MCC Coops and International Expansion
The following are a few emails from an exchange with a friend and professor at Loyola University in Chicago. He asked me some questions about the expansion of the MCC coops in developing countries and inernationally in general. I thought this would be interesting to post. These are themes I will be revisiting soon. Enjoy!

Dan Bianchi

David:
Dan, Concerning the MCC operations abroad: why are they doing these(expanding operations to foreign countries)? What sorts of companies are they? Are the MCC motivations the same as capitalist ones—looking for cheaper labor, trying to avoid import duties? Are these companies producing inputs for the cooperatives? Is it simply a matter of profit maximization, or are there other, more technical reasons for what they are doing

-David

Me:

Great questions. This is something that has been on my mind lately. I am hardly an expert yet but here is my take.

Keep in mind there are operations 60 abroad and growing, more than half of which are factories and they belong to a number of different companies each with their own vision, problems and level of commitment to local development. Then there is the distinction of owning a plant in a developing country versus one in Europe. In the cases I am familiar with, Irizar a bus company, Fagor Electrodomesticos (appliances), Fagor Ederlan (automotive) and a few others, the companies tend to be located in highly competitive industries where either some aspect or their production or there entire business can be done much cheaper abroad. These companies often then purchase a key component from abroad, or make simpler versions of their products aboard and make the most advanced, latest and highly value added ones in Spain. For instance, Fagor Electodomesticos will in 2 or 3 years make the majority of its standard fridges in Poland, but will continue to make advanced (i.e. with a TV or computer in the door etc) here.

Irizar makes its older bus models in Brazil, China or India and the newest one here. As a new model comes out the slightly older models get ¨exported¨ to the foreign plants.

In the case of Ederlan they were invited to be part of a supplier park by I think Fiat in Brazil and didn’t want to turn down the business. This company incidentally is the most committed to coop development abroad, but in a systematic way. They are starting with coop incubators and a technical school in the areas around their plant.

Fagor electrodomesticos also recently bought the largest appliance company in France, Brandt (which is the same size as they are). That is simply a question of market share.

An interesting thing I learned is that there is a real commitment to expand ownership of an ESOP on the part of MCC. Specifically through a plan called GESPA (which is what EROSKI uses outside of the Basque Region) in which workers own a company which is partial owner of the company they work in. The commitment on the part of MCC is to start implement this in 2008, with 30% of ownership effectively belonging to local workers. Furthermore there are some companies like Ederlan, Fagor and Irizar, which seem to be committed ideologically to turning the companies they have into coops. But it is a much slower process in these cases. Many of these companies are also very convinced of the importance of worker participation as being critical to remaining competitive and thus implement shared management as well.

In addition I recently met with 2 people who work a lot with coops abroad, one is head of member labor relations and one is a grad student who is doing his thesis on soops abroad. Both told me that MCC's stragtegy is to in a way repest their own history in developing countries. Namely, start region division (in this case by country), that can cooperate say in China, or Mexico ( although in different industries) giving them a competiive advantage. Eventually the idea is to expand from the nucleus, form schools, joint ventures, new businesses and begin to cooperatize ownership. This is a long term vision, but it is definitely something that is part of the plan

The idea basically in th short term behind opening these subsidiaries seems to be, how do we remain competitive here? What can we do more cheaply abroad and what can we do effectively here in order to maintain and create employment.

Sometimes the motives are joint ventures, new markets etc. I would say on the whole there is a High Road approach, and that the characterization some have made of MCC companies being just like any old multinational is a gross simplification. In the case of Fagor they are making an effort to cooperatize in Poland, but have found workers to be skeptical.

-Dan

David:
Thanks for the helpful reply. This is a really interesting topic. I don't understand the ESOP idea, workers owning a company that is partial owner of the company they work form. Does this mean they are buying shares of MCC itself, which is the partial owner of their
company?

I'd like to know more about worker skepticism in Poland. What's the
story on that? In Poland, of all places! Solidarity, when it was
opposing the Communist regime, was an advocate of
worker-self-management.

It's interesting--and understandable--the coop workers outsource simpler
versions of their product abroad. They certainly don't want to
outsource their own jobs. But then what is to be gained by this
outsourcing? Is it simply brand recognition for their own version, or
are they reaping substantial profits from these, which are repatriated
home. Presumably it's the latter--which would seem to involve a certain
amount of "exploitation."

-David

Dan:

I spoke to Fred Freundlich ( a professor at Mondragon University) about this topic after I wrote you that email and he emphasized the fact that it is really hard to generalize about the situation. There is a lot of diversity in types of project, reasons for going abroad, commitment to local development and coop development. Even here people are not entirely sure of what is going on in other countries, even when there own companies have affiliates abroad. What is the case is that this is a huge issue for people involved in the world of MCC. Everyone thinks about it, has an opinion and is concerned about the future of coops abroad and the challenge of spreading them. What Fred also said was that it would be inaccurate to say that MCC coops behave like regular multinationals. It would be a gross simplification to make any generalization about their role abroad.

The ESOP idea, as least in the case of EROSKI (which is the company that has most done it) is this; workers buy a share in a company that owns thirty percent of the company that they work in. The other 70% is owned by a holding company created by the parent (Irizar, Eroski etc.). Don’t ask me why it is done that way. I am not sure if it would always take on that form in other cases, but that seems to be the dominant form. They are not buying shares themselves but rather buying (in a roundabout way) a share in the company they work in. It was explained to me in the following way: If workers have a stake in ownership that will motivate them to care about the company and not feel exploited, work harder etc. Basically the ESOP idea.

MCC´s central office has created the following framework for future foreign expansion, 1) there should be transparency of information, accessible to all workers 2) the same management techniques used in the Europe should be applied abroad 3) 30% of ownership should belong to employees and 4) 5% of profit should be dedicated to local development. Of course not all companies have to follow these guidelines, so it is not clear that all will do this.

As for the Poland thing, I don’t know too much about that situation other than that there are maybe 7 or so plants there. When I asked someone from MCC about cooperativising a Fagor plant there, that was the reason he said it was unfeasible. (But he also told me that within 50 years there would be no coops left in MCC, he is also one of the 5 founders of the first coop, go figure!). I will have to investigate a bit more.

As for sending production abroad it is a bit complicated. Sometimes it is simply a way of remaining profitable. What is key though is the strategy of not just moving production abroad but the emphasis on technological innovation here, allowing them to produce more value-added products while pushing less value added production abroad. Surely there is a certain amount of exploitation there. One company in particular, Irizar refers to this process as technology sharing, and really talks about improving the capacity of manufacturers in other countries.

As I said this is something I really need to explore, it is complicated and sometimes hard to get a straight answer about

Otalora

Located in a scenic valley near the town of Aretxabaleta, in a beautiful building which formerly belonged to the Lord of Otalora, who 700 or 800 years ago ruled this entire region is the MCC coop Otalora. Otalora (nowdays), is in charge of training MCC managers in management practices and coop values, as well as providing an MBA to managers, a mini-MBA for technical staff and training for members who will serve on the Social Councils or the Governing Councils of coops. It also provides training/orientation to new coop members, providing them with a basic understanding of coop structure, their rights, responsibilities, the economic details of coop membership, etc.

Otalora also provides a manager location service for coops that need personal, from within the MCC world. That is they locate qualified managers from other coops in coops that have an opening that the can't fill internally.

Training in coop values is not extremely extensive. In the MBA, mini-MBA and other training they provide at Otalora, it is simply one part of the course, in the personnel management section. This orientation for new members is only a week or so.

Learning coop values, and about cooperativism is something that is mostly done on the job and over the years. Given that there are more than 120 coops in MCC, each with their own culture and history, members get a very different training on what Mondragon cooperativism is depending on where they work. Because once a new member receives the initial orientation to cooperativism they may never deal with issue relating to coop structure, management, renumeration, etc. all members who serve on the Social Councils and Governing Councils ( please see my next entry for a more detailed discussion of the structure of coops in MCC). Partly, it seems there is an assumption that the culture of cooperativism is widely diffuse here and within the coops. This is something I will have to investigate more.

About two weeks back I visited one of Fagor Electrodomesticos plants(MCC's oldest coop, Spain's largest appliance maker and one of Europe's largest). The company is divided into "business" each one consisting of a different area (Kitchen Furniture, Stoves, Refrigerators, etc.) Each business acts with a great degree of autonomy. Each has its own manager, personal directors, etc. and is in many ways a separate entity. I specifically visited Fagor Negocio de Muebles de Cocina FNMC (which is Kitchen Furniture, mostly cabinets and counters). This particular business of Fagor has about 125 workers in one plant (Fagor Electrodomesticos has 4,000 plus 4,000 more in France due to the recent purchase of France´s largest appliance maker). FNMC has consistantly improved sales and profitability during the last five years. The purpose of the visit was to share their system of 'improvement teams’ (similar to those described in my post on Geyser Gastech), their system of workers' ability to achieve their individual goals (as laid out by an objectives framework that relates all workers goals to the goals of the company), their client oriented structure and extensive use of customer surveys to improve production and services.
FNMC does extensive surveys each year of the customer. These surveys are done mostly by assembly line workers or other workers who are not is sales and don’t usually have contact with customers. In the last five years they have made a concerted effort to adjust the production and customer service to improve areas that customer regard as lacking. This has very direct effects on the production process, design and relation to clients. They specifically create direct linkages from customer to design and production teams (the survey being one of the principal ways doing so). The information received in these surveys may form the basis of a goal for ¨improvement groups¨, for instance if a specific item or piece regularly breaks, it may become the task of certain groups to redesign the assembly process, find a new or better way to make the piece, find a new material, etc. The focus is on meeting the customer needs, while at the same time creating an environment where groups of workers (often working with several other teams of workers from different areas) can creatively respond to problems, improve production etc, in a decentralized way. Collaboration between teams is facilitated by other personal (often customer service people). What I found most important was the degree to which improvement, meeting customer needs is dependant on the ability of improvement groups to independently solve problems, and take ownership of their work. Last year FNMC purchased one of its suppliers Grumal (located in another town in the Basque region), which makes doors for cabinets. The company was formally owned by an American multinational. The company is profitable and twice as large as FNMC. Currently the FNMC has a 70% share of the company while the management owns 30%. In 2010 the company will be fully converted into a coop as a part of FNMC. This seemed to me to be a particularly interesting example of the strategic and nature of Fagor's business model. This is something I have seen reflected in other coops as well. A larger vision of their future and of what remaining competitive consists of, while still remaining faithful to cooperative values although not in a simplistic way. Many coops recognize that it is impossible to compete by expanding in ways that seem like the methods of any other corporation or multinational. They recognize strategic needs and opportunities. In the case of Grumal, it is in the Basque region, in an area familiar with MCC and Fagor, nevertheless transforming this company into a coop will take 5 years. Transforming a company outside of Spain or the Basque region into a coop, becomes infinitely more complicated. However, that doesn’t mean that buying a company and keeping it as a subsidiary or starting up a factory in Poland is qualitatively the same as when a regular non-coop does it. Expanding market share, broadening the base of the coops and increasing the competitiveness of the coop is critically important. Furthermore, working in a company owned by a coop is qualitatively different then working in one owned by another company.

Tuesday I visited a company called Geyser-Gastech, founded in 1997 as a joint venture between Fagor Electrodomesticos (see my October 31st entry), Spain´s largest appliance manufacturer and a German (non-cooperative) company Vaillant-Saunier Duval. The plant makes hotwater heaters (exclusively for heating water for baths and sinks), which is a highly competitive and constantly changing sector. Fagor and Vaillant are the 3rd and 2nd largest producers of hotwater heaters, respectively. The plan is capabe of producing 800,000 hotwater heaters per year.

The decision to start a joint venture allowed Fagor to take advantage of the sophistication of Vaillant´s German engineering and allowed Vaillant to take advantage of the relative cheaper cost of Basque labor. The quality of the engineering and the ability to innovate in design, materials and fabrication is of critical importance to Fagor, because of the increasingly cutthroat nature of the market for this product. Onsite there are R and D facilities The factory sells exclusively to the Fagor and Vaillant and as a result has no marketing functions. It is exclusively a production plant.

Eighty percent of the workforce are worker-owners of Fagor and the remaining 20% of engineers and some support staff (most of whom are from Germany are not worker owners). The make-up of the company is a little strange because the company itself is not a coop, but is half owned by one. The workers have representation though a social council (just as they would in MCC company) and elect (through Fagor) representatives to the board of directors. Most of the production workers come from other Fagor plants.

This is a sector that his highly sensitive to variations in the cost of raw materials and is increasingly competing with lowcost producers. This plant represents a creative effort to remain technologically advanced and maintain market share while expanding coop employment.

Production is arranged in mini-factories. That is each section of the factory acts as an independent factory, with a leader, goals, separate meetings and a focus on improving production and customer satisfaction.

Sorry about the lack of keeping up. I have been a little out of sorts and feeling a bit directionless. This has been due mostly to my lack of being able to find an internship and the lax nature of the Masters program. Class two days a week, zero homework, zero reading. The nature of a Masters program here seems to be about sharpening professional skills for existing professionals, introducing them to new areas, concepts and the latest fads in business. This allows a lot of time for exploring on my own, defining exactly what I want to learn about and who I want to meet. Some of that time has been put to good use, some has not.

Nevertheless, I feel back on track these days and am starting to have a clearer vision of the areas I want to explore, the companies I want to visit, and the skills I want to learn. Recently, I have visited a few factories and met with some interesting people at a number of key organizations related to MCC.

In the next few days I will relate those experience which include: Fagor Negocio de Muebles de Cocina, Otalora (MCC organization in charge of training managers and new staff in coops values), Lanki (MCC organization in charge of studying coops), MCC Headquarters, Geyser-Gastech (a joint venture between Fagor Electrodomésticos and a German company that makes hot water heaters) as well as some in-depth conversations with professors about MCC.

Agur!

Just spoke to someone from Fagor Electrodomesticos. Probably one of the most well known MCC companies (at least in Europe). They are a large producer of appliance, ovens, dishwashers, washing machines, hotwater heaters, sinks etc. I will be interviewing with them next week or the following about an internship. It will be related to a new product, the DRIRON, which is a new product that dries and irons clothes at the same time. Anyway, would be working in some capacity where my English is needed for research of markets, marketing etc.

This is a response to comments made to my post about the founder of Eroski and its history. Since there have been a few comments recently and this post is buried a few weeks back, I wanted to put it here: Click here to see the original or here to see my first post about Eroski:

My father asked for an explanation about how COOP, the Italian Grocery chain and Eroski are part of a development vision that runs counter to and competes with the Low Road retail trend.
Matt knows a bit more about COOP then I do about Eroski, but I can back up the statement he made that Eroski represents an alternative to Low Road retailers like Wal-Mart or Carrefour. First of all Eroski is owned by its employees and allows consumers to join as members (but not owners) with a limited amount representation. As a worker owner, employees are allowed the right to vote on management of the company, are guaranteed secure employment with excellent benefits, and substantial pensions as well as a large bonus when they retire which represent their share of the company. A little more then half of the workers are not owners. There is a commitment to involve them in some form of ownership, (however, the exact type of ownership depends on if they are outside of the Basque country or not it is a bit complex to get into now) and they are significantly better-paid then comparable workers in other chains in Spain. There is also a commitment to develop organic and fair-trade products particularly under Eroski´s own labels and to support Spain agriculture. Finally, Eroski´s expansion was in direct response to the threat of outside chains, Low Road chains flooding the Spanish market, including Basque Country, so the decided to step and expand to limit the space for these retailers to expand.
The very ownership structure is about long-term investment and the wellbeing of local communities. The cooperative structure prioritizes re-investment in the company rather than a focus on quick profits for shareholders or owners. Even the expansion scheme in areas outside of the Basque Region calls for incorporating local, non-profit capital to get projects off the ground and form local partners.

Last Tuesday the 11th we were visited by, Manolo Quevedo, the founder of Ikerlan, the first research center at MCC. Manolo was another early disciple of Fr. Arizmendiarrieta. He was also founder of Alecop, which is a program for university students to gain experience, specifically in a coop environment, while earning money to pay for their education. He didn't have enough time to go into depth about Alecop, however, I will be meeting him next week for coffe to talk more specifically about it. He mostly talked about Ikerlan so that is what I will focus on today.

Ikerlan ws founded more then 30 years ago by Caja Laboral (the MCC bank and its central institution) as a way to bring technical solutions to the coops. Ikerlan is one of several innovation centers in MCC, but it was the first and for most of its history the only one. A portion of its work is contract I+D for outside firms, for MCC firms and research on emerging technologies. Ikerlan´s specific areas of expertise are improvement in production processes and production design, product design and energy products and processes.

Prior to the founding of Ikerlan most production by MCC coops was done by buying the rights to use a patent from a foreign company, allowing them to be the exclusive producers of that product in Spain. This allowed companies to develop their sophistication and technical competency. However, it did not help them develop technologically. After the founding of Ikerlan, the idea was that new technology could be developed for coops and that technical solutions could be found for coops with very specific production needs. During this time Ikerlan was funded exclusively by MCC. Work was evenly divided between specific projects for MCC coops and research on new technologies.

In the early 80´s two changes come about, 1st Ikerlan begins to receive money from the regional government (approximately half of its budget) and 2nd they begin to take on research projects from all over Europe. At a certain point Ikerlan begins to have an identity crisis, because the majority of its work is coming from outside of MCC companies, they are being stretched in two directions.

Eventually they change their policy about working with non-MCC firms. They decide they will continue to do these projects, but with the understanding that they will only do projects that are relevant to MCC industries or that will allow them to gain technical knowledge that will be useful to the coops. The strategy of Ikerlan becomes very clear, to develop new technologies for coops, solve technical problems and understand and transfer emerging technologies to the coops from external sources. Outside projects would always be considered based on their degree of utility to the MCC firms.

Mostly he talked about the historyof Ikerlan, so after my meeting with Manolo on Monday, I will try to get a little more info its current situation and relationship with the coops.

I have got a little out of the habit of updating the blog due to a somewhat overwhelming project. We had to present a sample business plan and in groups and I was responsable for the financial part. It was challenging, but I learned a lot. We have just begun with the financial portion of the class so it was a good introduction. Anyway, I apologize for my absence and I am back now.

Today was the second day of my Master's class and we talked for the first art about entrepreneurship and our business plans. For the last four hours of class however we were joined by Antonio Cancelos, Founder of the Eroski (click to see a previous post on Eroski) retail chain and former director of the MCC. He was truly a dynamic and energetic speaker. Cancelos was the head of a local coop grocery store in the town of Eibar (about a half hour away from Mondragón) in the mid sixties he saw the need to join together with other coops in the region to form a larger entity. By 1970 this organization had become Eroski.
As I explained in my previous post on Eroski at a certain point in the 1980´s Eroski underwent a rapid expansion in all of Spain. This was done to head off the arrival of its competitors, such as the French retail chains and perhaps even companies like Wal-Mart. In order to expand they developed Hipermercados (like Supercenters that include food and all kinds of other retail items) and a network of hundreds of smaller stores as well as an alliance with a regional cooperative chain in Valencia called Consum. In order to finance this bold expansion of what had once been two relatively small and regional chains into a national chain capable of competing head-to-head with multinationals, Eroski had to get creative. Aside from forming a partnership with Consum (which fronted only 5% of what Eroski did) they reached out to several investors, limiting themselves to quasi-governmental agencies or non- profits and also the Italian Cooperative chain Coop Italia. With this capital they formed various holding companies and for each individual store the holding group provided 51% of the capital and local partners like ONCE (National Spanish Organization of the Blind) provided the rest of the capital. In this way they were able to multiple their capital to fund the expansion. After a number of years as their new businesses became profitable they were able to fund everything on their own. It also should be noted that they did not recieve money from Caja Laboral.

In the mid-90s Cancelos became the director of MCC, he summarized his six years there in this way: ¨when I arrived there were 28,000 workers in MCC and when I left there were 70,000.¨ He also noted that only about 38,000 of those workers were employee-owners (now days the figure is somewhat higher) and that the rest (that is, non-worker owners) worked abroad or largely at Eroski. He rhetorically raised the question that if the coops were creating non-cooperative jobs at such a large rate would they soon no longer be coops? His answer was that expanding non-coop employment allowed for the creation of more worker owners, made coops more competitive and that during his time as the head of MCC the created on average 2,000 co-operators per year more then during any other period. In addition non-owner workers in MCC companies tend to be treated and paid better then workers in other firms in the same industry.

Meeting Cancelos was even more exciting then meeting Jose María Ormaetxea. He truly embodied the image of an entrepreneur dedicated to cooperativism but open to non-traditional means of growing cooperative firms.

Yesterday was the first day of class for my Masters program. I was excited to finally get started. We began with an overview of the class and the structure of the program. It is basically the following: there is an initial portion that is one semester long that all students take part in. Then each student picks area of concentration either, General Management, Finance, Marketing, Supply Chain Management or Management of Athletic organizations and possibly (if enough people participate) a cooperative management one. Not sure which I wil do yet.

There are 25 five students including me, 6 of us are from other countries one Chilean, a Venezuelan woman and a Columbian and two Mexicans who haven’t arrived yet because of visa problems. The rest are from Spain. They are mostly from all over the Basque region and a few from beyond. The group seems to be a mix of those who are currently working and young people who have never worked. We also got our first assignment, which is to do a business plan in a group. I have three other people in my group, the live about an hour away in either San Sebastian and Bilbao, which should make group work interesting.

The highlight was when José Maria Ormaetxea, one of the five founders of the first Mondragón Coop, ULGOR (which later became Fagor), as well as the founder of Caja Laboral and the first director (the coop bank) and former President of MCC gave a speech about the cooperative experience to us. He 80 years old but still quite vibrant and seems to have an exceedingly clear and sharp memory of the early days of the coops. He outlined the growth of the Coops from a small group of student who were around the Priest Arizmendiarrieta to its current state.
He divided the MCC's history into three phases: 1) the Christian period from the founding of the first coop in1955 until 1973. The period when a small group of people who surrounded Arizmendi spread the coops motivated largely by christian values and because of the Dictatorship in the context often of Christian meetings etc.

2) The second phase he identified was the Romantic phase from 1973 until 1990. This period is characterized by a widening of the cooperatives to individuals who are motivated by idealistic, but now religious beliefs and is also a period of tremendous growth. When many new coops are started, when Lagun-Aro the social service coop was setup and the first research center was set up. The expansion of inter-cooperative support.

3) The third period Ormaetxea identifies is the period of Pragmatism from 1990 to the present. This is the period of increased competition, European integration and huge expansion. It is also the period when Coops begin to incorporate large amounts of non-owner workrs and operate subsidiaries internationally. The Mondragón Cooperative Corporation (although formed in 1987) takes on the leading role in defining the course of the coops.

Ormaetxea also made the point that because of globalization and increased competition that most likely in 50 years there would be no coops. That is, there would be companies with a small token amount of cooperative leadership, but in order to remain flexible and competitive they would not be able to incorporate new workers as owners and would have to do much of their work abroad. When ask about the prospect of turning subsidiaries in other countries into coops, he replied in no uncertain terms that it was impossible and would never, ever happen! Specifically, the company Fagor has a plant in Poland with 1,000 workers who seem uninterested in becoming a coop. However, Ormaetxea, a man who helped lead the fashioning of the world’s premier industrial cooperatives from an impoverished backwater, during the repressive reign of Franco believes spreading coops or even growing them at all is impossible.

He seemed to me like a man who was prone to overstatement and liked to make an impression. He is quite entertaining and it was impressive to meet him in the flesh. I will let you know how the class goes in the next few days.

Tomorrow my classes start at Mondragón Universitatea, (or the University of Mondragón) in addition I will be doing an internship which will start sometime later in the year. Here is little background on the University. MU itself is only about ten years old, however it roots lie in the very first project that the founder of the Mondragón Coops, the priest Jose Maria Arizmendiarrieta, undertook. Today it is an integral part of the MCC and many graduates go directly into the coop workforce. Originally founded as a technical secondary school in the 1940´s, it would provide a basis for the coops in terms of forming young people with the necessary skills and same vision for transforming their community. In 1997, after years of evolution and the creation of a social science school and a business school, the University was formed by merging the three separate institutions. Its explicit goal is to link the academic world closely to the world of work, specifically in the coops. Most undergraduates are required to work in a coop at come point during their studies and in the program I will be in, contact with coops is frequent (plus hopefully the internship). It is a small institution and relatively intimate. As I get to know it better I will provide more info.

For all of you cycling fans out there. I just read this piece on Orbea, which is a company that makes road, triathlon and mountain bikes and also is an MCC Coop. The article, United States, Orbea's Leading Market Abroad talk's about the growth of the sells of Spanish coop's bikes in the US, and their plant in Arkansas.

Here are few more pictures from the Oñati town festival. The last two days a lot more happened. There were thousand of people in town yesterday during the day for what was kind of like an outdoor fair with farm animals, a big all you can drink hard cider fest, food, handy crafts a market with all kinds of apples and traditional music. Also there were a bunch of traditional Basque sporting events like picking up a really heavy ball over and over, picking up an anvil over and over, tossing hay with a pitch fork over a bar, chopping wood and a couple of others ones that I can't really explain. Over all there amount of people out in the streets and taking part in the activities was really amazing.

After everything was over there a pro ETA march of a few hundred people calling for the release of prisoners held by the Spanish government. Most of those taking part were on the young side. It was a strange way to end the whole scene, but I guess illustrative of the political leaning of most folks there.
Of course late at night the bars and streets were packed with all kinds of people partying until sunrise. There is still two more days of the festival so I will have more posts on this.

Last night was the first day of the Town Festival for Oñati. It is a pretty wild affair and goes on until Monday, but then Tuesday everything is closed so people can recover from five days of partying. I am not sure what it celebrates, I will have to ask somebody that. But it is quite a big deal, it really seemed like every citizen was out there. In some ways it was reminiscent of a four of July Parade in the US, but late at night with a lot more drinking and mixing of age groups. People come from other towns, everyone goes out to the plaza, to the bars and carouse and socialize in the street. The few pictures I have are from when a rock band that sings in Basque and Spanish are playing and the "tamborada" which is basically a parade that starts at 11pm.

The unique part is the way people are dressed up, one part of the procession is chefs (presumably a nod to the famous culinary traditions of Basques), while another part is made of people dressed as blacksmiths, (which is because of the long tradition of metal forging, and mining etc in the area) others in traditional Basque peasant clothes. For a small town this is quit a party, all of the bars are packed with people, young and old until at least 4:30 (which is when I went home). People seemed to be pretty voracious drinkers, too (I couldn’t keep up). It was really a lively scene on the street, roving packs of young people go from bar to bar to bar, I think I was 7 or 8 myself. Everywhere was full of people and lots of kid playing and dancing in the plaza to the band (especially early). Will have some more posts for the next few nights.

Mondragón/Arrasate and Eroski Coop
Today I went to the birthplace and headquarters of the MCC, Mondragón, or Arrasate as it is known in Basque. Mondragon is a bustling town of at least 30,000. But just like Oñati it is a town that appears much bigger because it is squeezed in a valley (also, there is a huge imposing rocky mountain just outside of town). Consequently, there are a lot of tall buildings narrow streets and a lot of hustle and bustle people in the street in the middle of the day. The middle of town is a picturesque medieval town square. In the main square of Mondragon, on a balcony of the city hall building there was a banner hanging that said a Basque independence slogan and "Zero Pobrezia" or Zero Poverty in Basque. Mondragon, itself is not a poor place. There was a lot of construction, and brand new, fancy apartment buildings and stores. This is clearly a place that is dong well. Nevertheless, the two slogans are about independence and eradicating poverty. That says a lot about the way things are run in Mondragon.
Unfortunately, I didn't spend too much time there or even see any of the industrial coops. I actually went there to go to Eroski, which is Spain's 2nd largest retailer and the largest company in MCC. It is a worker and consumer coop and has about 30,000 workers, only about 12,000 of whom are worker-owners. The chain consists largely of supermarkets, but is increasingly using the Hiper-mercado format which is like the Wal-Mart Super Center. An all-in-one store that has a full service supermarket, clothes, house wares, electronics, a restaurant, cellphone dealer, travel agent, realtor and more stuff, I forget. Affordable stuff, not fancy. Although you have never seen a seafood section like this in a supermarket in the US. All kinds of crazy seafood, eels, unidentifiable stuff. Should have taken a picture.
The predominance of non-owner workers (more than 60%) is due to an aggressive and rapid expansion on the part of Eroski to preempt the competition (large retailers like Carrefour from France) and prevent the possibility of companies like Wal-Mart from coming into the country. The strategy is to go head-to-head with these companies and then go about incorporating the workers into an ownership structure. As for my experience at Eroski it was pretty cool. The bus dropped me off downtown and the Hiper-mercado is located on the edge of town so after a 20 minute walk through a light-industrial zone along the river. As you can see from the picture, there are a lot construction cranes. Lots of nice apartments. The store is huge, super clean, super orderly and the workers really nice. It was very much like being in a store in the US, except forthe fish.
As for my experience at Eroski it was pretty cool. The bus dropped me off downtown and the Hiper-mercado is located on the edge of town so after a 20 minute walk through a light-industrial zone along the river. As you can see from the picture, there are a lot construction cranes. Lots of nice apartments. The store is huge, super clean, super orderly and the workers really nice. It was very much like being in a store in the US, except for the fish.
They have also recently announced that all of the brands they sell under the Eroski name will be ranked environmentally. That is, organic products, recycled paper etc. will be labeled and have priority positions on shelves.
I hope to go back to Mondragon soon and give you an update.

If you are wondering where Oñati is, here are a couple of maps of the area:
Oñati

This is about five minutes from my dorm and just across the river from the center of Oñati. I believe it is an old monastery.

Mondragon Resources:
I want to recommend some resources for those who are interested in learning more about MCC.
Despite its size, complexity and importance as a development model, in the US in particular, very few people are aware of MCC. However, there are a few good books out that give a great overview. In addition if you write me I can get you some of MCC's materials right from the source in English.
Here is the list:

We Build the Road as We Travel: Mondragon A Cooperative Social System
Roy Morrison 1997

Making Mondragon: The Growth and Dynamics of the Worker Cooperative Complex
William Foote Whyte and Kathleen King Whyte 1991

Values at Work Employee Participation Meets Market Pressure at Mondragon George
Cheney 2002

From Mondragon to America: Experiments in Community Development
Greg MacLeod 1998

Finally, I give a less than whole-hearted recommendation to read:
The Myth of Mondragon: Cooperative, Politics, and Working-Class Life in a Basque Town
Sharryn Kasmir 1996
I say that not only because it is critical of the cooperatives, but because it clearly written by someone who makes her conclusions first then goes about trying to find the evidence. From a methodological standpoint this book is garbage. Ultimately, her attack on the coops is not based on very much or very solid evidence and is mostly the view of a naïve, utopian mind set. Kasmir was, it seems, disappointed to find out that Mondragon was not paradise, her conclusion then was that it must be really bad for workers, even worse then regular capitalist companies. The leap is rather self-righteous. However, it does include more about life beyond the coops than the other books and raises important issues about democracy in the coops.

Finally a note about this list, some of these books are dated, but are still very much worth reading to learn the history and structure of the Mondragon Coops. At lot is still relevant today.

I will try to post some stuff soon that gives a more up to date view of MCC.

One quick note about an earlier post. MH had asked about cooperative buying other companies. I stated that that does not happen, but I was wrong. Not only to coops often own no cooperative subsidiaries in other countries they also do so within Spain. Additionally, the cooperative law has even been modified to allow other coops to act as shareholders in other coops.

I have finally arrived in Basque country. Well, actually I got here on Saturday after a long trip and my bags have yet to arrive, but I made it safe and sound. After a day and a half spent in Guernica at the house of Universitatea Mondargon Professor Fred Freundlich (who has been nice enough to show me around and take me under his wing here) I am now in Oñati. Oñati (or Oñate in spanish) is a small town of less than 10,000 residents near the town of Mondragon (about 7 miles away). It is located in the Alto Deba region of Guipuzcoa, which has traditionally been the heart of the Mondragon Coops. There are number of coops here including the ULMA group. The Business Department of the Universitatea Mondragon is located here, it is known as ETEO. The area is lush, the town tightly packed with apartment buildings that give it an urban-ness that a town of a similar size in the US would lack. Basque is widely spoken and most things in the street are written in Basque. I am still jetlagged and getting my bearings. My bags haven’t arrived and this is my fourth day wearing the same pants. Classes start in two weeks. More soon. DB

While I will be in Spain for the next year or so, I am actually currently employed at the The Center for Labor and Community Research(CLCR) in Chicago, USA. CLCR is a consulting and research organization that specializes in new approaches to community development, having a particular expertise in manufacturing and creating effective partnerships between labor, community, and business. We currently are involved in serveral initiatives that are advancing High Road manufacturing and development in the US. These are based on joint partnerships among top business, labor, governmental, and educational leaders with the goal of launching a long-term initiative for making Chicago and State of Illinois world leaders in modern manufacturing.
We are at the center of numerous projects that have the goal of promoting the "High Road", which seeks to have a long term vision of development, enhance worker’s skills, while making a commitment to innovation, such as developing new niches and markets, adding value to existing products, investing in research and development, expanding market share, and improving the efficiency of the productive process and the productivity of employees.
The influence of the Mondragon Cooperative Corporation on CLCR's vision for developing our City, State and Nation’s economy is critical. Along with the Italian experience in Emilia-Romagna, MCC is one of the most significant examples of a sophisticated, industrial and competitive cooperatives actively participating and competing in the economy. MCC represents a competent and advanced alternative that is not relegated to marginal industries or confined to small scale firms. The structural elements of the MCC, the Caja Laboal, the dedication to reinvesting income, to Research and Development, to providing aid to ailing firms, scientific innovation and an emphasis on worker training are all exceedingly important elements of the Mondragon model that have influenced our vision for development.
Despite the fact that our vision for development is highly influnced by MCC, it is not exclusively focused on developing cooperatives as the only means of transforming and democractizing the workplace and society, instead MMC's model represents one significant trend and an important model for development. However, to truely be transformative cooperatives and the kinds of structures pioneered by the MCC must be part of a larger movement that takes into account the political sphere, as well as organized labor, elements of the business community and the community.