Mondragon The Organizers’ Forum delegation took the 915 bus from the center of Bilbao to Mondragon riding through an intermittent rain and mist draping the mountains. Upon arriving, we were shuttled in cabs to the top of the mountain where the Mondragon cooperatives maintained their training center in a remodeled house in a beautiful setting. This was going to be one of the highlights of our week in Spain. We were not disappointed.
The raw numbers are impressive. Mondragon now consists of 92 autonomous cooperatives with over 70,000 worker-members and over 100 subsidiaries around the world, although the cooperatives are all in Spain. The overall enterprise now is an 11 billion euro operation administered by a central support staff of only 60.
That’s the thumbnail sketch of the basic vital statistics of the cooperatives. The history dates back to a priest assigned to the area to prevent the deterioration of Catholicism. The priest couldn’t do much about that, but did found a school for technical and engineering training to support industries in the area, which has now morphed into Mondragon University located there. The founders of the cooperative in 1959 were five engineers who were former students of the school. Part of what makes Mondragon unique is the fact that it was and still is largely a set of industrial cooperatives dating back to these roots. Once we had the overview from our guide, the questions from our group were nonstop for the rest of the two hours on the mountain.
The core of Mondragon lies not in ideology, but hard-headed commitment to business sustainability linked to equally committed and disciplined cooperative principles, illustrated by our guide with one hand on his heart and the other on his pocket. 80% of the workforce are members and 20% are temporary, contract workers. To become a member, if a job is available, and the temporary worker has performed well, they are invited to join and, depending on the cooperative, they invest an average of 19,000 euros to join, sometimes from their own savings while on contract and at other times through a loan from the cooperative credit union paid out over several years. Worker members build equity, but they are not able to cash it out until they retire or are voluntarily separated. They can use the retained equity as collateral for buying a house or similar major purposes. If they are separated for cause, they might only get back 70% of their equity as a penalty.
Despite the severe housing bubble that led to foreclosures in the financial crisis in Spain, our guide claimed no member lost their equity, even if they lost their house. If a cooperative goes under, a worker member can lose their equity, but Mondragon seeks to find a position for the workers in another cooperative or pays for their retraining and support for several years. These are lifetime jobs. There is a mandatory retirement at 67, but the average worker retires at 61. Mondragon claims superior pay and job security along with three weeks of vacation, another 10 days for Easter, 5 days for Christmas, and more. There are no unions, and from the tenor of the response to questions, there is antipathy there. Essentially, they argue, why would someone organize against themselves?
There is an overall general manager for Mondragon as well as managers in the autonomous cooperatives. There is a general assembly in which all members get one vote. The process of producing majorities on the agenda in preliminary meetings was elaborate in an attempt to reach some consensus.
When asked why their subsidiaries were not also cooperatives, the answer was lengthy. They had spent time and treasure in lobbying various iterations of the government in Madrid to win rules that allowed their cooperatives to exist, which often didn’t exist in other countries. As he related stories about efforts in Mexico and elsewhere, it seemed that the breakdown was often over the requirement that worker-members invest their own money in the cooperative to join, which didn’t travel well around the world.
Our guide was slick. He was quick to say that Mondragon was not perfect and had problems. When asked about gender and diversity, he would raise his hands and say they were maybe 70%, but not Sweden, or on climate, they were not California.
When asked how they had survived against global competition, he claimed they had done so with research and innovation, where they led other Spanish enterprises in investment. They weren’t immune though. When asked if they still made refrigerators, he quickly answered that was one of the cooperatives that went under.
One hand on the heart, the other on the pocketbook. It sounds simple, but the Mondragon model is impressive, but almost impossibly hard to duplicate.