The flagship of the European labor and the cooperative movement Mondragon Corporation, the seventh largest employer in Spain with revenues of about 14 billion euros, is overcoming a set of complex troubles. Bankruptcy of the Spanish federation of cooperatives can be an analogue of Lehman Brothers collapse.
In February 1941, in the impoverished, devastated by civil war town of Mondragon in the north of Spain appeared a young priest José María Arizmendiarrieta.
He miraculously survived the meat grinder of war: he should have been shot by Francoists for his work in one of the Basque newspapers but he survived. He was not a communist but certainly professed leftism.
In 1943 he created in Mondragon the Polytechnic School, which quickly became the center of attraction of urban youth. In 1956, Arizmendiarrieta and several graduates of his school founded the city's first cooperative UGOR. A few years it turned into a dynamic cooperative corporation Fagor, then to Mondragon Corporation - a worker cooperatives’ federation of Spain.
Cooperatives own by the workers themselves. Many economists believe that it is more efficient company structure than a corporation. Workers combine their resources, sharing losses and profits.
Arizmendiarrieta died in 1976. After 32 years Mondragon Corporation became the largest employer of the Basque Country. The organization became much more complex: Mondragon Corp. has developed its own department for research, banking and financial services, and organized educational courses for workers.
Mondragon employees participate in the system of social protection of corporation, under which they can receive benefits and other payments. If one co-op experience financial problems, the others help it. Mondragon Corporation is the seventh largest employer in Spain. Last year, its revenues amounted to 14 billion euros.
At the last months of this year the impossible happened. In October, one of the largest cooperatives in Spain and member of Mondragon Corporation - Fagor Electrodomésticos, a cooperative engaged in production of goods for the home, closed its factory. Co-op was a major exporter and one of the leaders in the American market of pressure cookers.
It shocked the entire network of Mondragon cooperatives, which now includes 109 companies. Confidence in the weakest of them fell and the employees are now afraid of losing their jobs. Unemployment in Spain is 26%. For Spain it may be an analogue to the collapse of Lehman Brothers - recall that its bankruptcy started the world financial crisis.
In Spain, the 2013 can be called as the year of bankruptcies. Fagor, with its 850 million euros of debt, is one of the largest units in the chain. The Spanish economy is gradually recovering from the crisis but its growth is too slow to save the companies mired in debt.
Cooperatives were, amd still are, considered as one of the best kinds of organization: they took care of their employees and management was based on democratic principles. But the crisis has been identified the weak link of this structure - in difficult periods it’s very difficult to cooperatives to get the money they need. Now their existence was called into question.
However, there is another point of view, which is based on the fact that the Mondragón Corporation, despite the difficult times, will be able to get out of the crisis. Economic statistics confirms this.
DANOBATGROUP, the leading national cooperative in the machine tool sector and part of the Mondragon Corporation Cooperative Group, on December 18 has signed major contracts with two renowned world leaders in the mining industry located in Australia to the total amount of 103 million Euro.
Earlier, Mondragon Corporation has won the first edition of the Business Dragon Award, in recognition of the co-operative group’s track record in China. The aim of these awards is to recognize the work done by companies and institutions to promote trade relations, investment and business co-operation between Spain and China.
Thus, despite the too pessimistic views of those economists who adhere to traditional structures of corporations, Spanish giant is not going to give up and is ready to show that by its opportunities, it in no way inferior to the classic mega business structures.
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