Mondragon Corporacion Cooperativa, Spain


[Contact][Community List][Home]
The Mondragon Corporacion Cooperativa (MCC) began in the town of Mondragon in 1956 when a group of five young engineers were encouraged by their socialist priest, Father Jose Maria Arizmediarrieta, to set up a cooperative to make paraffin cooking stoves. Using Arizmediarrieta's vision the five young students built a financial base for the MCC today. By 1959 they had already formed the Caja Laboral Popular (CLP), the Working People's Bank, which is not only the bank for the cooperatives but is run as a cooperative itself. MCC has grown in its forty years of operation to include 160 employee-owned cooperatives, involving 23,000 member owners, with sales grossing US$3 billion in 1991. The main focus of the Association of the Mondragon Cooperatives is the creation of owner-employee jobs to expand the opportunities for people to participate in the relationship economy. Statistics show the Mondragon cooperatives to be twice as profitable as the average corporation in Spain with employee productivity surpassing any other Spanish organisation. It is focused on social success, involvement of the people and industrial democracy.

MCC has grown to be one of the twelve largest companies in Spain and is the biggest in Basque County. The MCC includes numerous community and employee based programs, their social systems include health care, housing, social security, primary and post secondary education, training and retraining and unemployment insurance. Extensive efforts to retrain or relocate workers who are affected by changes that occur in the wider economy is an essential component of it's program. The educational system that they have implemented has over forty schools and a college; there is also a student relationship cooperative, which allows working students to cover their tuition and living expenses for their private high school and college education while having the experience of running their own cooperative.

The MCC views capital as only a means to an end, the goal is for a happy and productive work environment and capital is a tool needed to achieve that. Ten percent of the annual net profits is donated to charity, 40 percent is retained in the collective internal account. This collective internal account is regarded as the portion of profits that is collectively owned and managed for the common good; if the cooperative ever ceased to exist, this portion would go to charity. The remaining 50 percent is open for use by the owner employees because it can be used as collateral at the bank for a loan at an interest rate only a point or two above the six percent it is earning, yet the cooperative has the use of the capital at the same time.

Another unique aspect of MCC is the way it deals with the establishment of new companies and the repayment of debt. The Coop always begins a new enterprise with a group of people who are friends, never with just one person. It sees the natural bonds of friendship as a building block for which successful ventures are built. The new enterprise and the MCC bank agree to stay together until the business is profitable. The members of the new group put up twice the membership fees that others will invest and the bank loans any additional capital necessary at a normal interest rate. If the business runs into trouble the bank will loan additional capital at roughly half the initial rate. If the company is still in financial trouble the interest rate will be dropped to zero, and if more assistance is needed the bank may donate capital to the business. Eventually, even if the company has to go through drastic changes like new managers or new product lines, the business becomes successful and is able to repay much of the loans, although the bank also uses a portion of its profits from time to time to reduce the size of the loans of all of its cooperative businesses.