Mondragon Corporation

A long time ago, a teacher started a group.

He wanted to help people in a small town. He and his students made heaters first.

Now, many people work together in this group. They work in many ways. Some people work with money. Some people make things in shops.

Workers help each other. They even vote on things. This makes the group strong.

They make many cool things too. They make bikes and tools. They even make machines for cars.

It is a very big group. It helps many people find jobs. It is a great way to work together.

The Mondragon Corporation is a big group of companies. It is in the Basque region of Spain. A priest named José María Arizmendiarrieta started it in 1956. He worked with his students from a college. Their first product was paraffin heaters.

Today, the group is very large. It has many different parts. Some parts work in finance, which is managing money. Other parts work in industry to make goods. Some parts work in retail to sell things. One part is for knowledge, like teaching and research.

Workers in this group are also owners. They use a way of working called cooperatives. This means they work together and help each other. They even vote on how to run things. They use a pay rule to keep things fair. A top boss might earn five times more than the lowest worker. This is much less than other big companies.

Iñigo Ucín is the president of the group.

They make many things. You can find their bikes and tools. They also make machines for cars. In 2013, they made over 12 billion euros in sales.

The Mondragon Corporation is a large group of companies based in the Basque region of Spain. It is not a typical company because it is a federation of worker cooperatives. In a cooperative, the people who work there are also the owners. This group is very important to its home region. It is the leading business group in the Basque Country. It is also the seventh-largest company in Spain when looking at asset turnover.

This way of working follows a set of shared rules. These rules include ideas like democratic organization and participation. This means workers have a say in how things are run. They also use a system of solidarity to help one another. For example, successful cooperatives often contribute money to a fund. This fund helps support other cooperatives that might be having a hard time. They also use wage ratios to keep pay fair. In many places, a boss might earn hundreds of times more than a worker. At Mondragon, the average manager earns about five times the minimum wage.

The story began with a priest named Father José María Arizmendiarrieta. He moved to the town of Mondragón in 1941. At that time, the town was struggling with poverty after the Spanish Civil War. In 1943, he started a technical college to train young people. He wanted them to learn skills and how to work together. In 1955, he helped five students start the very first company. This first business was called Ulgor workshops. They made paraffin heaters to start their journey.

Since those early days, the corporation has grown into a global group. It works in four main areas: finance, industry, retail, and knowledge. In the industry sector, they make many things like Orbea bicycles and machines for cars. By the end of 2016, the group had 257 different companies. These companies employed 74,117 people. The group has also expanded far beyond Spain. They opened their first plant in Mexico in 1990. By 2013, they had 122 plants in different countries around the world.

You can see the impact of this group in many everyday items. Some of their machines help build houses or make metal parts. They also work in finance through banks like Laboral Kutxa. This helps people manage their money and plan for the future. Even the way they handle knowledge is unique. They have research centers and schools to keep learning. This helps them stay ready for a changing world. From the bikes you might ride to the tools used in factories, Mondragon is part of many things.

The Mondragon Corporation is a massive federation of worker cooperatives located in the Basque region of Spain. Unlike traditional corporations owned by outside investors, Mondragon is built on a model where the employees are also the owners. This structure is designed around a humanist philosophy of solidarity and participation. It serves as a major economic engine for its home region and is the leading business group in the Basque Country. In terms of asset turnover, it ranks as the seventh-largest company in Spain.

The cooperative mechanism functions through a shared business culture and specific operating rules. These rules are approved by Co-operative Congresses and regulate how the different divisions and governing bodies act. The system is rooted in ten Basic Co-operative Principles, such as democratic organization and the sovereignty of labour. This means workers participate in management and decisions. They also practice payment solidarity to ensure fairness. A key part of this mechanism is the use of a common fund. Successful cooperatives contribute 10% of their profits to this fund to support other cooperatives that are struggling.

This organization operates across four distinct areas of activity: finance, industry, retail, and knowledge. The industry sector is highly diverse, manufacturing everything from Orbea bicycles to complex industrial components. It includes groups like the Danobat Group, which leads in Spanish machine tool manufacturing. The finance sector provides essential services through entities like the bank Laboral Kutxa and the insurance company Seguros Lagun Aro. The retail sector includes consumer cooperatives like Eroski. Finally, the knowledge sector sets Mondragon apart by focusing on research and specialized training through centers and universities.

The history of the corporation began with Father José María Arizmendiarrieta. He arrived in the town of Mondragón in 1941, a time when the area faced poverty following the Spanish Civil War. In 1943, he founded a technical college to train skilled workers and managers. He believed technical knowledge must be paired with a spirit of solidarity. In 1955, he helped five students launch the first company, called Ulgor workshops. This group produced paraffin heaters and eventually became known as Fagor. Over the following decades, the group expanded through the creation of labor savings banks and social welfare bodies.

To remain competitive in a globalized world, Mondragon has expanded significantly outside of Spain. The corporation opened its first international production plant in Mexico in 1990. This expansion grew steadily, reaching 73 plants by 2008 and 122 plants by 2013. This internationalization helps the group bring components closer to customers in the automotive and appliance sectors. By 2012, the industrial sector reached a record of €4 billion in international sales. At that time, international sales accounted for 69% of all sales, supported by 14,000 employees working abroad.

Despite its success, the corporation has faced significant economic challenges and internal changes. During the 2008 financial crisis, bondholders sued cooperatives after yields fell. In 2008, the worker-owners of the Ampo and Irizar cooperatives voted to leave the corporation. The Fagor group also faced a major crisis, filing for bankruptcy in 2013 due to heavy losses from the Spanish real estate crisis. This led to the Fagor group's bankruptcy in November 2013, though parts of the company were later bought by the company Cata. More recently, in 2022, the ULMA Group and Orona voted to leave, which was estimated to reduce the workforce by 13%.

One of the most notable aspects of the Mondragon model is its approach to wage regulation. The corporation uses agreed-upon wage ratios to prevent extreme inequality between different levels of staff. These ratios typically range from 3:1 to 9:1, with an average of 5:1. This means a general manager earns no more than five times the theoretical minimum wage of their cooperative. In 1991, Mondragon managers' wages were 30% lower than managers at similar local industries. This commitment to solidarity helps maintain a shared sense of purpose across the entire federation.