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.