The story
Founded by José María Arizmendiarrieta in 1956.1
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.
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 Talleres Ulgor ("Ulgor workshops"), an acronym derived from the surnames of Usatorre, Larrañaga, Gorroñogoitia, Ormaechea, and Ortubay, known today as Fagor Electrodomésticos (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 Caja Laboral ("Labor savings bank", 1959) and the Social Welfare Body Lagun Aro ("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 Ikerlan ("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.
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Between 2002 and 2007, Fagor and Eroski issued bonds (aportaciones subordinadas).
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. On 26 March 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) announced their detailed union co-op model.
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. In 2013, international sales grew by 6.7% and accounted for 71.1% of total sales.
On 16 October 2013, domestic appliance company Fagor Electrodomésticos filed for bankruptcy under Spanish law to renegotiate 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. This was followed by bankruptcy filings by Fagor Electrodomésticos’ subsidiaries, including its French subsidiary FagorBrandt on 6 November 2013. In July 2014, Fagor Electrodomésticos 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.
From Wikipedia’s article on Mondragon Corporation, shared under CC BY-SA 4.0.4