Mondragon (Spain), a world-class Cooperative business example & model that's sorely needed in the US

(This was a reply I posted to another thread, I have had some requests to post it as an OP)

http://www.mondragon-corporation.com/ENG.aspx?language=en-US

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http://distributistreview.com/mag/2011/10/mondragon-revisited/

Mondragon Revisited

In the face of the global financial crisis that has Spain’s unemployment level standing currently at some 22 per cent, the Mondragon co-operatives offer an astonishingly successful alternative to the way we organise business and economies. Revisiting recently for the fifth time, since the early nineteen-eighties, the great complex of worker-owned manufacturing, retail, agricultural, civil engineering and service cooperatives centred on Mondragon in the Basque region of Spain, it was impossible not to be impressed by the resilience that has enabled them to take their share of economic hits and emerge largely unscathed.

As Mondragon’s Human Resources Director, Mikel Zabala, points out, “We are private companies that work in the same market as everybody else. We are exposed to the same conditions as our competitors.” For example, Mondragon’s Eroski worker/consumer retail co-operative—hitherto Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls—has over the past two years experienced for the first time since its inception in 1959 losses consequent on massively reduced consumer demand, and only now in the current financial year anticipates a return to modest profitability.

Fagor, Spain’s largest manufacturer of white goods including refrigerators, washing machines and dish washers, has successfully managed down production by 30 to 40 per cent in the face of a precipitous contraction of the effectively discretionary consumer durables market. The co-operative group’s Caja Laboral credit union—effectively Spain’s ninth largest bank—is recovering from a seventy-five per cent reduction in its profitability, from 200 million to 50 million euros. And following a sharp reduction in the use by the co-operatives of temporary workers, overall employment has stabilised at around 83,800. That so testing and ultimately triumphant an outcome has been achieved is attributable overwhelmingly to key attributes that set the co-operatives aside from comparable conventional enterprises.

Not to be overlooked, in the first instance, are the conceptual framework and enduring solidarity and subsidiarity values that are the legacy to the co-operatives of their founder, the Basque priest Don Jose Maria Arizmendiarrieta. Internalised and in part secularised as the values and framework have so largely become, they stem directly from the unswerving adherence by Arizmendiarrieta, between his arrival in Mondragon in 1941 and the launch of the first of the co-operatives in 1956, to formation in the ‘see, judge, act’ or ‘inquiry’ study circle mould as developed by the Young Christian Workers (YCW) under the leadership of its long-time director, the Flemish priest, and later Cardinal, Joseph Cardijn.

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Spain's astonishing co-op takes on the world

As Britain’s David Cameron embraces the ideal of worker co-operatives, a remarkable hi-tech variant with global operations is already thriving in the industrial heartland of Northern Spain.

http://www.telegraph.co.uk/finance/economics/8329355/Spains-astonishing-co-op-takes-on-the-world.html


The Mondragon Corporacion is the world’s biggest co-op with 85,000 'worker-owners’, though the Basque group is better known for products such as Orbea bikes that won gold at the Beijing Olympics and sell for up to £11,000, or Fagur fridges, Brandt ovens, Eroski shops, or the coming electric City Car.

Anglo-Saxon elites might find its pay scale unsettling. Top brass in Mondragon’s mountain lair may not earn more than six times the lowliest cleaner. "In reality it is just three times after tax, but we don’t need much money to live here," said an ascetic Josu Ugarte Arregui, the global director. The differential in big Western companies can be 400 times, and is getting worse. The top pay of FTSE 100 bosses has jumped from 124 times the minimum wage to 202 times over the last decade, according to the Hutton Review of Fair Pay.

Mr Ugarte struggled to explain how the group keeps talent. High flyers seem to stay for reasons of tribal loyalty or the ideals of Catholic social doctrine. To be a Mondragon manager is to accept the vows of priesthood, and indeed the movement was founded by a parish priest, Jose Maria Arizmendiarreta. His mission was to lift youths in the hilly Alto Deba region out of poverty after the Civil War, when Basques were on the losing side and a particular target of General Franco’s wrath. Nearby Guernica – flattened in 1937 by the Condor Legion, and seared in our collective mind by Picasso – holds the ancient oak tree and symbol of the Basque nation.

The solidarity ethos has its allure given mounting research by the IMF and other bodies that the extreme gap between rich and poor was a key cause of the global asset bubble and financial crisis, as well as being highly corrosive for democracies. The GINI index of income inequality has reached levels not seen since the 1920s across the West. Mondragon weathered the 2009 slump in machine tools, car components, and its other cyclical niches by putting 20pc of full staff leave for a year at 80pc pay, with names chosen by lottery. Some of its 256 co-ops froze pay, others took a 10pc cut. The membership rule is that all new workers must put up €13,400 in share capital, which they can borrow from the group’s Caja Laboral, one of the few Spanish savings banks in robust health.

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