mondragon’s America’s Division, Fernando De Landa – Director of International Operations (America), who had spoken to our group just the week before in Mondragon. And although when we met with him, he did not announce this partnership, he did talk a bit about what Mondragon looks for when going into partnership with organizations overseas: organizations that not only are familiar with the local area and the market, but also organizations that match their values. He likened this type of relationship to a marriage, where the matching of values is as important to anything else in making a successful collaboration. 

In my opinion, not only will Mondragon’s decision to collaborate with the United Steelworkers result in good bit of splash, it will also result in a terrific marriage. Mondragon will be working with an organization that has been fighting since 1942 for the right of workers to have such things as collective bargaining, higher wages and paid vacations, and believes that the true value of a product comes from the labor that goes into it. These beliefs are shared by Mondragon, whose new corporate name is, Mondragon: Humanity at Work, and has been striving to empower the worker-owners in its own organization for over fifty years.

The collaboration of these two organizations is a monumental move for both the U.S./Canada labor movements and the U.S./Canada worker co-op movements. Although no specific plans have been laid out as of yet, it is definitely a step in the right direction. Unions will have a chance to innovate the working world once again by actively working with and encouraging a worker-owned model. This partnership will also help shine new light on the successes and benefits of Mondragon and the benefits of the worker co-op model as the labor union movement continues to look for new ways to advance the working conditions and the empowerment of workers in the U.S. and Canada.

For my second post about Mondragon, I would like to talk about the 6th co-operative principle: cooperation among co-operatives. Mondragon has done amazing work with cooperating amongst the different co-ops within their network, but they’ve also faced challenges.

I was blown away by Mondragon’s network of various co-ops. As noted in my previous post, there were worker-owned home appliance and auto parts factories, worker/consumer-owned credit unions, worker/consumer-owned grocery stores, worker-owned universities, to name a few, and they are all working together. The ways that they work together is just as impressive as the variety and types of worker co-ops themselves.

The first and most basic way in which the Mondragon co-operatives cooperate with each other is through the divvying up of each co-op. Below is a chart of how each co-op puts their profits towards the general Mondragon network:

Gross Profits (general funds):

• 15-20%: the average that goes to the group reserves (most co-ops choose 20%)

• 10%: goes to Mondragon investment for new products and co-ops

• 2%: goes to Mondragon education (a.k.a. – Research & Design, Mondragon University)

• 2%: goes to a general solidarity fund (to cover individual co-ops’ losses)

So, around 34% of an individual co-op’s profits go straight to the Mondragon network to supporting a variety of activities, from growing the reserves, to investing in new products and co-ops, to support education, and even toward a solidarity fund to help co-ops in financial difficulty. Not only does this profit allocation provide a healthy safety net for all of the co-ops, it also helps fund innovation and future projects that allow the co-ops to continue to be profitable and innovative far into the future. This is one very direct way in which all the co-ops in Mondragon cooperate!

There are other ways that co-ops in Mondragon cooperate. Our group took a shopping trip to the Mondragon worker/consumer hybrid super market: Eroski. The particular store we went to can only be compared to a store like Super Walmart or a Super K – it sold groceries, appliances, luggage, clothing, etc., but all of the workers were also owners! On the shelves of the co-op, you could buy products that were manufactured by other Mondragon worker co-ops, like refrigerators and washing machines. The machines were very likely researched and designed by one of the Research & Design co-ops, and the products were transported from the factory to the store by a worker owned transportation co-op. They also had tons of Eroski private labeled items, which came in handy when I had to find some Spanish deodorant with a name I could trust! The point is, this is just one of many examples of how these co-ops, who are distinctly separate in business, are able to work together to create a vibrant co-operative economy.

So with all this cooperation going on, our group was left with the question: “How is Mondragon co-operating with co-operatives outside their network”? In all truth, Mondragon typically teams up with any company in a given area that can best do what Mondragon is looking to do, regardless of their ownership structure. When we asked Jesus Herrasti, who was the former head of Mondragon’s International Division (and current head of Mondragon’s Innovation Park – Garia), about partnering with any co-ops in the United States, he noted that Mondragon had talked with a few co-ops in America, some of them with quite a lot of resources, but in the end, the American co-ops were not able to come up with any projects for collaboration with Mondragon. Herrasti felt that this was the case because co-ops are thinking about their own time, their own stuff – and that co-ops do not trust each other. He noted that often times, in co-op organizations with social missions, you can find that people are very proud and thus the organizations are hard to manage and hard to work with. The point of bringing this up is that we, as a co-op community, have to do better. We need to work together, we need to work with each other in the U.S., and we need to work with large co-ops such as Mondragon in other countries if we are to accomplish our missions!

It is time to put aside our egos and our pride and just do something, together. If unions and worker co-ops can cooperate to build something new (see my first post: A Timely Visit to Mondragon), then it should not be asking too much to expect consumer co-ops and worker co-ops to cooperate, or worker co-ops cooperating with other worker co-ops, or Credit Unions with housing co-ops, etc. The point is, we in the co-op world recognize that we need an alternative model; that much is obvious.

I, personally, also believe that the co-op world has that alternative model to give to the world. So the question is, are we going to be able to work together to build that alternative? I would like to leave off with a quote from Herrasti that highlights what we need to do in cooperating with each other: “We do not need to be something big and fight with capitalism; we just need to create something different.”