Basque Co-Operative Mondragon Defies Spain
Slump

By Tom Burridge
BBC News Europe
August 13, 2012

http://www.bbc.co.uk/news/world-europe-19213425

Arrasate, Spain

Economic success stories are rare in recession-hit
Spain these days but one can be found in the small
northern Basque town of Arrasate, nestling in rolling
green hills.

Here lies the headquarters of Mondragon, reckoned
to be the world's largest worker co-operative. The
name is the same as the town's, when translated
from Basque into Spanish.

The unemployment rate in the Basque Country is
15%, and lower in the province of Guipuzcoa, where
Mondragon is based. The rate in Spain as a whole is
now 25%.

The Mondragon co-operative is a collective of
around 250 companies and organisations. They
include Mondragon Assembly in Guipuzcoa, which
employs some 85 people.

The firm produces machines for making industrial
components, for example the room-sized plant for
making solar panels.

According to the company's commercial director,
Inaki Legarda, government subsidies for renewable
energy have dried up in much of crisis-hit Europe,
and therefore, so has much of the company's
business closer to home.

"We used to sell a lot in Spain and in Europe," says
Mr Legarda, but the company is now targeting places
like South Africa, Brazil, China and North Africa.

Their two biggest projects at the moment are in
Kazakhstan and Lithuania.

People's voice

Partly because of falling sales closer to home,
Mondragon Assembly had to lay off several workers
throughout 2008 and 2009.

But those workers who lost their jobs were taken on
by other companies within the co-operative.

By 2010, the company's fortunes were on the up
again, and those people were able to return to their
former jobs.

"Today we fortunately have work for everybody,"
says Mr Legarda.

"We are actually recruiting people from other
companies within the group because they are now
having tougher times than us."

Fagor Arrasate is another company within
Mondragon, which employs around 600 people.
They make house-sized machines which
manufacture parts for cars.

The majority of the firm's workers are "socios",
which translates literally as "members", but also
means they are all shareholders in the business.

The socios, some of whom are managers, all have
one vote in a general assembly, which makes
important decisions affecting the business.

Other decisions have to be approved by a governing
council, elected by the assembly.

Anoitz, a 34-year-old engineer working at Fagor
Arrasate, argues that "if many people are thinking
about a problem, then the solution is better".

An example he gives is that if the business is not
doing well, the employees can vote to reduce their
own salaries.

Interestingly, the pay of bosses working at
Mondragon is capped at six times that of the average
worker.

'Egalitarian culture'

Oskar Goitia, head of Mondragon Automocion, a
conglomerate of Mondragon firms which do
business in the automotive sector, says that for the
business model to work it requires "consensus".

He admits it "takes a little bit more time to explain
what the plans and projects are.

"But once we agree. it's much easier because
everyone pushes in the same direction."

Firms within Mondragon are not immune to the
eurozone crisis, but none of its companies has gone
out of business.

And although the Basque economy is expected to
shrink by around 1.2% of GDP this year, and the
Spanish economy by approximately 1.5-1.8%, many
of the co-operative's companies are doing more of
their business further away from home.

However, according to Manuel Escudero, an
economist at the prestigious Deusto business school
in Bilbao, the Mondragon model is difficult to
export.

He argues the region enjoys "a deep culture of
egalitarianism".

And that is why, he believes, so far people who have
travelled to Mondragon to learn about the co-
operative have been unable to replicate this
particular business model elsewhere.

___________________________________________

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