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Mondragon: where workers own and owners work

By JOE PEARCE

At the heart of the Mondragon complex lies the polytechnic (foreground), with the research centre on the hill above. Vigor can be seen in the distance.

IN THE ancient Basque Nation in northern Spain, one in five of the working population is unemployed. Yet at the area's heart is a network of factories where business is booming. No workers have been permanently laid off and new jobs are being created. This is Mondragon where all the factories are owned and run by the people who work in them.

Mondragon is rapidly becoming one of the world's best-known and most admired worker co-operatives. Starting 24 years ago, it now includes 164 enterprises with almost 19,000 worker-members. Ninety industrial plants turn out everything from heavy machine tools to bicycles, and there are also eight food and agricultural co-operatives.

Even in these economically depressed times, annual sales for the entire Mondragon group have more than doubled to some £500 million. Its greatest miracle is that in a region with one of the highest jobless rates in Spain, it has actually expanded employment; 327 new jobs were added in 1982, and getting on for 200 in 1983.

Besides industrial and agricultural co-operatives, the group includes primary and technical schools, sports and housing associations, an industrial research institute and an indepdendent social-security system. There are also 80 co-operative stores selling a wide range of goods to 120,000 members.

REMARKABLE ACHIEVEMENT

The Mondragon achievement is truly remarkable. The people there are working both for themselves and for the common good - and they are managing to be economically very successful at the same time. So how did Mondragon become such a formidable success?

It all begain in 1941, two years after the end of the Spanish civil war, when Jose Maria Arizmendiarrieta, a 26 year-old, newly-ordained priest, arrived in the small town of Mondragon, some 25 miles south-east of Bilbao.

One of Don Jose Maria's first achievements was the founding of a trade school. Up until his arrival, the only technical school in the area was run by a major metalworking plant which only admitted sons of employees. In 1943, Don Jose Maria's trade school opened its doors to all. Once fully qualified, its students soon found jobs.

Twelve years later, in October 1955, with the priest's moral support, five trained men from his school opened a small workshop they called Talleres Ulgor, and began making oil stoves. Each man contributed £500 from his savings to get production off the ground, and became an owner as well as a worker. In April 1959, Ulgor was officially registered as a co-operative.

Today, Ulgor has 2,500 worker-members and is one of the biggest industrial co-operatives in Western Europe and one of Spain's major manufacturers of refrigerators, washing-machines and cookers.

Don Jose Maria drafted Ulgor's constitution, a model for the Contract of Association that would later be used for the entire co-operative group. Based on the principle of one man, one vote, the constitution also provided that the highest pay be no more than three times the lowest, which was pegged at the average of comparable firms in private industry.

Workers in the co-operatives modelled on Ulgor now elect their boards of directors for four-year terms. Each board is a cross-section of company personnel from top to bottom. They in turn elect the chief executive and monitor and question his decisions.

Decisions on safety, pay scales and social welfare are monitored by the Social Council, composed of one elected representative for every 15 or 20 workers. An elected council of auditors scrutinises company books on behalf of all personnel.

In all the co-operatives, workers are members, not employees, and pay a contribution to join the firm currently around £3,000. Instead of a salary, they receive a monthly advance on future shares in profits. In addition, a maximum of 70 per-cent of the firm's profits is divided among them and placed in individual capital-holding accounts to which fixed interest is added annually, and which they withdraw when they leave. Of the remaining 30 per cent, a minimum of 20 per cent goes into a collective reserve fund, and 10 per-cent subsidises civic and social co-operatives associated with the movement.

TREMENDOUS SUCCESS

Due to the tremendous success of those workers' co-ops, Mondragon is now a bustling town which serves as the centre of the co-operative group's support services. The polytechnic that evolved from Don Jose Maria's original trade school spreads across a large campus near the town centre. Its 1,200 students study for degrees as craftsmen, specialists and technical engineers; a proportion split their days between the classroom and practical on-the-job training. More than half the students join nearby co-operatives after they graduate. On a hillside just above the school, a modern research centre staffed by 60 engineers provides the industrial co-operatives with the latest technology. Nearby is the headquarters of the group's own social-security system, which operates alongside the state scheme and provides extra family allowances, medical services and sickness and widow's benefits, as well as paying at least 60 per-cent of final salary as a pension to be added to the state benefits.

All in all, the co-operative movement at Mondragon is one of the biggest industrial success stories in the world at the moment. Its success is important to the National Front because it proves that the NF's ideas for industrial ownership do actually work in practice, which is more than can be said for Marxism.