The Mondragon Corporation is a corporation and federation of worker cooperatives based in the Basque region of Spain.
It was founded in the town of Mondragón in 1956 by Father José María Arizmendiarrieta and a group of his students at a technical college he founded. Its first product was paraffin heaters.
It is the seventh-largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2016, it employed 74,117 people in 257 companies and organizations in four areas of activity: finance, industry, retail and knowledge. By 2019, 81,507 people were employed. In 2024, it had over 70,000 workers, 30,660 in the Basque Country, 29,340 in the rest of Spain and around 10,000 abroad. Mondragon cooperatives operate in accordance with the Statement on the Co-operative Identity maintained by the International Co-operative Alliance.
History
In 1941, as a young Catholic priest, José María Arizmendiarrieta settled in Mondragón, a town with a population of 7,000 that had not yet recovered from the poverty, hunger, exile, and tension of the Spanish Civil War.The Mondragón Experiment – Corporate Cooperativism (1980) FULL You Tube In 1943, Arizmendiarrieta established a technical college which became a training ground for managers, engineers and skilled labour for local companies, and primarily for the co-operatives.
Arizmendiarrieta spent a number of years educating young people about a form of humanism based on solidarity and participation, in harmony with Catholic social teaching, and the importance of acquiring the necessary technical knowledge before creating the first co-operative.
In 1955, he selected five young people to establish the first company of the co-operative and industrial beginning of the Mondragon Corporation. The company was called ("Ulgor workshops"), an acronym derived from the surnames of Usatorre, Larrañaga, Gorroñogoitia, Ormaechea, and Ortubay, known today as (Spanish for "Fagor electric appliances").
In the first 15 years, many co-operatives were established, thanks to the autarky of the market and the awakening of the Spanish economy. During these years, also with the encouragement of Arizmendiarrieta, the ("Labor savings bank", 1959) and the Social Welfare Body ("Friend/help time", 1966) were established that played a key role. The first local group was created, Ularco. In 1969, Eroski was founded by merging ten small local consumer co-operatives.
During the next 20 years, from 1970 to 1990, the dynamic continued, with a strong increase in new co-operatives promoted by Caja Laboral's Business Division, the promotion of co-operative associations, the formation of local groups, and the founding of the ("Research work") research centre in 1974.
With Spain scheduled to join the European Economic Community in 1986, it was decided in 1984 to establish the "Mondragon Co-operative Group", the forerunner of the current corporation. In-service training for managers was strengthened by creating Otalora, dedicated to training, and the dissemination of co-operatives. The Group consisted of 23,130 workers at the end of 1990.
International expansion On the international stage, the aim was to respond to growing globalisation, expanding abroad by establishing production plants in a number of countries. The first was the Copreci plant in Mexico in 1990, followed by many others: up to 73 by the end of 2008, and 122 at the end of 2013. The goals were to increase competitiveness and market share, bring component supply closer to customers' plants, especially in the automotive and domestic appliance sectors, and to strengthen employment in the Basque Country by promoting exports of co-operatives' products by means of new platforms.
Between 2002 and 2007, Fagor and Eroski issued bonds (). While they were commercialized as safe deposits, the courts classed them as riskier debt instruments. When the yields fell during the 2008 financial crisis, bond-holders sued against the cooperatives.
In 2008, the worker-owners of the cooperatives Ampo (metal casting) and Irizar (coaches) voted to leave the corporation.
In October 2009, the United Steelworkers announced an agreement with Mondragon to create worker cooperatives in the United States.Wilson, Amanda. Bendable Business: Cooperatives less likely to break in economic crises. The Dominion. 4 December 2009. On 26 March 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) announced their detailed union co-op model.The-Union-Co-op-Model United Steelworkers, 26 March 2012
The industrial sector ended 2012 with a new record of €4 billion in international sales, beating sales figures from before the 2008 financial crisis. Mondragon opened 11 new production subsidiaries. International sales that year accounted for 69% of all sales, a 26% increase from 2009 to 2012, and with 14,000 employees abroad. Mondragon's share in the BRIC markets increased to 20% compared to the previous year.Internationalisation consolidates MONDRAGON’s industrial business with sales abroad in excess of €4bn www.tulankide.com 17 June 2013 In 2013, international sales grew by 6.7% and accounted for 71.1% of total sales.Internationalisation and innovation, keys to the evolution of MONDRAGON cooperatives in 2013 8 September 2014, mondragon-corporation.com
On 16 October 2013, domestic appliance company Fagor Electrodomésticos filed for bankruptcy under Spanish law to renegotiate €1.1 billion of debt, after suffering heavy losses during the euro area crisis and the 2008–2014 Spanish real estate crisis, putting 5,600 employees at risk of losing their jobs.Spanish white goods company Fagor seeks protection from creditors 16 October 2013 reuters.com/ This was followed by the bankruptcy of the whole Fagor group on 6 November 2013.Fagor et sa filiale française déposent le bilan www.lemonde.fr Le Monde.fr, AFP and Reuters, 6 November 2013 In July 2014, Fagor was bought by Catalonian company Cata for €42.5 million. Cata pledged to create 705 direct jobs in the Basque Country and to continue the brand names Fagor, Edesa, Aspes, and Splendid.
In 2022, the worker-owners of ULMA Group (scaffolding) and Orona (elevators) voted to leave the corporation. Estimated impact of the leave is a workforce drop by 13% and a 15% cut of the group's sales. As successful cooperatives they were contributing 10% of their profit to a common fund supporting ailing cooperatives. They will not contribute to the solidarity fund but they will keep insuring their workers with Lagun Aro and collaborate with Mondragon Unibertsitatea and other cooperatives in the group.
Business culture
Mondragon co-operatives are united by a humanist concept of business, a philosophy of participation and solidarity, and a shared business culture. The culture is rooted in a shared mission and a number of principles, corporate values and business policies.
Over the years, these links have been embodied in a series of operating rules approved on a majority basis by the Co-operative Congresses, which regulate the activity of the Governing Bodies of the corporation (Standing Committee, General Council), the Grassroots Co-operatives and the Divisions they belong to, from the organisational, institutional and economic points of view as well as in terms of assets.
This framework of business culture has been structured based on a common culture derived from the 10 Basic Co-operative Principles, in which Mondragon is rooted: Open Admission, Democratic Organisation, the Sovereignty of Labour, Instrumental and Subordinate Nature of Capital, Participatory Management, Payment Solidarity, Inter-cooperation, Social Transformation, Universality and Education.
This philosophy is complemented by four corporate values: Co-operation, acting as owners and protagonists; Participation, which takes shape as a commitment to management; Social Responsibility, by means of the distribution of wealth based on solidarity; and Innovation, focusing on constant renewal in all areas.
This business culture translates into compliance with a number of Basic Objectives (Customer Focus, Development, Innovation, Profitability, People in Co-operation and Involvement in the Community) and General Policies approved by the Co-operative Congress, which are taken on board at all the corporation's organisational levels and incorporated into the four-year strategic plans and the annual business plans of the individual co-operatives, divisions, and the corporation as a whole.
Wage regulation
At Mondragon, there are agreed-upon wage ratios between executive work and field or factory work which earns a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns no more than 5 times as much as the theoretical minimum wage paid in their cooperative. For most workers, this ratio is smaller because there are few Mondragon worker-owners that earn minimum wages, because most jobs are somewhat specialized and are classified at higher wage levels. The wage ratio of a cooperative is decided periodically by its worker-owners through a democratic vote.
Compared to similar jobs at local industries, Mondragon managers' wages were 30% lower in 1991 (as some companies pay their best paid managers hundreds of times more than the lowest-paid employee of the company) and equivalent for middle management, technical and professional levels. Lower wage levels are on average 13% higher than similar jobs at local businesses. Spain's progressive tax rate further reduces any disparity in pay. These comparatively low wages can make it very difficult to recruit managers from investor-owned firms.
Business sectors
Mondragon Corporation operates in four areas: finance, industry, retail, and knowledge, with the latter distinguishing Mondragon from other business groups. In 2013, the corporation posted a total revenue of over €12 billion (roughly US$16 billion), and employed 74,061 workers, making it Spain's fourth-largest industrial and tenth-largest financial group.
Finance This area includes the banking business of Laboral Kutxa (successor of ), the insurance company Seguros Lagun Aro, and the Voluntary Social Welfare Body Lagun Aro, which had an asset fund totaling €5,566 million at the end of 2014. The yield obtained from this fund is used to cover long-term retirement, widowhood, and invalidity benefits, complementary to those offered by the Spanish social security system.
Industry
The corporation's companies manufacture consumer goods, capital goods, industrial components, products, and systems for construction, and services. The latter includes very diverse business groups such as:
Abantail: Adaptive design optimization Alecop: Engineering training LKS Consultores: Legal services KREAN: Architects and engineers. MCCTelecom: Telecommunication engineering. Mondragon Lingua: Translation and language schools Mondragon Sistemas: Automation, Industrial Computing and Telecommunications. Ondoan: Turnkey projects in the energy and environmental sector. In the leisure and sports area, it manufactures Orbea bicycles, exercise equipment and items for camping, garden and beach.