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.