Wednesday, December 5, 2012

The Mondragon Corporation: An alternative to traditional corporate structure? Part 1 of 3

Peter Schnall and Erin Wigger

So much is wrong with the way work is presently organized in America, you could look in almost any direction and find something terribly amiss. Part of this is surely due to the steady pressure of globalization on the world’s companies to compete as they strain against a slumping economy.  We have a serious problem in the world of today’s work.

Can a business survive/stay competitive in these volatile times without sacrificing their own worker’s health and financial security? Are there any viable alternatives to the current business model? We believe there are. These come in the form of companies and organizations which have gotten something right in terms of working out the balance between their bottom line and the health, safety and personal growth of their labor force. These companies recognize that their assets are weighed not only in gold, but also in the health, longevity and productivity of their workers.

Mondragón Co-operative Corporation (MCC) is one of these. MCC is the world’s largest worker cooperative. A multinational company based in the Basque region of Spain (7th largest company in Spain), with 256 different businesses under it’s umbrella, 80,000+ employees (each cooperative supporting anything from 6 to 2,000 workers), 43 schools, one college, and more than $4.8 billion of business annually in manufacturing, services, retail and wholesale distribution, Mondragon has become one of the world’s most successful story of a worker-owned company (1,4).

How did it become so successful and on what principles is it built? The Basque region has a long history of organized labor in the form of craftsman guilds, but it wasn’t until 1941 when a priest called José María Arizmendiarriet arrived and, seeing the need for education free and open to all began a democratically run Polytechnic School (1,2).

In 1956, the threat of unemployment in the area from the shutdown of a local factory that manufactured petrol-based heaters and cookers led José María Arizmendiarriet to encourage several students (and workers) from his school to purchase and manage it themselves. ULGOR, now called Fagor Electrodomésticos, was the result (3,4).

Mondragon’s following first cooperatives founded the Caja Laboral Popular credit co-operative bank, helping to secure the financial success and independence of the company. It was the Business Division of Caja Laboral that served as the catalyst for the evolution of MCC into what it is today. In our next blog we will describe how Mondragon’s workers relate to the company and to each other (2,3).

1 comment:

  1. Mondragon is a wonderful example of an alternative business model that needs greater publicity in the U.S. For some U.S. examples of producer cooperatives, see: