Fred Freundlich, a native of the Boston area, moved to Mondragon for the first time in 1982, in his mid-twenties. He was fascinated by a business world that he believed was impossible to create. Corporations that value human dignity over profits were, in his experience, an oxymoron. Today, almost three decades later, he is a professor and researcher at what would, in America, be the equivalent of the Mondragon Business School, called mlk for Mondragon Innovation & Knowledge
mlk is a non-profit cooperative, but owned by the teachers and employees together with the Mondragon Cooperative Corporation (MCC). Today, mlk is one of 14 MCC universities that exemplify the community’s extraordinary commitment to education. The founder of Mondragon, Father Arizmendiarrieta, worked as an educator and community organizer for 15 years before the first coop was started.
Freundlich provided some of the richest reflections and observations about Mondragon, aided in large part by his ability to communicate with us in his native tongue. He noted, “There is a tendency in Mondragon to do, do, do, do, do – and not reflect enough…No one knows how many of the 83,000 people in Mondragon are gung ho about cooperative enterprise. We should know.” (On a related note, read “Long Live Community: Social Capital As Public Health,” an American Prospect article that explores theories of social cohesion and its effect on social, economic, political and public health factors).
The Challenge Ahead
Freundlich outlined challenges for the future: Working with provincial authorities to design and implement legal and tax structures that encourage broad employee participation in enterprise ownership, and collaboration to introduce employee ownership in non-cooperative firms and study the relationship between participatory ownership and community and social well-being.
He is now working on an Italian study of three towns – one with 0% cooperative employment, one with 25% cooperative employment and one with 50% – to see if the same improvements in well being are in evidence.
A question we asked whenever we had the opportunity was, what is Mondragon’s international competitive strategic advantage that will allow the coop to compete effectively in the global marketplace? Freundlich answered, “Most people would rather work cooperatively. We’re more collaboratively, more vigilant.”
Many at Mondragon take their culture almost for granted. One of the most striking things we heard was that “most Mondragon managers can’t believe that anyone in America would put 100% employee-owned on their business card. Why would anyone care?”
Another challenge comes from the supermarket chain, Erosky, which has employing primarily non-member, non-owners. In 2009, they decided to convert the 30,000 non-members to members at an investment of $9,000 per person to join. Yet, 2009-2011 were terribly difficult economic years, and the chain lost money for the first time. Thus, the workers ownership accounts decline, creating significant turmoil and dissatisfaction.
This mirrors a situation that Mondragon faces internationally where its 77 manufacturing facilities employ non-member, non-owners. While MCC has attempted to convert a number of these facilities to cooperatives, so far these efforts have failed. Employees at these plants seemed to lack interest in making the financial investment required to buy into the business. This is an issue that generates significant criticism and concern outside and inside of MCC.
Occasionally, a coop decides to leave the MCC group, something they are free to do. For example, Irizr, a bus manufacturing company left the Mondragon MCC because of disagreements over control, value and autonomy.
Freundlich noted that, “The fact that Mondragon factories overseas are not organized as cooperatives is intellectually incoherent. I’ve seen people storm out of the room, angry that they didn’t join the cooperative in Spain to be a capitalist in Mexico. But how do you broadly discuss this when there are Mondragon businesses in Spain whose revenues are down 20% are with people suffering economically…When your three most important international customers say ‘if you want to be a preferred supplier you need to set up a plant with-in 50 miles of our facility in China, Brazil and Poland,’ what do you do other than set up the plant?”
Freundlich continued: “One researcher toured 44 of the international Mondragon plants to compare them to other international plants, and study how they impact local employment at home. We don’t know how our plants compare to the best-in-class, or what risks we may face if some inappropriate activity might be uncovered.”
“Ninety percent of the strategy and marketing Mondragon does internationally does not uniquely leverage what is special and unique about Mondragon,” said Freundlich.
This is one of the most striking aspects of what I believe is MCC’s unrealized potential. With dozens and dozens of companies and individual brands and nothing that connects them back to the Mondragon brand, outside of Spain where the connection is well-known, consumers and partners miss the story – one that is impactful and inspiring.