Saturday, May 12, 2007


Recently I visited the MCC cooperative Ampo.

Located in the Gipuzkoan town of Idiazabal, AMPO Cooperative is a divided into two separate activities, POYAM which make valves for liquid gas pipelines and AMPO which is a foundry that mostly serves valve makers. AMPO has approximately 450 workers in its two divisions. Last year they had more then $200 million in sales and $20 million in profit. AMPO is the premier manufacturer of valves for liquid gas pipelines in the world and the foundry is recognized as the finest in the sector in Europe.

However, to reach where it is today, AMPO has undergone remarkable and drastic changes. As recently as 2003, AMPO was losing money, was forced to move workers to other companies within MCC and dismiss its CEO. AMPO was suffering from internal tension, a lack of efficiency and a top down management style which saw management charging overtime (a practice not allowed in Cooperatives). As a result of this crisis, AMPO’s Management Council appealed for help from its incredibly successful neighbor and fellow MCC cooperative, Irizar. Irizar is one of the worlds top luxury bus manufacturer and MCC’s most highly successful and profitable company. In 1991 it began a process that changed itself from a failing, money losing-company, ridden with internal strife and a top down management model, to one that was not only economically successful but hugely efficient and entirely based on autonomous work teams. Irizar’s change was based on creating a company “based on people”, and by the work of a visionary and charismatic leader, Koldo Saratxaga.

In 2003, Saratxaga was invited to help in the restructuring of AMPO. He helped AMPO implement a total reengineering of its management model and the internal structure of the company. This lead to a direct turnaround in the efficiency of the company and it quickly began to turn a profit again, as well as bring back the employees it moved to other coops.

This was the beginning of a radical departure from the way it had done business during its entire history. Middle management was abolished, as were departmental structures, mandatory hours and the hierarchical structure that is the mainstay of nearly all companies. Instead a more horizontal structure based around self-managed, cooperative work teams with leaders elected by each teamed was established. These teams are organized by area of production or around specific processes or relations to customers or providers.

Certain individuals called coordinators, are responsible for certain areas, however each team is responsible for defining and meeting its own goals and deciding how it will work, as well as electing a leader. It is a structure based in a profound belief in the responsibility and creativity or workers and the centrality of the customer.

The two principle structures that define AMPO are its customer satisfaction teams and the customer line teams. The first being responsible for finding customers, communicating their needs to the company and as wells as charging, and providing service. The customer line teams are multidisciplinary production teams (made up not only of assembly line workers, but also engineers and others who provide technical services to the teams). They work closely with the client satisfaction teams as well as others. These two types of teams are central, considered along with the customers and the suppliers to be the Value Chain of AMPO. The rest of the teams provide services to the value chain. There are many types of teams composed of different employees, both direct and indirect workers, and individuals can be on various teams. The teams themselves meet regularly to work on different areas of the business and strategic planning. This structure can be seen below:

The structure itself is loose and not particularly easy to visualize. This to me suggests the level of coordination and most importantly communication that is occurring at all levels of the cooperative. It is particular significant to point out that the central teams are composed to a great degree of assembly line workers and that other areas of AMPO “serve” them. That is to say, AMPO is a cooperative where workers are clear at the center of activity in terms of importance and the value given to their contribution.

An indispensable element of AMPO’s model is the freedom and responsibility of workers organized in autonomous work groups around a shared vision for the future of the cooperative and a sense of ownership on the part of all workers. In AMPO there are no set hours, no time clocks, no managers overseeing workers; workers hold themselves and their co-workers accountable, and as a group they elect leaders and representatives to the strategic planning meetings or other higher decision making bodies. Different groups interact to serve clients and the value chain. In addition, there is a strong emphasis on communication, the interaction of so many groups and the autonomy of individuals means that constant and clear communication is indispensable and that meetings and discussion are a critical part of everyone’s job and the lifeblood of the organization.

In order to help create a sense of equality and shared mission AMPO has a considerable equality in its pay scale. Prior to its reorganization AMPO had approximately 40 different pay grades. That has since been changed to four different pay grades based on level of responsibility, level of education and the nature of the job. This policy is designed to create greater solidarity and greater transparency and openness in retribution policy.

A related element to this culture of responsibility, involvement and sense of shared mission is transparency and one that workers at AMPO identify as critical to creating a community where all feel lie the company is truly theirs. The commitment to transparency is paramount. It is extremely important that workers of any stripe are aware of how the company is performing, new customers, costs, new accounts, undertakings and salaries of other workers are all routinely shared. On a weekly basis sales figures are announced to all workers. There is careful emphasis on not overwhelming workers with data, but at the same time destroying the tendency that the management of most company's have (Coops or Capitalist companies) of concealing figures and hiding inconvenient information.

I don’t want to make it appear that there is no room for leadership in AMPO. It is not total anarchy. There are coordinators and leaders and a leader of the entire company. Their roles more then anything are to be sure that the critical processes are achieved and especially in the case of the Coordinator of the project to build a consensus around a shared vision for the future. This is accomplished not by traditional strategic planning, but instead by what they term as “Strategic Thinking”. It is not a process that is carried out by a few managers at the highest level, but instead by two “Piloting Teams” of about 30 people, (one for each division of the company) composed of leaders and coordinators from all the teams in the company, who conceive of goals and initiatives for the near future. They don’t make complex sales projections or goals. Instead they work with more general concepts, becoming leaders in Spain, entering a new market, obtaining a new client, opening a new plant. The concepts are then shared with each group through the representatives are become internalized in each team and related to their daily activities. It is a process where leadership is key, but where the basis of it is creating a shared vision for the future that everyone buys into.

Perhaps the most critical element of AMPO's economic success is its orientation towards the customer and emphasis on going out into the marketplace. Prior to its reengineering AMPO had perhaps 5 personnel responsible for customer relation and sales. That number is now somewhere around 40 for each of the two divisions, approximately 7 groups in total corresponding to the different regions of the world. Plus the very structure of the company is one designed to meet customer needs and integrate workers not-traditionally involved in sales in the process of finding customers and satisfying existing ones. This includes assembly line workers, engineers, accountants, etc. The result is that the demands, needs and problems of the customer and the market are much more internalized in the day to day operations of the company and that the number of customers and markets has multiply greatly. In addition AMPO recognizes that they are not the cheapest company in the market. Instead they differentiate themselves based on quality, knowing their customers and their high degree of customer service.

AMPO is a company that has made an impressive and fascinating change and is highly successful economically. This success can be attributed to its emphasis on customers, it orientation towards the market and on its participatory democratic structure. To me it represents the advantages that a coop can potentially have over tradition enterprises because its structure and culture are particularly in tune with the nature and values of cooperatives and take advantage of the creativity of its workers while involving them and creating a sense of ownership and responsibility on a daily basis. AMPO is not only democratic in the sense that workers elect the leaders of the company like in other coops, but also because they have a large degree of participation, autonomy and responsibility over the day to day, as well as the long term vision of the cooperative. It is truly a project based on people, but at the same time with a strong focus on the competing within the market and the customer satisfaction.


Bill Bianchi said...

The AMPO article is quite inspiring. It certainly seems to answer critics who say that in order to compete in today's global capitalist market place, coops must sacrifice their cooperative values. Your report seems to show just the opposite.

I have a few questions. Did you get a chance to talk directly to team members (workers)?
The second question is about accountability on different levels. How are team members held accountable? Do teams set their own norms for work behaviour or are they set for them by higher up? Also to whom are the teams accountable?

Dan Bianchi said...

To answer your question. I spoke with someon who is a tam member at Ampo, but virtually everyone is a team member there. If you mean assembly ,line workers, no.

There are no norms per se. But virtually nothing is set by higher ups. Teams have responsibilities to other teams that they have to fulfill and they have figure out how to manage that within each team. The teams are held accountable by other teams in the company or by customers. It sounds a little hard to gt your head around, but there are higher-ups. There are people who coodinate processes but their job is to make sure that everyone knows what needs to be done. The$y can't oder people to do anything though.