December 10, 2013
215 members of Fagor Electrodomésticos already relocated in other MONDRAGON cooperatives.
500 more relocations to other group cooperatives forecast over the next six months.
The group of candidates for early retirement based on Lagun-Aro EPSV regulations rises to 300 people.
To date, 215 members of Fagor Electrodomésticos are already working in other cooperatives in the MONDRAGON Corporation. The Corporation has therefore maintained its firm commitment to employment, as just one month after it was announced that Fagor Electrodomésticos was in an arrangement with creditors, it has already succeeded in relocating over 200 members.
It is also establishing a plan that points to 500 new relocations over the next six months, due to the extraordinary response from cooperatives in the group, particularly in the Industry area, who have offered new posts to help solve the employee surplus caused by the financial crisis at Fagor Electrodomésticos. Furthermore, additional efforts by the Distribution area are awaiting confirmation, and its capacity for receiving members will also contribute to providing employment solutions.
In addition, and in accordance with current Lagun-Aro EPSV regulations, it is predicted that the group of candidates for early retirement among members of Fagor Electrodomésticos stands at approximately 300 people.
This way, the Corporation is trying to provide solidarity and a cooperative response to the employment problem through relocations and early retirements, thereby complying with its established aim of offering solutions to a group of between 1,000 and 1,200 people over the next few months.
The MONDRAGON Corporation is working hard in a coordinated manner through Lagun-Aro EPSV, the Corporate Employment Office, Fagor Electrodomésticos and the other cooperatives.
Several temporary and permanent options which may help to find positions for the employee surplus created by the financial crisis at Fagor Electrodomésticos are currently being assessed.
The Corporation has a long history of generating employment and all divisions are currently following this policy. The diversity of sectors and markets in which the cooperatives operate guarantees that in the short- to medium-term new activity will continue to be generated, resulting in new employment opportunities. The fact that the businesses are competitive in their respective markets is always good news, and particularly now, because this will create options for solving the employee surplus from Fagor Electrodomésticos.
Arrasate, 22 November 2013
November 26, 2013
One, if not the most important, concern of the Club of Rome is to pay attention to fractal issues that may anticipate a change in our social and economic future. From this perspective, we have closely followed the evolution of the Mondragon (MCC) cooperative experience as a benchmark for another way of doing business and we view the current financial crisis at Fagor Electrodomésticos (FE) as an opportunity for this experience to change.
As with the collapse of Lehman Brothers due to its respective financial crisis, which did not represent the end of the liberal-capitalist system, but rather the cleansing of a globalisation process that needs to be fairer, we believe that the crisis at FE has a similar significance for the cooperative model.
Given the unique nature of the subject matter, it is important to highlight the hallmarks of the MCC cooperative model, which is characterised by transparency in management, sharing financial results and capital, cooperation between companies and a coherent pay scale. It is based on the values of respect for people and work as a method for social integration, training, and staff working on shared projects, leadership as responsible duty and commitment, and an inclusive business project that aims to create employment, with a long-term vision that responds to the social and cultural environment.
With these principles, it has overcome various crises since the first cooperative was founded in 1955 to the current incarnation of 100 cooperatives involving 80,000 people. Over this 58-year period, an “inclusive system” has been designed and implemented that is capable of “building development capacities”, in which all the composing parts collaborate with one another.
This includes both the Industrial Area, which includes the machine tool, construction, automotive parts, and services cooperatives, etc. with production plants in 24 countries, sales of €5.812 Bn (65% overseas), of which FE represents 8.4%, and Eroski, the Distribution Area, with sales of €7.092 Bn, the Financial Area, composed of Laboral Kutxa with €18.636 Bn in deposits and Lagun Aro with €4.876 Bn in funds, and the Knowledge Area, comprising the Vocational Training Colleges, the University, Technology Centres, etc.
Each has a system that means each part preserves its corporate identity and its own balance sheet and generation-of-income account, with internal solidarity agreements, investment funds, relocation of staff, R&D platforms and joint exports, etc., under a governance model that is unique to the cooperative experience. MCC is the leading industrial group in the Basque Country and the 10th largest in Spain for a good reason.
However, some aspects of this model are under scrutiny following the current crisis. One of the most critical of these is the transparency of information and the complex management of the dissemination of information in large cooperatives in a changing market, with diverse options, where decisions must be made continuously, along with the permanence of key historic leaders that frame these decisions within the values, history and aims of the cooperative.
The dynamics of organisations move between two extremes: change (promoted by staff members with the greatest awareness and a long-term vision), and resistance to change (where short-term, individual interests dominate). In a representative organisation, where all employees are members, the majority of the group (70%) will either be for or against change depending on how those in positions of responsibility know how to transmit the importance and opportunity represented by these changes, and whether the information is handled with transparency and intelligence and not left entirely in the hands of bodies with no direct responsibility such as the Social Council in the cooperative or the Works Council in the Sociedad Anónimas (public limited companies).
The transparency of information, its breakdown into indicators that reflect the contribution of each person to shared projects and their effect on company strategy is key to any organisation, whether it is a cooperative or not. Along these lines, cooperatives offer an important experience, given that today competitiveness is based on the innovation generated by people in a shared business project. This is one of the key features in the knowledge society we currently live in. The second aspect is related to the competitiveness and internationalisation model, based on technological development (R&D) which is normally reserved for parent companies and applied to low cost production processes. This has led to production being relocated overseas, depending on labour costs and/or emerging markets with a heavy demand for these products. In short, it has followed the model of large multinational companies, against which it is competing, but without the flexibility and lack of roots of these companies in their aim for maximum short-term profit. At present this model is being questioned, firstly due to exhaustion: which countries are currently the cheapest and for how long? And secondly by the emerging countries themselves, who are determined to “build development capacities”, solutions that comprise training, the development of competitive businesses, R&D, financing, governance, etc., integrated into the local culture and which strengthen responsibility, creativity, solidarity and equality among people.
In these terms the Mondragon cooperative experience has the values and resources to reinvent itself and adapt to the demands of a fairer globalisation, where human beings continue to be the start and finish point.
José Luis Jiménez Brea. Basque Country Coordinator of the Spanish Chapter of the Club of Rome.
November 21, 2013
The Mondragon Cooperative Group (“Humanity At Work” through Cooperation, Participation, Social Responsibility and Innovation, headquartered in the Basque region between Spain and France) is ranked as the world’s largest worker-owned industrial cooperative group but also as the top Basque industrial group, 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 60-year mission is to generate wealth for society through values-centric and market competitive business development and job creation under the “one worker, one vote” cooperative framework where labor is sovereign and capital, while essential, is subordinate to sustaining job creation.
Yesterday, Fagor Electrodomestics, which evolved from the original Mondragon household white goods manufacturing cooperative (ULGOR) to hold almost a third of its domestic sector market share for decades, was declared formally insolvent (859 million Euros in debt, 5,642 jobs at risk, 100,000 Euros left in the corporate account). Predictably, global media “punditcrats” have wasted no time in jumping on the “see, I told you so” bandwagon. Case in point, The Economist, “Trouble in workers’ paradise – The collapse of Spain’s Fagor tests the world’s largest group of cooperatives.” This publication and others speculate as to whether cooperatives and similar hybrid forms of worker ownership can survive the “real world” of boom or bust cycles that both predatory and virtuous capitalism practices mete out to passive adherents and active practitioners, beneficiaries and victims.
Also yesterday, Mondragon’s social mutual, Lagun Aro, announced it would propose a 1.5% raise in contributions from all members at Mondragon’s next General Assembly to support its role in providing additional unemployment benefits to displaced Fagor Electrodomestics worker-owners. This other news received only local media coverage and therein lies the conventional wisdom disconnect from the healing power of practicing metrics-based solidarity. (more…)
November 16, 2013
ALTHOUGH the financial crisis at Fagor Electrodomésticos (FE) is more spectacular due to the renown of the brand involved, it is neither the first nor the largest suffered by what is today the leading business group in the Basque Country. Therefore, to glimpse how it will react in the face of this adversity, it is worth recalling how it did so in earlier critical moments.
It experienced its first significant crisis in 1970 due to the stratospheric growth of cooperatives in the heat of an internal market protected from overseas competition.
In that year the financial needs of industrial companies exceeded the capacity of Caja Laboral, which had established itself in the small towns where cooperatives were based (Aretxabaleta, Elorrio, Placencia, etc.) and where, with an ideological message, it requested savings from inhabitants to support the development of local business.
When faced with the lack of trust from financial institutions in the new “business invention” and the inability of Caja Laboral (the sole financier) to resolve the liquidity problems, some cooperatives began to be unable to make their payments. This had a knock-on effect and in some towns a panic-driven withdrawal of funds which both aggravated and increased the problem.
Caja Laboral, with very few resources and with 100% investment of its third-party resources set aside for a small number of companies was a serious contender to join the list of failed credit cooperatives.
However, the hard work of many missionaries, whose spent countless hours explaining the project and achieving the backing of several social leaders, managed to contain the problem.
The subsequent decision to open branches in larger towns and cities, with an emphasis on service and customer relationships (unknown in banks and building societies at this time) confirmed the support of many sectors of Basque society for the original social business project. Savings deposited in Caja Laboral grew rapidly and in just a few years they outgrew the financial needs of the cooperatives.
The second crisis, in the latter half of the 1980s was more serious and complicated because it involved several negative factors at the same time:
- The results of the general crisis in the Basque economy with its general problems, and over 10 cooperatives that had to be closed after successive failed attempts to keep them open that consumed a great deal of resources.
- The Bank of Spain being granted responsibility for supervising credit cooperatives (previously the responsibility of the Ministry for Employment). It demanded external audits, that large loans borrowed by cooperatives be registered as losses and a drastic reduction in the bank’s investment in the group, which had previously represented 70% of its total investment.
- The retirement of the founders, whose status as the founders whose leadership had been helped by their great professional thoroughness and their outstanding commitment and austerity.
The response was proportional to the problem: it was unanimously decided to establish solidarity systems that meant sacrifices for all, to help the over 2,000 people affected and, in addition, the MCC Corporation was established. This replaced the Caja Laboral as the leader of the cooperative based on the creation of the Cooperative Congress, with representation proportional to the number of members; the General Assembly, as executive body, and the Corporate Centre, for managing joint services and funds.
This led to a new successful period with great business development, visionary internationalisation and a firm commitment to research and growth, also accepting ideological flexibility, with a growing use of ‘sociedades anónimas (private limited companies) to keep control of the new initiatives led by cooperatives.
In both crises, what stood out was the solidarity of the affected parties can be emphasised, based on special efforts and personal sacrifices, as well as the pragmatism of adapting to new regulatory or market requirements while the basic values which should be the cornerstone for any situation (participation, cooperation, innovation and social responsibility).
So, what should we expect as the response to this new crisis regarding the liquidation of the largest part of Fagor Electrodomésticos? As we have seen, the pioneers faced problems with a level of effort, self-sacrifice, self-demand and solidarity that we may have forgotten. They understood that it was the way to effectively “fight for a job” for themselves and their children. This capacity for sacrifice was accompanied by the pragmatism to “be reborn and adapt” without dogma or ideological prejudices but instead thinking, first and foremost, about solving people’s problems and doing so without betraying the founding values.
Within this framework, it will be necessary to address the following practical matters, at least:
- Promptly implement new and traditional mechanisms to provide solutions to the unemployed staff members of Fagor Electrodomésticos to relieve their understandable current anxiety.
- Attempt to save jobs in the profitable business of this company, even while it is undergoing arrangements with creditors, and to do so as quickly as possible, the key to efficiently negotiating its future in new companies.
- Optimise, where possible, the running of the profitable cooperatives so as to improve group results, generate greater solidarity funds and realistically start new businesses that can absorb, in the medium-term, the unemployed members and current temporary workers.
- Restore trust from suppliers and financial institutions, who will have been disappointed by the inability to keep to their promise that “we have always paid every last penny”.
- Review the brand policy in cooperatives with the Fagor name in their company name, due to the possible negative consequences.
- Find new ways of financing new projects, perhaps giving financial contributors a say in future decisions (remember that in the cooperative world Marx’s famous statement that “capital is accumulated work” is especially true).
However, although these challenges are significant and critical, in-depth reflection on other aspects is also necessary, such as:
Should the sovereignty of the cooperatives be shared in the event that solidarity funds necessary for their development have been contributed? Should the Corporation have the capacity to intervene in companies (as Caja Laboral did in the first phase based on its financing monopoly) in order to avoid extreme situations such as those we are currently experiencing? Is it necessary/appropriate to provide institutional representation to possible providers of capital to meet the financing needed for development?
Can (should) mechanisms involving the participation of professionals also now be put into practice in the group’s sociedades anónimas? In short, is it necessary to review the corporate governance model and find variations on the traditional industrial cooperative model?
The challenge is to do this while simultaneously retaining the differentiating values mentioned above, forging new routes to solidarity and being sufficiently pragmatic to discover business formulas that combine competitiveness and human development in such a way that, despite requiring sweat and perhaps even tears, the original, humanist Basque business project is capable of offering, in a few years, new results for the people and society of this country.
Juan Manuel Sinde Board member of Arizmendiarrietaren Lagunak Elkartea – Saturday, 16 November 2013
October 17, 2013
Paper submitted by Michael Peck (Mondragon USA), Steve Dubb (The Democracy Collaborative, University of Maryland), and Rob Witherell (United Steelworkers Union) for the “Corporations in a Great Transition: Visions, Models, and Pathways for Transformation” event hosted by the Tellus Institute & MIT Sloan School of Management, in Boston on October 31st & November 1st, 2013.
Capitalism at a Crossroads
Although the theme of this roundtable is “Corporations in a Great Transition,” the authors would argue that corporations, especially those in the financial sector, mostly have not transitioned at all. Instead, the increasing wealth inequality and diminishing social mobility experienced by the United States reflects a capitalist system protecting shareholder-centric relics of past century technology and socioeconomic realities rather than the empowered stakeholder movements we see and in which we participate. In this anachronistic context, shareholder value is measured more on perception and popularity than on actual long-term performance and real wealth creation. Meanwhile, share ownership for the vast majority of people means little more than legalized gambling with an account balance.
- Case in point: Apple’s market capitalization recently increased by $10 billion overnight simply because of a report the CEO had dinner with a prominent investor.
Alarmingly, the traditional capitalism concept of building value over the sustainable long term has been tossed aside and replaced with maximizing short term profits at the great expense of anything sustainable, starting with the basic right of people to “life, liberty, and the pursuit of happiness.”
- Case in point: A major pharmaceutical company recently announced it would lay off thousands of its employees and abandon a number of research and development projects to focus on higher profit margin drugs because their profit margin wasn’t perceived to be high enough.
- Case in point: Vulture capital firms scoop up undervalued, but profitable companies either to doctor their income statements so the acquired business can be resold at a higher price, or suck out as much cash from continuing operations as possible until the carcass of plant, property and equipment can be sold off for a few dollars more.
In these cases, the cure is visibly worse than the disease for those left disenfranchised and behind. Jobs are eliminated and shipped to whichever place can offer the lowest poverty wages for workers coupled with the least restrictions on safety and environmental conditions. This is because global labor arbitraging has become the predatory capitalist market mechanism instrument of choice. We have replaced “slavery based on race and color” with a new form of slavery based on lack of ownership, viable options and means. (more…)
October 8, 2013
A long-term plan to renovate the American dream begins at the local level and scales up.
This article is adapted from Gar Alperovitz’s What Then Must We Do? (Chelsea Green).
by Gar Alperovitz
Everyone knows the United States faces enormous challenges: unemployment, poverty, global warming, environmental decay—to say nothing of whole cities that have essentially been thrown away. We know the economic system is dominated by powerful corporate institutions. And we know the political system is dominated by those same institutions. Elections occur and major fiscal debates ensue, but most of the problems are only marginally affected (and often in ways that increase the burdens).
The issue is not simply that our situation is worrisome. It is that the nation’s most pressing problems are built into the structure of the system. They are not unique to the current economic slump or the result of partisan bickering, something passing in the night that will go away when we elect forward-looking leaders and pressure them to move in a different direction.
Not only has the economy been stagnating for a long time, but for the average family, things have been bad for a very long time. Real wages for 80 percent of workers have not gone up more than a trivial amount for at least three decades. At the same time, income for the top 1 percent has jumped from roughly 10 percent of all income to more than 20 percent. A recent estimate is that a mere 400 individuals in the United States own more wealth than the bottom 180 million Americans taken together.
Unfortunately, what we call traditional politics no longer has much capacity to alter most of the negative trends. To be clear: I think projects, organizing, demonstrations and related efforts are important. But deep down, most people sense—rightly, in my view—that unless we develop a more powerful long-term strategy, those efforts aren’t going to make much of a dent.
In 2007, people got excited about federal legislation raising the minimum wage from $5.15 to $7.25 an hour. This was obviously good, but the long-term negative trend continued nonetheless. The minimum wage, adjusted for inflation, was more than $2 higher in 1968. Clearly, when great victories don’t even get us back to where we were more than forty years ago, we need to pay close attention. I support such efforts, but it appears unlikely that strategies aimed at reviving the politics that produced the New Deal and Great Society programs are going to alter the big trends, even if those strategies are intensified by movement building—especially given the decline of labor unions, the power base of traditional progressive politics.
There is, however, a little-noticed twist to this otherwise bleak narrative. Deepening economic and social pain are producing the kinds of conditions from which various new forms of democratization—of ownership, wealth and institutions—are beginning to emerge. The challenge is to develop a broad strategy that not only ends the downward spiral but also gives rise to something different: steadily changing who actually owns the system, beginning at the bottom and working up.
* * *
Consider the evolutionary change developing in that rustiest of Rust Belt states, Ohio. On one unhappy day in September 1977, 5,000 steelworkers lost their jobs, their livelihoods and their futures when Youngstown Sheet and Tube closed down. Such large-scale layoffs were not common in the United States up to that point. The story made the front page of newspapers and led television news across the country. The workers called it Black Monday, and I remember all too well reports of desperate men committing suicide after concluding they could no longer support their families.
A young steelworker named Gerald Dickey had a different idea: Why couldn’t the workers run the facility themselves? Dickey and a group of activist friends teamed up with an ecumenical coalition in Youngstown to demand that the mill be put back to work under worker-community ownership. After a huge organizing effort, they got support from Washington—including the Carter administration, which agreed to allocate $100 million in loan guarantees.
When the administration reneged after the midterm elections of 1978, the plan fell apart. But the story did not end there. And what happened next is of even greater significance.
The inspiring example of the workers and religious leaders—and the sophisticated educational and political work they did to spread the word—had lasting impact. They knew they were up against some of the most powerful corporate (and union) players in the country. They were fully aware they might lose the battle. They also knew they had discovered an important idea with great promise. Accordingly, they made it their business to educate the public, the press and politicians in the state and around the country about what they were trying to do, and why.
The idea took root in Ohio, and over time the practices and strategies of worker-owned businesses grew more sophisticated and innovative. Today, the state is home to half a million worker-owners, and the support system for building such businesses is one of the most advanced in the nation. The simple idea that workers can and should own their businesses is now conventional in many parts of the state, not only among workers but also businessmen, many of whom (aided by certain tax benefits) sell their businesses to their employees when they retire.
The current goal is not simply worker ownership, but worker ownership linked to a community-building strategy. In Cleveland, a group of worker-owned companies are connected through a community-building nonprofit corporation and a revolving fund designed to help such businesses thrive. Part of the design involves getting hospitals and universities in the area (like the Cleveland Clinic, Case Western Reserve University and University Hospitals) to purchase supplies, goods and services from these companies. Everything in the network is green by design. One of the cooperatives, for example, is an industrial-scale laundry that uses two-thirds less energy and water than conventional ones.
Similar networks are developing in many other cities, and big unions are lending their support as well. Working with the Mondragon Corporation in the Basque region of Spain—an exemplary integrated model involving numerous cooperatives and more than 80,000 people—the United Steelworkers, whose national leadership once opposed the Youngstown effort, has announced a campaign to help build “union co-op” worker-owned companies here. The Service Employees International Union, the Steelworkers and Mondragon are involved with a worker-owned laundry in Pittsburgh. SEIU has also joined in a groundbreaking partnership with the largest worker cooperative in the United States: New York City’s Cooperative Home Care Associates, which provides home services to the elderly, disabled and chronically ill.
Visit The Nation to read the full article.
September 17, 2013
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.
September 13, 2013
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.
September 4, 2013
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 NCB-Laboral 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 Bank – Laboral 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 (NCB – www.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.”
August 11, 2013
by Elissa Yancey, WCPO Digital Contributing Environment Editor
CINCINNATI – On a main road in College Hill, smack dab in the middle of an urban food desert, sits a quiet, 28-acre farm at the center of a revolution.
A freshly built propagation house stands just a hundred yards or so off a four-lane section of North Bend Road that 20,000 cars traverse daily. Inside, the last remains of a small patch of cucumbers dangle from tall vines next to rows of knee-high hot pepper plants; piles of onions dry out on a row of pallets, their last stop before delivery to local homes, grocers and restaurants.
Fields of tomatoes, broccoli, beans and Swiss chard lead back to a pasture where more than a dozen cows graze over a hillside. On an early August afternoon, four farmers work the land. They water, weed and collect ripe vegetables; they inspect each new find with a gentle touch, crouching and reaching and stretching their way down neatly planted rows.
Just four-and-a-half acres of Bahr Farm, one of the last remaining family farms within Cincinnati city limits, serves as the incubator farm for Our Harvest, a union cooperative with major ambition and a core group of leaders determined to reshape the local food culture.
The cooperative, now reaping its second summer of organically grown harvest, has already garnered international attention and national press.
Our Harvest is the first business launched as a part of the Cincinnati Union Cooperative Initiative, or CUCI. Founded by local peace, justice and union professionals, CUCI is based on an international worker-owned business model and infused with American union support.
“We are very interested in helping to rebuild our food system here,” said CUCI co-founder Kristen Barker, 36. “We want to put so much of this fertile land back into production and create good, family-sustaining jobs. And we want to impact food access issues in a serious way.”
Read the whole article at WCPO.