What’s happening to the Mondragon cooperatives during the present crisis in Spain?
How about the Mondragon cooperatives? How do these weather the crisis? To me, these cooperatives are not an alternative to ‘capitalism’. They compete successfully in the international market, after all. But they might be an alternative to the limited ‘capital is sacred’ shareholder value kind of thinking so prevalent in neo-liberal thinking. The crisis hits the cooperatives too, of course. But they seem to be rather resilient and flexible – ‘flexible’ not defined in the neo-liberal, capital and ‘managers’ oriented way but in a somewhat more social, labor, quality and productivity oriented way (cut interest rates – not jobs!). As the cooperatives have an important ‘industry area’ which also sells in the international market, they have been able to boost exports which compensates the meagre results of the retail and finance ‘area’. And yes, the financial statement starts with ‘value added’ (wages plus interest plus amortizations plus depreciations plus profits), profit is only the bottom line, like it should be. The least one can say is that there is a lot more creativity and flexibility in the respons to the crisis than neo-liberal ‘economists’ can dream of. Quite some non-member temporary workers have been fired but there is also a lot of inter company lateral flexibility and re-training, they own their own bank which makes a large difference and the members have voted in favor of an 8% wage cut, in combinations with an ‘hours bank’. And yes, there are some successes, even during this extremely severe crisis. The cooperatives do survive and some of them even thrive. Five bits of data:
1. From the website of the Mondragon headquarter: “the most relevant data“. Consolidated profits are down (but still positive, about 1.500,– per employee). Capital is down (except for the rainy day fund), jobs aren’t. And neither is R&D – to the contrary!
04/30/2012 – 14:49
In sum of the 120 coops in Mondragon, 70 are making profits and 50 are having losses. What happens when a coop has losses?
One of Mondragon’s co-operatives is called Fagor Electrodomestic – 3,500 employees make very modern looking fridges, stoves, washing machines and while they sell to 120 countries, Europe is their main market. So when new construction starts in Spain fell from just under 700,000 units in 2007 to just 40,000 units this year, Fagor was hit hard and appliance sales have fallen by 50%. Their response was to reduce workers by 10%- that meant laying off 300 temporary workers and transferring 250 worker members to other coops in Mondragon (worker members are frequently transferred from one coop that isn’t doing well to one that is). It also meant reducing wages by 8% in Fagor and reducing the number of models produced. Another interesting strategy is the hours bank- if there is less work at one time of the year , workers will reduce their hours and make it up later in the year. If the total is less than a full salary, Mondragon’s internal welfare system will compensate the workers for 80% of the gap between a full time salary and however much they worked- for up to two years!
Another fascinating aspect- a coop that needs money for investments will borrow it from another coop that has surpluses and to ease the transaction, Mondragon’s Investment organisation will guarantee the loan. This means that while other companies were capital strapped in the financial crisis, Mondragon coops have a much higher level of access to cash- from each other. A true solidarity economy!