Study Guide on Mondragon

What is Mondragon?

considered the most successful worker owned cooperative enterprise in the world

What are the main activities of Mondragon?

coops manufacture everything from commercial kitchen equipment (under the flagship Fagor brand) to industrial robots; the retail giant Eroski boasts 2,000 outlets throughout Europe; and the bank Caja Laboral and social security coop provide financial services to members and affiliated businesses.

What proportion of workers in Mondragon businesses are members?

members composed 29.5% of employees. By 2012, members made up about 40.3% of the total workforce.

What three distinct strategies do the cooperatives of Mondragon use to convert temporary jobs into cooperative ones.

In the distribution sector, Mondragon uses the EMES plan (Estatuto Marco de la Estructura Societaria). Eroski, Mondragon's distribution group, acquired another distribution group (Caprabo), and then merged the supermarkets of the two groups. In 2009, the Eroski General Assembly approved the EMES plan, giving all workers an opportunity to become partners in worker cooperatives. Although this plan is still in force, the Eroski cooperative has found itself in a difficult situation, facing huge losses, and is now in the midst of a process of internal restructuring to reduce and refinance the accumulated debt. This is not the best context for inviting (non-cooperative) workers to become members. A second strategy involves the conversion of industrial subsidiaries into mixed cooperatives, allowing workers to become members - an alternative which is only feasible when the companies are viable, and when both cooperative partners and subsidiary workers are willing to extend membership. This has happened in several cases: Maier Ferroplast Limited which belonged to Maier Cooperative Society (2012); the Victorio Luzuriaga Usurbil cooperative (2004); Fit Automotive (2006); and Victorio Luzuriaga Tafalla cooperative (2008). These are neither unusual nor isolated examples of how to cooperativize industrial subsidiaries. The third strategy concerns international subsidiaries outside the Basque Country which are said to represent the degeneration of the cooperative model. The Group has created international subsidiaries to assist the maintenance or even expansion of employment in the parent cooperatives. From this point of view, this strategy has been successful, since the internationalizing cooperatives have created more jobs than those that stayed at home. Contrary to what some critics claim, figures show an increasing percentage of workers who are members. According to Altuna (2008), in 2007 members composed 29.5% of employees. By 2012, members made up about 40.3% of the total workforce.

Do non-members who work for cooperatives of Mondragon receive the same working conditions as members?

Many analysts trust the Mondragon group to treat non-member employees well, pointing to efforts to educate workers in Mexico and the coop conversion of a private enterprise in Galicia, Spain. Others, however, argue that Mondragon's global strategy proves cooperatives cannot survive in a capitalist sea: facing competition, coops either degenerate into capitalist firms, or founder

What are the limits on managerial salaries in the cooperatives of Mondragon?

Mondragon limits its highest managerial salary to about nine times the pay of its lowest-paid members, a remarkably flat scale compared to Spain's overall ratio of about 127:1

What is the main reason why Mondragon cooperatives create subsidiaries abroad, according to these authors?

When subsidiaries are created abroad, Mondragon's priority has been to maintain jobs and preserve locally-rooted cooperatives, rather than to outsource or offshore production.

The authors say "many critiques - including Kasmir's - aim to show that Mondragon has degenerated". What two elements of "degeneration" do these authors point to?

the proliferation of temporary workers and the international expansion of non-cooperative subsidiaries.

Mondragon controls some 100 foreign subsidiaries and joint ventures. Are they also cooperatives?

these firms are not worker-owned, and employees do not enjoy the same rights or privileges given coop members. Instead, they are wage laborers. Even in the Basque country and Spain, industrial and retail coops employ significant numbers of temporary workers on short-term contracts. Today, only about one-half of Mondragon's businesses are cooperatives, and only one-third of its employees are members.