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BACKGROUND

MONDRAGON = Network of 260+ cooperative enterprises, subsidiaries and affiliates.

Employee-owned, not user-owned

7th largest business group in Spain (€14B, sales)

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CONTEXTCONTEXT

• The Basque Country (Euskadi)

• 2.1 million inhabitants

• Strong industrial tradition since 16th c, esp since late 19th

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BASIC PHILOSOPHYBASIC PHILOSOPHY

STATUS OF FACTORS OF PRODUCTION

MAXIMUM AUTHORITY

INSTRUMENT

Conventional Company

CAPITAL LABOR

Cooperative Company

LABOR CAPITAL

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IMPLICATIONSIMPLICATIONS

1. Democratic control

2. Distribution of surplus among all

worker-members

3. Egalitarianism

4. Participation in decision-making

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See co-op structure chart

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The Business TodayThe Business Today --

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Sales, 2009Retail & Allied Group

€8.4 billion

Industrial Group€5.5 billion

13.9 billion €(retail & industrial only)

60%

40%

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WORK FORCE, 2009

RETAIL≈ 48,000 (56%)

MANUFACT.≈ 33,200 (39%)

FINANCE≈ 3,000 (3%)

KNOWLEDGE≈ 1,100 (1%)

TOTAL≈ 85,300

MONDRAGON – Network StructureMONDRAGON – Network StructureCO-OP CONGRESSStanding Committee

Education, Training and Research Centres

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CIA

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INDUSTRIAL GROUPAutomotive Components

Industrial Components

Construction

Industrial Equipment

Domestic Appliances

Engineering and Capital Goods

Machine Tools + 5 other divisions

GENERAL COUNCIL

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Mondragon in the World

Manufacturing Plants (70+)Corporate Delegations (6)

Rep. Checa (5)

India

Rumania (2)

Alemania (3)

Tailandia (1)

Marruecos(2)

Francia (5)

Brasil (6)

Brasil

Mexico (6)

Mexico

Polonia (5)

China

China (8)

U.S.A.

U.K.(4)

India(2)

Italia(3)

Rusia

Turquía(2)

Sudáfrica (1)

Eslovaquia (2)

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HOW WAS THIS ACHIEVED?

(History)

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1936-39 Spanish Civil War

Destruction, poverty, repression

1500 – 1925: Industrial tradition, then heavy industrialization—iron, steel, metalworking,

shipbuilding, mining

1941: Priest Arizmendiarrieta Mondragon

-Technical School, 1943

- Other “Education” … 15 years

- First co-op 1955-56

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Growth … and NETWORK INSTITUTIONS NETWORK INSTITUTIONS

1955-59 four new co-ops

1959 Caja Laboral (bank)

1964 Ularco (regional subgroup)

1967 Lagun Aro (soc. sec./insurance)

1969 Eroski (retail food)

1974 Ikerlan (technology R&D)

1984 Cooperative Congress

1991 MCC – Sectoral Restructuring / Central Services

1997 Mondragon University … ETC.

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2000’s

INTERNATIONALIZATION

CO-OP CO-OP RENNOVATIONRENNOVATION

The Meaning of Mondragon The Meaning of Mondragon ExperienceExperience

Participation, Cooperative Participation, Cooperative Ownership Education, Social Ownership Education, Social Responsibility, Other Arenas Responsibility, Other Arenas (Bagara)

12+ R&D CENTERS

NOT JUST TECHNOLOGY, also organization, commun-ication, leadership

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FUTURE CHALLENGES

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CHALLENGES1. Globalization

Need to “cooperativize” operations, ensure social responsibility. The “30%” policy.

High pressure broad impact Work and management in other cultures

2. Non-member workers (Retail and Manufacturing) In co-ops, 20% 15% In subsidiares (> 50% total wkfce) ... BUT

shared ownership + COOP’Z’N in Retail 3. Manufacturing Services, new sectors4. Environmental Sustainability

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CHALLENGES

5. Participatory decision-making (in the face of post-modern, consumer culture) The management dimension—conventional

management “ideology” re costs, profits, style

The front-line worker dimension—work is means not end; in 2nd generation, co-op membership seen less as “activism”

6. Re-creation, reinforcement of “cooperative identity” via education, leadership and organizational change

TE.

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Cooperative Principles

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COOPERATIVE PRINCIPLES

• Open and Voluntary Membership

• Democratic Governance

• Sovereignty of Labor

• Capital as Subordinate and Instrumental

• Participation in Management

• Solidarity in Compensation• Intercooperation• Social Transformation• Contributing to the Social Economy

Worldwide• Education

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Open and Voluntary Membership

Open to all those who freely and voluntarily accept our Principles.

COOPERATIVE PRINCIPLES

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Democratic Governance

One member, one vote to elect the Governance Bodies and define

codes of behavior

COOPERATIVE PRINCIPLES

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Sovereignty of Labour

Rights are assigned to Labor, not capital. Labor is the engine of

collective progress and the key to generating wealth

COOPERATIVE PRINCIPLES

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Capital as Subordinate and Instrumental

Capital is an essential resource, but it is subordinate to labor.

COOPERATIVE PRINCIPLES

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Participation in Management

Responsible involvement of members in management of the

business

COOPERATIVE PRINCIPLES

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Solidarity in Compensation

Internal to the company, as well as relative to the sector and region.

COOPERATIVE PRINCIPLES

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Intercooperation

As a mechanism of intercooperative solidarity and business efficiency

COOPERATIVE PRINCIPLES

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Intercooperation

1. Central Representative Governance Bodies

2. Central Management Services and Coordination Bodies

3. Sectoral Divisions for collaboration, synergies, mutual help

4. Shared support institutions in key activities—banking, venture capital, social security, education, R&D, non-profit activities

COOPERATIVE PRINCIPLES Practice

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Social Transformation

Commitment to egalitarian and sustainable economic and

community development in the Basque Country and elsewhere

COOPERATIVE PRINCIPLES

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Building the SocialEconomy Worldwide

Collaboration and solidarity with those who work for a democratic social

economy around the globe.

COOPERATIVE PRINCIPLES

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Education

Cooperative and professional, in order to consolidate and develop the

Mondragon Experience

COOPERATIVE PRINCIPLES

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“The present, no matter how marvelous it may seem, sows the seeds of its own destruction if it separates itself from the future”.

“El presente, por espléndido que fuere, lleva la huella de su caducidad, en la medida que se desliga del futuro”.

D. José María Arizmendiarrieta