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Mondragon Corporation

 

Mondragon Corporation

MONDRAGON Corporation
Worker cooperative federation
Founded 1956
Founder José María Arizmendiarrieta
Headquarters Mondragón, Basque Country, Spain
Area served
International
Key people
Javier Sotil (president of the General Council)
Revenue 11,479 million € (2013)[1]
Total assets 34,011 (2013)
Number of employees
74,117 (2014)[1]
Divisions Finance, Industry, Retail, Knowledge
Website mondragon-corporation.com

The MONDRAGON Corporation is a

  • Official website
  • El PNV asegura que Fagor y Mondragon han actuado tarde, mal y a destiempo EL CORREO Newspaper
  • MONDRAGON Corporation - Google Maps
  • CEPES MCC is member of the Spanish National Confederation of social economy Enterprises.
  • Mondragón: The Remarkable Achievement article from In Context magazine, 1983

External links

  • Cooperation for Economic Success. The Mondragon Case (2011) in Analyse & Kritik, 33 (1), 157-170 . Ramon Flecha & Iñaqui Santa Cruz.http://www.analyse-und-kritik.net/en/abstracts_current.php#562
  • Making Mondragon: The Growth and Dynamics of the Worker Cooperative Complex (1991), William Whyte. ISBN 0-87546-182-4
  • We Build the Road as We Travel: Mondragon, A Cooperative Social System, Roy Morrison. ISBN 0-86571-173-9
  • The Mondragon Cooperative Experience (1993), J. Ormachea.
  • Cooperation at Work: The Mondragon Experience (1983), K. Bradely & A. Gelb.
  • Values at Work: Employees participation meets market pressure at Mondragon (1999), G. Cheney.
  • Mondragon: An economic analysis (1982), C. Logan & H. Thomas.
  • The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town (1996), by Sharryn Kasmir, State University of New York Press.
  • From Mondragon to America: Experiments in Community Economic Development (1997), by G. MacLeod, University College of Cape Breton Press. ISBN 0-920336-53-1
  • "Jobs of Our Own: Building a Stakeholder Society" (1999), by Race Mathews, Pluto Press (Australia) and Comerford & Miller (London). ISBN 1-86403-064-X. US reprint 2009, The Distributist Review Press. ISBN 978-0-9679707-9-0. ISBN 0-9679707-9-2.
  • , September 15, 2011The Rag Blog"Rag Radio: Carl Davidson on Mondragon and Workers' Cooperatives," Interview by Thorne Dreyer (44:05)
  • The Rag BlogArticles about the Mondragon Corporation on
  • Azurmendi, Joxe 1984: El hombre cooperativo
  • Spanish white goods company Fagor seeks protection from creditors (October 2013)
  • Thousands of Fagor employees demand in Mondragon town to keep their jobs (October 2013)
  • White-goods giant Fagor goes into administration (October 2013)

Further reading

  1. ^ a b c d Mondragon Corporation. "Annual Report 2012". 
  2. ^ The Mondragón Experiment - Corporate Cooperativism (1980) FULL
  3. ^ Molina, Fernando (2005). José María Arizmendiarreta.  
  4. ^ Foote, William (1991). Making Mondragón. IRL Press.  
  5. ^ http://www.eroski.es/es/conoce-eroski/una-empresa-diferente/historia
  6. ^ http://www.euskomedia.org/aunamendi/76338
  7. ^ "Year-on-year Development, MONDRAGON Corporation". www.mondragon-corporation.com. Archived from the original on 2011-12-31. 
  8. ^ Ormaetxe, Jose Maria (2003). Medio siglo de la experiencia cooperativa de Mondragon. Azatza. SS-1433/2003. 
  9. ^ Wilson, Amanda. Bendable Business: Cooperatives less likely to break in economic crises. The Dominion. 4 December 2009.
  10. ^ http://assets.usw.org/our-union/coops/The-Union-Co-op-Model-March-26-2012.pdf
  11. ^ http://www.tulankide.com/en/internationalisation-consolidates-mondragon2019s-industrial-business-with-sales-abroad-in-excess-of-20ac4bn-3
  12. ^ a b http://www.mondragon-corporation.com/eng/internationalisation-and-innovation-keys-to-the-evolution-of-mondragon-cooperatives-in-2013/
  13. ^ http://www.reuters.com/article/2013/10/16/spain-fagor-idUSL6N0I61WA20131016
  14. ^ http://www.lemonde.fr/economie/article/2013/11/06/fagorbrandt-en-cessation-de-paiement-2-000-emplois-menaces_3509174_3234.html
  15. ^ http://www.catalannewsagency.com/business/item/catalan-company-cata-buys-bankrupt-domestic-appliance-business-fagor
  16. ^ Larrañaga, Jesus (1998). El cooperativismo en Mondragon. Azatza.  
  17. ^ Mondragon Corporation
  18. ^ Mondragon Corporation. Co-operative Culture
  19. ^ Foote, William (1991). Making Mondragon. ILR.  
  20. ^ Mondragon Corporation. Co-operatives bodies and terminology
  21. ^ a b Herrera, David (2004). "Mondragon: a for-profit organization that embodies Catholic social thought." (PDF). Review of Business (The Peter J. Tobin College of Business, St. John's University) 25 (1): 56–68. Retrieved August 29, 2014. 
  22. ^ a b Vincent Navarro, What About Cooperatives as a Solution? The Case of Mondragon, CounterPunch, 2014.04.30
  23. ^ Jeffrey Hollender (June 27, 2011). "The Rise Of Shared Ownership And The Fall Of Business As Usual". Fast Company. Retrieved 2011-06-28. 
  24. ^ [3]
  25. ^ / Organisational Estructure in Mondragon, consumer goods
  26. ^ / Organisational estructure in Mondragon, capital goods
  27. ^ / Organisational Estructure in Mondragon, industrial components
  28. ^ / Corporative Profile 2010
  29. ^ Tu Lankide, 17 June 2013, "Internationalisation consolidates Mondragon’s industrial business with sales abroad in excess of €4bn", http://www.tulankide.com/en/internationalisation-consolidates-mondragon2019s-industrial-business-with-sales-abroad-in-excess-of-20ac4bn-3
  30. ^ http://www.tulankide.com/en/mondragon-cooperatives-in-industrial-sector-create-1-000-jobs-in-2014
  31. ^ [4]
  32. ^ / Magnitudes económicas de Eroski
  33. ^ "Erkop". 
  34. ^ Mondragon Annual Corporate Profile for 2010
  35. ^ / Mondragon Yearly Report 2010
  36. ^ http://article.wn.com/view/2015/07/15/MONDRAGON_cooperatives_in_industrial_sector_create_1000_jobs/
  37. ^ Wolff, Richard (24 June 2012). Yes, there is an alternative to capitalism: Mondragon shows the way. The Guardian.
  38. ^ Talking With Chomsky, Laura Flanders, CounterPunch.

References

See also

The Mondragon system is one of four case studies analyzed in Capital and the Debt Trap, which summarized evidence claiming that cooperatives tend to last longer and are less susceptible to perverse incentives and other problems of organizational governance than more traditionally managed organizations.

Vincent Navarro wrote that from a business perspective, Mondragon is successful in matching efficiency with solidarity and democracy. However, he writes that the number of employees who are not owners have increased more rapidly than worker-owners, to a point that in some companies, for example in the supermarket chains owned by Mondragon, the first are a much larger group than the second. In Navarro's view, this establishes a two-tier system - for example, in terms of whom to save in the case the company collapses. In the collapse of Fagor, the relocation of employees to other companies belonging to Mondragon favored those who were worker-owners, which, in Navarro's view, creates a two-tier system that may affect labor relations:[22]

has said that while Mondragon offers an alternative to capitalism, it is still embedded in a capitalist system which limits Mondragon's decisions:[38]

Noam Chomsky

Scholars such as Richard D. Wolff, American professor of economics, have hailed the Mondragon set of enterprises, including the good wages it provides for employees, the empowerment of ordinary workers in decision making, and the measure of equality for female workers, as a major success and have cited it as a working model of an alternative to the capitalist mode of production.[37]

Reactions

The 15 technology centres play a fundamental role in the development of the sectors of focus. In 2009 they employed 742 people and had a budget of €53.7 million.[35] In 2013 its network of technology centres and R&D units provided employment for 1,700 people and the commitment to R&D&I matters amounted to 136 million Euros, 8.5% of added value.[12] Mondragon has 479 families of Patents for Inventions, which accounts for 25% patents in the Basque Country, participating in more than 30 R&D cooperation projects at the European level. [36]

Mondragon University is a co-operative university, which combines the development of knowledge, skills, and values, and maintains close relations with business, especially Mondragon co-operatives. Technological innovation is generated through the co-operatives’ own R&D departments, the Corporate Science and Technology Plan, the corporation’s 12 technology centres and the Garaia Innovation Park.[34]

This area has a dual focus: education-training and innovation, which have both been key elements in the development of the Corporation. Training-education is mainly linked to the dynamism of Mondragon University, the significant role that Politeknika Ikastegia Txorierri, Arizmendi Ikastola and Lea Artibai Ikastetxea play in their respective areas and the activity of the Management and Co-operative Development Centre Otalora.

Knowledge

The retail area is also home to the food group Erkop, which operates in the catering, cleaning, stock-breeding, and horticulture sectors and has as its leading name Auzo Lagun, a co-operative engaged in group catering and the cleaning of buildings and premises, and also offers an integrated service in the health sector.[33]

At an assembly held in 2008, its worker-members approved by a majority vote the process to expand the transformation into co-operatively run businesses to the group as a whole. So work started on turning the group’s subsidiaries into co-operatives, and on making their salaried workers worker-members. This process was to be carried out over the next few years.

At the end of 2013, Eroski was operating an extensive chain of 2.069 stores made up of 90 Eroski hypermarkets, 1,211 Eroski/center, Caprabo, Eroski/city, Aliprox, Familia, Onda and Cash & Carry supermarkets, 155 branches of the Eroski/viajes travel agency, 63 petrol stations, 39 Forum Sport stores and 221 IF perfume stores.[31] Moreover, in the south of France it has 4 hypermarkets, 16 supermarkets and 17 petrol stations, and it has 4 perfume stores in Andorra.[32]

Led by Eroski, Mondragon runs one of the leading retail groups in Spain, posting a turnover of €6.6 billion in 2013. It operates all over Spain and in the southern France, and maintains close contacts with the French group Les Mousquetaires and the leading German retailer Edeka, with whom it set up the Alidis international partnership in 2002. The worker-owners and consumer-members are involved in the management of Eroski, with both groups participating in the co-operative’s decision-making bodies.

Retail

In 2014, cooperatives in industrial sector created 1.000 jobs in and the internationalisation continued with 125 production subsidiaries abroad -3 more than the year before-.[30]

In 2013, 71.1% of turnover came from international sales. Sales resulting from the export of products abroad and production generated in the 122 subsidiaries located in several different countries: China (15), France (17), Poland (8), Czech Republic (7), Mexico (8), Brazil (5), Germany (4), Italy (4), United Kingdom (3), Romania (3), United States (4), Turkey (2), Portugal (2), Slovakia (2), India (2), Thailand (1) and Morocco (1). Overall, in 2013 these 122 plants provided work for more than 11,000 people. The corporate industrial park in Kunshan, close to Shanghai houses seven subsidiaries.[28] In 2012, it opened 11 new subsidiaries abroad, employing around 14,000 people. Its international sales that year marked a record number of 69% of its total sales (€5.8bn, with a 2% fall compared to the previous year). Mondragon also participated in 91 international R&D projects.[29]

In services to business, sales totalled €248 million in 2008, including business consultancy services, architecture and engineering, property consulting, design and innovation (LKS Group), systems engineering for electromechanical installations, and integrated logistics engineering. It also offers a modern language service, manufactures educational equipment, and provides graphic arts services (MccGraphics).

In construction, sales totalled €974 million in 2009. Mondragon has constructed buildings and important infrastructure projects. It designs and builds large metallic (URSSA), laminated wood and prefabricated concrete structures; supplies prefabricated parts in polymer concrete; offers solutions for formwork and structures (ULMA Group) as well as public works machinery and the industrialisation of the construction process, including engineering and assembly services. It also produces elevators (ORONA Group).

In Industrial Components, Mondragon posted a turnover of €1.5 billion in 2009, a sector in which it operates as an integrated supplier for the leading car manufacturers, offering from the design and development of a part to the industrialisation and supply of components and assemblies. It has different business units such as brakes, axles, suspension, transmission, engines, aluminium wheel rims, fluid conduction, and other internal and external vehicle components. It also produces components for the main domestic appliance manufacturers in three business areas: white goods, home comfort, and electronics. And it manufactures flanges and pipe accessories for processing oil-gas, petrochemical plants and power generation, copper and aluminium electrical conductors, and components for conveyors.[27]

In capital goods, Mondragon posted a turnover of €976 million in 2009, and is the leading Spanish manufacturer of chip-removing (Danobat Group) and sheet metal forming (Fagor Arrasate Group) machine tools. These machines are complemented by automation and control products for machine tools, packaging machinery, machinery for automating assembly processes and processing wood, forklift trucks, electric transformers, integrated equipment for the catering industry, cold stores, and refrigeration equipment. Specifically focusing on the automotive sector, the corporation also manufactures a wide variety of dies, molds and tooling for casting iron and aluminium, and occupies a leading position in machinery for the casting sector.[26]

The corporation’s companies manufacture consumer goods, capital goods, industrial components, products and systems for construction, and services to business. In the leisure and sports area, it manufactures Orbea bicycles, exercise equipment and items for camping, the garden and the beach.[25]

Industry

Laboral Kutxa, for its part, ended 2014 with €109.2 million in revenue in a year in which it granted loans worth €14.4 billion, mainly to households and small and medium-sized enterprises. Its extensive experience with the Corporation’s Co-operatives enables it to offer SMEs services typical of large companies.[24]

This area includes the banking business of Laboral Kutxa, the insurance company Seguros Lagun Aro, and the Voluntary Social Welfare Body Lagun Aro, which had an asset fund totalling €5.566 million at the end of 2014. The yield obtained from this fund is used to cover long-term retirement, widowhood, and invalidity benefits, complementary to those offered by the Spanish social security system.

Finance

The corporation’s companies operate in four areas: finance, industry, retail, and knowledge, with the latter distinguishing Mondragon from other business groups. In 2013, the corporation posted a total revenue of over €12 billion (roughly $16 billion USD), and employed 74,061 workers,[1] making it Spain's fourth-largest industrial and tenth-largest financial group.[23]

Areas of activity

Compared to similar jobs at local industries, Mondragon managers' wages are considerably lower (as some companies pay their best paid managers hundreds of times more than the lowest-paid employee of the company)[22] and equivalent for middle management, technical and professional levels. Lower wage levels are on average 13% higher than similar jobs at local businesses. Spain's progressive tax rate further reduces any disparity in pay.[21]

At Mondragon, there are agreed-upon wage ratios between executive work and field or factory work which earns a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns no more than 5 times as much as the theoretical minimum wage paid in his/her cooperative. In reality, this ratio is smaller because there are few Mondragon worker-owners that earn minimum wages, because most jobs are somewhat specialized and are classified at higher wage levels. The wage ratio of a cooperative is decided periodically by its worker-owners through a democratic vote.[21]

Wage regulation

This business culture translates into compliance with a number of Basic Objectives (Customer Focus, Development, Innovation, Profitability, People in Co-operation and Involvement in the Community) and General Policies approved by the Co-operative Congress, which are taken on board at all the corporation’s organisational levels and incorporated into the four-year strategic plans and the annual business plans of the individual co-operatives, divisions, and the corporation as a whole.[20]

This philosophy is complemented by four corporate values: Co-operation, acting as owners and protagonists; Participation, which takes shape as a commitment to management; Social Responsibility, by means of the distribution of wealth based on solidarity; and Innovation, focusing on constant renewal in all areas.[19]

[18] This framework of business culture has been structured based on a common culture derived from the 10 Basic

Over the years, these links have been embodied in a series of operating rules approved on a majority basis by the Co-operative Congresses, which regulate the activity of the Governing Bodies of the Corporation (Standing Committee, General Council), the Grassroots Co-operatives and the Divisions they belong to, from the organisational, institutional and economic points of view as well as in terms of assets.[17]

Mondragon co-operatives are united by a humanist concept of business, a philosophy of participation and solidarity, and a shared business culture. The culture is rooted in a shared mission and a number of principles, corporate values and business policies.[16]

Javier Sotil, president of the General Council of Mondragon Corporation

Business culture

On 16 October 2013, Fagor filed for bankruptcy under Spanish law in order to renegotiate €1,1 billion of debt, after suffering heavy losses during the eurocrisis and as a consequence of poor financial management, putting 5,600 employees at risk of losing their jobs.[13] This was followed by the bankruptcy of the whole Fagor group on 6 November 2013.[14] On July 2013, Fagor was bought by Catalan company Cata for €42.5 million. Cata pledged to create 705 direct jobs in the Basque Country as well as ensuring the continuity of the brand names Fagor, Edesa, Aspes, and Splendid. [15]

In 2012 its industry component ended the year with international sales that set a new record of €4 billion, beating sales figures from before the crisis. Mondragon consolidated its presence abroad by opening 11 new production subsidiaries. Its international sales that year accounted for 69% (with a 26% increase from 2009 to 2012) and it employed 14,000 people abroad. The increase in Mondragon’s share in the BRIC markets (Brazil, Russia, India, and China) was also particularly significant, around 20% up compared to the previous year.[11] In 2013, international sales grew by 6.7% and accounted for 71.1% of total sales.[12]

In October 2009, the United Steelworkers announced an agreement with Mondragon to create worker cooperatives in the United States.[9] On March 26, 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) announced its detailed union co-op model.[10]

On the international stage, the aim was to respond to the growing globalisation process, strongly promoting expansion abroad by setting up production plants in a number of countries. The first, the Copreci plant in Mexico in 1990 was followed by many others taking the total to 73 by the end of 2008 and 122 at the end of 2013. This was part of a strategy aimed at: increasing competitiveness and market share, bringing component supply closer to important customers’ plants, especially in the automotive and domestic appliance sectors; and strengthening employment in the Basque Country, by promoting the export of products manufactured by the co-operatives by means of the new platforms.[8]

[7] With big changes on the horizon like Spain's joining the

During the next 20 years, from 1970 to 1990, the dynamism continued, with a strong increase in turnover, the launch of new co-operatives promoted by Caja Laboral’s Business Division, the promotion of co-operative associativism with the forming of local groups, and the setting up of the Ikerlan Research Centre in 1974.[6]

In the first 15 years many co-operatives were established, thanks to the autarky of the market and the awakening of the Spanish economy. During those years, also with the encouragement of Don José María, two bodies were set up that were to play a key role in the development of Mondragon: Caja Laboral (1959) and the Social Welfare Body Lagun Aro (1966). The first local group was created, Ularco, the embryo of the industrial co-operative associativism which has been so important in the corporation’s history. In 1969, Eroski was set up by a merger of ten small local consumer co-operatives.[5]

Before creating the first co-operative, Arizmendiarrieta spent a number of years educating young people about a form of humanism based on solidarity and participation, in harmony with Catholic social teaching, and the importance of acquiring the necessary technical knowledge. In 1955, he selected five of these young people to set up the first company of the co-operative and industrial beginning of the Mondragon Corporation.[4] The people were Usatorre, Larrañaga, Gorroñogoitia, Ormaechea, and Ortubay, and the company was called Talleres Ulgor, an acronym derived from their surnames, known today as Fagor Electrodomésticos.

The determining factor in the creation of the Mondragón system was the arrival in 1941 of a young Catholic priest, José María Arizmendiarrieta, in Mondragón, a town with a population of 7,000 that had not yet recovered from the Spanish Civil War: poverty, hunger, exile, and tension.[2] In 1943, Arizmendiarrieta established a technical college that became a training ground for generations of managers, engineers, and skilled labour for local companies, and primarily for the co-operatives.[3]

José María Arizmendiarrieta on a bicycle

History

Contents

  • History 1
  • Business culture 2
    • Wage regulation 2.1
  • Areas of activity 3
    • Finance 3.1
    • Industry 3.2
    • Retail 3.3
    • Knowledge 3.4
  • Reactions 4
  • See also 5
  • References 6
  • Further reading 7
  • External links 8

Mondragon cooperatives operate in accordance with Statement on the Co-operative Identity maintained by the International Co-operative Alliance.

[1]

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