The economic and historical significance of the Mondragon Corporation

The Mondragon Corporation is a corporation and federation of worker cooperatives based in the Basque region of Spain. It was founded in the town of Mondragoe in 1956 by graduates of a local technical college. Its first product was paraffin heaters. It is the tenth-largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2014, it employed 74,117 people in 257 companies and organizations in four areas of activity: finance, industry, retail and knowledge. By 2015, 74,335 people were employed.

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

History

In 1941, a young Catholic priest, José María Arizmendiarrieta settled in Mondragón, a town with a population of 7,000 that had not yet recovered from the poverty, hunger, exile, and tension of the Spanish Civil War. In 1943, Arizmendiarrieta established a technical college which became a training ground for managers, engineers and skilled labour for local companies, and primarily for the co-operatives. 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 before creating the first co-operative. In 1955, he selected five young people to set up the first company of the co-operative and industrial beginning of the Mondragon Corporation. The company was called Talleres Ulgor, an acronym derived from the surnames of Usatorre, Larrañaga, Gorroñogoitia, Ormaechea, and Ortubay, known today as “Fagor Electrodomésticos“.

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 these years, also with the encouragement of Don José María, the Caja Laboral (1959) and the Social Welfare Body Lagun Aro (1966) were set up that were to play a key role. The first local group was created, Ularco. In 1969, Eroski was founded by merging ten small local consumer co-operatives.

During the next 20 years, from 1970 to 1990, the dynamic continued, with a strong increase in new co-operatives promoted by Caja Laboral’s Business Division, the promotion of co-operative associations, the formation of local groups, and the founding of the Ikerlan Research Centre in 1974.

When Spain was scheduled to join the European Economic Community in 1986, it was decided in 1984 to set up the “Mondragon Co-operative Group”, the forerunner to the current corporation. In-service training for managers was strengthened by creating Otalora, dedicated to training and to dissemination of co-operatives. The Group consisted of 23,130 workers at the end of 1990.

On the international stage, the aim was to respond to growing globalisation, expanding abroad by setting up production plants in a number of countries. The first was the Copreci plant in Mexico in 1990, followed by many others: up to 73 by the end of 2008, and 122 at the end of 2013. The goals were to increase competitiveness and market share, bring component supply closer to customers’ plants, especially in the automotive and domestic appliance sectors, and to strengthen employment in the Basque Country by promoting exports of co-operatives’ products by means of new platforms.

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

The industry component ended 2012 with a new record €4 billion in international sales, beating sales figures from before the financial crisis of 2007-2008. Mondragon opened 11 new production subsidiaries. International sales that year accounted for 69% of all sales, a 26% increase from 2009 to 2012, and with 14,000 employees abroad. Mondragon’s share in the BRIC markets increased to 20% compared to the previous year. In 2013, international sales grew by 6.7% and accounted for 71.1% of total sales.

On 16 October 2013, domestic appliance company Fagor Electrodomésticos 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. This was followed by the bankruptcy of the whole Fagor group on 6 November 2013. In July 2013, Fagor was bought by Catalan company Cata for €42.5 million. Cata pledged to create 705 direct jobs in the Basque Country and to continue the brand names Fagor, Edesa, Aspes, and Splendid.

More at:  https://en.wikipedia.org/wiki/Mondragon_Corporation

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