Archive for September, 2013

Time to Make Job Creation a Team Sport | Huffington Post

By Frank Islam and Ed Crego

The American jobs machine is broken. To fix this, we need to bring more cooperation to capitalism and make it a team sport.

In our previous two blogs we looked at the condition of labor and workers in the United States and recommended worker cooperatives as a means to address that condition. In our final blog in this series, we explore why this is an essential action at this point in time and what cooperatives of all types can bring to the table.

America has always prided itself on rugged individualism and the benefits of the free market system — as well it should for the contributions that many individual entrepreneurs and capitalism have made to advance the American dream over the past half century or so. Times have changed.

Now, we live in an era when self-centered individuals and extreme capitalism are extracting rather than adding value for society. As a result, the American dream is at risk for the vast majority of workers.

Stagnant wages, high unemployment and increasing income inequality have been the standard bill of fare for workers since the end of the Great Recession and the beginning of the ever-so sluggish recovery…

“It used to be,” as Jia Lynn Yang points out in a masterful article for The Washington Post, “a given that the interest of corporations and communities such as Endicott (birthplace of IBM) were closely aligned. But no more. Across the United States as companies continue posting record profits, workers face high unemployment and stagnant wages.

Driving this change is a deep-seated belief that took hold in corporate America a few decades ago and has come to define today’s economy — that a company’s primary purpose is to maximize shareholder value.”

Ms. Yang examines this transformation in detail in her article and traces its origin to Milton Friedman and the “Chicago school” of free market economists. We don’t know if the University of Chicago economists deserve the credit — or blame — for this change.

We do know that it used to be that workers bled IBM blue, John Deere green, or International Harvester red. Today, workers are “free agents” and disposable — they just bleed.

The question becomes what do you do to stop the bleeding? We don’t expect most large corporations to grow a conscience. We know that many small businesses can’t get loans or credit. We know that government at all levels is shedding jobs rather than creating them.

So, we need to turn elsewhere. One of the primary answers, as we proposed in our previous post, is for workers to take matters in their own hands by forming worker cooperatives and becoming business owners. In that post, we featured the Mondragon Corporation from Spain, the world’s largest industrial, worker-owned and run cooperative with more than 80,000 employees world-wide and revenue in excess of $14 billion euros.

Cooperatives may sound like an un-American or unrealistic proposal or solution. Nothing could be further from the truth. They are as American as mom and apple pie…

Read the entire article via The Huffington Post.

A Formula for Reawakening Labor: Capitalism, Communities and Cooperatives | Huffington Post

By Frank Islam and Ed Crego

Based upon the rhetoric at the quadrennial labor convention held in Los Angeles this week, it appears that the labor movement will be trying new things and working diligently to break out of the daze we described in our most recent blog.

Richard Trumka, president of the AFL-CIO, in his keynote address at the convention declared, “We must begin, here and now, today, the great work of reawakening a movement of working people — all working people, not just the people in this hall, not just the people we represent today – but everyone who works in this country…”. Before the convention, Steven Greenhouse of The New York Times quoted Trumka as saying, “The crisis has deepened. It’s at a point where we really must do something differently. We really have to experiment.”

The coverage of the convention suggests that the reawakening and experiments will include: embracing “worker centers” — nonprofit groups that are not unions who organize low-wage workers, and building coalitions with other interest groups to achieve collective bargaining through ballot measures such as increasing the minimum wage and securing health care coverage.

What we haven’t seen reported in any great detail, however, is one of the most innovative and highest potential new initiatives to revitalize the labor and workers’ movement in the United States that comes to us from — of all places — Spain. That’s the entry and expansion of Mondragon Corporation (Mondragon), the world’s largest industrial, worker-owned and run cooperative, into the American market and workplace.

The Mondragon story is not well known outside of Spain and labor circles. It is one that deserves to be told, however, given the current conditions confronting the American worker and the footprint Mondragon is beginning to build stateside.

In March of this year, the Financial Times (FT) gave Mondragon its Drivers of Change “Boldness in Business” award. FT stated that Mondragon was given this prize “for what it represents in terms of a real proposal for a new type of business model, ‘Humanity at Work,’ based on cooperation, working together, solidarity, and involving people in the work environment.”

Read the entire article via The Huffington Post.

Mondragon and National Cooperative Bank Partner in Growing Domestic Worker-Owned Cooperatives

For Release: Wednesday, September 4, 2013

Laboral Kutxa (the Mondragon Bank) and National Cooperative Bank (NCB) to Partner in Growing Domestic Worker-Owned Cooperatives 

NCB & Laboral Kutxa Form Precedent-Setting USA Collaboration

Memorandum of Understanding Signed on Wednesday, September 4th, 2013

The world’s largest industrial, worker-owned and run cooperative, Mondragon, founded in the Basque region of Spain over fifty-five years ago and winner of the 2013 Financial Times “Boldness in Business” award has agreed through its cooperative bank, Laboral Kutxa, to partner and build cooperative stakeholder businesses in local living economies throughout America with the U.S.-based National Cooperative Bank headquartered in Washington, D.C.

For the first time in their respective operating histories, both Mondragon’s Laboral Kutxa and National Cooperative Bank (NCB) will collaborate to support each other’s banking customers including subsidiaries of cooperatives operating in the United States belonging to the Mondragon Group. Predicated on similar “doing well by doing good” principles, social responsibility values, and a growing understanding that cooperative markets extend beyond borders, both entities pledge to support each other’s customers with regard to charges, payments, financial services, online banking systems, and other commercial banking practices.

National Cooperative Bank fulfills its singular mandate to strengthen America’s cooperatives, their members and other socially responsible organizations through the delivery of social impact banking products and services.  NCB’s customers are cooperatives such as grocery wholesaler co-ops, food co-ops, purchasing co-ops, credit unions and housing co-ops who share in the spirit of joining and working cooperatively to meet personal, social, and business needs.  Headquartered in Washington, DC, NCB has offices in Alaska, California, New York, Ohio and Virginia.

Laboral Kutxa of Mondragon, the financial cooperative arm of the Mondragon Group, is a cooperative bank fielding 450 branches with over 1,300,000 customers.  Mondragon is the world’s largest worker-owned industrial cooperative but also the top Basque region industrial group, ranked tenth in Spain with 80,000 personnel, a presence in 70 countries, and expanding operations across the U.S. and North America.

The NCBLaboral Kutxa Memorandum of Understanding frames the general terms and conditions for the cooperation between both parties, based on subjecting each future transaction to a specific contract with market-driven competitive performance goals.  This partnership intends to exchange best practices and experiences in social and solidarity-oriented high impact lending and to support international initiatives for the accelerated development and promotion of the global cooperative sector.

This agreement represents Mondragon’s first international financial sector agreement but second precedent-setting U.S. collaboration during the past four years.  Announced in late October, 2009, with an extensively researched structural template provided in March, 2012, North America’s leading manufacturing union, the United Steelworkers, and Mondragon International agreed to develop a hybrid union co-op model that is currently adopted by multiple U.S. unions and underway in over ten U.S. cities with projects ranging from an organic sustainable farm to a commercial laundry to energy efficiency. To buttress this initiative,  Mondragon International USA has partnered with the Ohio Employee Ownership Center (OEOC) and The City University of New York (CUNY) School of Law’s Community Economic Development (CED) Clinic to create reusable union-coop business templates and communities of practice with the Cincinnati Union Cooperative Initiative (CUCI) illustrating the leading metropolitan success story to date.

Both Mondragon’s partnership with National Cooperative Bank through the Mondragon Bank, Laboral Kutxa, and its union-coop model collaboration with the United Steelworkers reflect the ten basic principles that Mondragon co-operatives have put into practice during the past fifty-five plus years (open admission, democratic organization, sovereignty of labor, instrumental and subordinate nature of capital, participation in management, wage solidarity, inter-cooperation, and education).  Fully compatible with the UN Principles for Responsible Investment, the National Cooperative BankLaboral Kutxa partnership intends to promote investments and businesses essential for revitalizing local productive economies and renewing community prosperity.

In the U.S. alone, member-owned organizations account for $3 trillion in assets, $500 billion in revenue, and more than one million jobs.  Specifically, the United States fields 29,000 cooperatives holding 350 million co-op memberships and consisting of 900 rural electric coops with 42 million clients in 47 states, two million farmer-members in 3000 farmer-owned cooperatives who provide over 250 thousand jobs and annual wages of $8 billion, 250 purchasing coops offering group buying and sharing to more than 50,000 independent businesses, 7500 credit unions providing financial services to nearly 90 million members, and circa 8000 housing coops providing one million homes.  Mondragon’s recent annual sales in North America have reached the $250 million level.

About National Cooperative Bank (NCBwww.ncb.coop): NCB fulfills its singular mandate to strengthen America’s cooperatives, their members and other socially responsible organizations through the delivery of social impact banking products and services.  NCB’s customers are cooperatives such as grocery wholesaler co-ops, food co-ops, purchasing co-ops, credit unions and housing co-ops who share in the spirit of joining and working cooperatively to meet personal, social, and business needs.  In 2012, NCB provided nearly $1.4 billion in loans to cooperative and community organizations across the United States of which $232 million served low-moderate income communities.  Headquartered in Washington, DC, the Bank has offices in Alaska, California, New York, Ohio and Virginia.  Recent transactions include a $30 million first mortgage to Amalgamated Housing Cooperative in New York City’s Bronx Borough, the oldest limited equity housing cooperative in the United States, and a $4.7 million term loan to Wheatsville Food Co-op in Austin, Texas, with 12,000 consumer-owners.  Chartered by the 95th U.S. Congress in 1978, NCB was privatized in 1981 as a member-owned financial institution. Since then, NCB has been structured as a financial cooperative and all capital stock has been owned by borrowers or entities eligible to borrow from NCB.

About Laboral Kutxa (www.laboralkutxa.com): Laboral Kutxa, created in 1959 currently fields 450 branches with over 1,300,000 customers whose deposits ($24 billion in 2012) and loans ($20 billion in 2012) contribute to the bank’s total assets of $31 billion (2012) and $70 million in profits (Q2/2013).  Laboral Kutxa is the financial cooperative arm of the Mondragon Group (“Humanity At Work” through Cooperation, Participation, Social Responsibility and Innovation) with 2,235 worker-owners.   Mondragon is the world’s largest worker-owned industrial cooperative but also the top Basque region industrial group, ranked tenth in Spain with 80,000 personnel, a presence in 70 countries, and winner of the 2013 Financial Times “Boldness in Business” award. Mondragon’s more than fifty-five year old mission is to generate wealth for society through business development and job creation under the “one worker, one vote” cooperative framework where labor is sovereign and capital, while essential, is subordinate to sustainable job creation. As the second largest credit cooperative in both the Basque region and Spain but ranking first in customer satisfaction and service quality, Laboral Kutxa is one of the three founding pillars of the Mondragon Group’s domestic and global unparalleled growth and success as defined by Mondragon principles.  Under the Mondragon framework, Laboral Kutxa’s workers are partners and therefore have a share in the ownership and the distribution of profits while also participating in management and management decisions.”

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Media Contact: Mondragon International USA/Michael A. Peck, mpeck@mapagroup.net, TEL (202) 412-2499 or National Cooperative Bank/Mary Alex Blantonmblanton@ncb.coop, TEL (703) 302-8876  

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