The sign outside the headquarters of Mondragon, in Spain’s Basque Country. Yes, the sign is in English. Photo by the author.
Most of you are familiar with the Mondragon organization because of your worker co-op backgrounds, but recently, there has been a noticeable increase in interest about Mondragon from a broader range of groups. This was evident during a visit to Mondragon this summer, where Mikel Lezamiz, Mondragon’s director of cooperative dissemination, rushed from room to room hosting multiple groups of visitors from Columbia, South Korea, and the US, all on the same day.
Mondragon Corporation, located in the northern Basque region of Spain, is a federation of 125 worker cooperatives, and 85,000 employees. One of its core objectives since its founding in 1956 has been the creation of jobs and the development of its workers. Much of the current interest in Mondragon is due to this ability to create and sustain jobs over the years.
Much of this success can be attributed to Mondragon’s unique structure. Each co-op in the organization operates on a one-worker, one-vote principle. But as the organization has grown, it has needed to develop a more elaborate governing structure, such as a governing council to oversee its global strategy.
Even as it has grown to such a large size, the democratic culture still can be seen on the shop floor, as evident at the “Fagor” co-op, an appliance manufacturer, where workers operate in teams with elected leaders.
There are differences between the Mondragon model and worker co-ops in the US besides just the sheer size of the organization. For one, the buy-in for a new member is much steeper in Mondragon, at $18,500, which is equal to the minimum salary for one year.
Profit distributions are also handled in a unique way. 10% of the yearly profits go toward community investment, 20-60% go to a co-op reserve fund, and the remaining 30-70% are returns for members. However, all member returns are retained by the co-op, and only interest on those returns is paid out each year. The full returns are paid out upon retirement.
This directly contributes to Mondragon’s core objective of creating and sustaining jobs. By retaining 90% of the profits, funds are available for reinvestment, which allows for growth and job creation.
Mondragon has also created additional organizations to support the co-ops. Early on, Mondragon created its own bank to help raise capital to invest in new co-ops. There are now four arms supporting the co-ops in education, social security, research, and finance.
The unique structure, long history, and proven success certainly make Mondragon worthy of the recent interest, and definitely worth a visit.