As the Dean of the Business School at Mondragon University explains , “Cooperatives are not isolated. They share suppliers, they share markets, and they share in the general economic climate.” Sales of home appliances like refrigerators and dishwashers fell by 75% in just three years. Fagor’s competitors in Europe were producing in low wage countries and importing those products to Europe. Over the past few years, the other cooperatives in the Mondragon network had pumped in over $300 million euros in emergency funds to try to keep Fagor Home Appliances afloat, but with the greater Spanish economy stagnating this was not enough. However, unlike what happened in the US when the home appliance industry moved to Mexico and beyond, Fagor workers are not thrown into the street with no options. Nearly all will find positions in other Mondragon cooperatives, some will take early retirement, and all are eligible for extended unemployment benefits.

We discussed the situation extensively with Mondragon leadership, worker/owners of several coops, and faculty at Mondragon University. Despite the extraordinary measures of assistance from other Mondragon coops, the bankruptcy at Fagor is causing real hardships. Worker owners will lose their investment in the company. Other companies in the region that have been suppliers to Fagor are losing their principal customer. And as Fagor members transition to other Mondragon coops, those coops will need to lay off probationary workers, those who had not yet become members but were expecting to do so.

Worker/owners across the Mondragon cooperatives are discussing the Fagor bankruptcy and how to avoid anything like this happening again. We talked with Alaitz, a second generation member of Fagor Automation [which is still going strong] one of whose sisters is a worker owner at Fagor Home Appliances. Alaitz has the last word in SHIFT CHANGE, where she talks with pride about the Mondragon Cooperatives and vows to keep working to make them stronger for her children. She said that she had been thinking about what she says in SHIFT CHANGE and about whether she would say the same thing again after what has happened. “Yes,” she said, “I certainly would.”

“We started with nothing, and everything we have achieved was because of our own hard work and dedication,” explains Jose Maria Ormaetxea, who was one of the five founding members of the Mondragon coops in 1956. Now these worker owned coops employ 85,000 people and had revenues of about 25 billion dollars in 2010.

We have to interrupt our reports on worker owned companies in the U.S., because we are now visiting the Mondragon coops in the Basque region of northern Spain. Our days are long and intense as we film in numerous factories, universities, research centers, the coop bank and social service agency. We’ve been given complete access to coop managers, regular workers and others in the region to report on what these remarkable cooperatives have achieved and the complex ways they work together to benefit their worker owners and the economy of the entire region.

People here are feeling the effects of the economic crisis, of course, but unemployment in the Basque country is half what it is in the rest of Spain. The cooperatives take a variety of measures to prevent layoffs of members. They can vote to reduce their own hours or pay, or workers may be transferred temporarily to other cooperatives that are not as affected by the downturn. These worker owned coops employ 85,000 people and had revenues of about 25 billion dollars in 2010.

This worker owned bike factory builds some of the finest bicycles in the world. The Orbea sponsored mountain bike team now holds the world and Olympic championships.

We look forward to sharing more stories, both from here and from North America, in the coming weeks, as we wrap up our Mondragon filming and begin editing the documentary, Shift Change. Stay tuned.

Sheep grazing in the hills of Spanish Basque Country

We recently returned from a research trip to the beautiful Basque Country in northern Spain where the Mondragon Corporation has its roots. While we won’t actually begin filming at the Mondragon factories until this fall, we had a wonderful time touring the area, making connections, and further honing our vision of the kinds of stories we want to feature in the film, Shift Change: Putting Democracy to Work.

Thoughts on our trip

Well, 9 hours of time zone change does take some adjustment….

We booked a rural guesthouse for lodging near Mondragon, and found ourselves in a lovely area of small farms, close to town. Like many areas that we saw, there were small farms on the hillsides, with towns and cities tucked into valleys, often with a huge factory on the outskirts, a source of employment for people of that town.

Many of the towns, like Mondragon, have a long history, and the central part of the town, the “casco viejo,” has a stone plaza and narrow walking streets. In the summer season especially after work, these central areas are full of people who are out visiting with neighbors and enjoying the offerings of local cafes and bars, often “pintxos”, snacks of incredible variety, and small glasses of beer or wine. Children run rampant. People seem relaxed.

On one such afternoon in Mondragon, we met some members of one of the Fagor Cooperatives, the oldest and largest of the Mondragon Cooperative Corporation. They shared some of their views, let us know that all were doing a re-training around cooperativism and the roots of the Mondragon system which was inspired by a Catholic priest, Jose Maria Arizmendiarrieta 55 years ago.

Basque country has a very long industrial history, and particularly around the town of Mondragon, we saw factories everywhere, factories that produce household appliances, auto parts, industrial machinery, etc. But in addition to that, many institutions are organized as coops, such as Mondragon University, a banking system, language training centers, social service agencies, research and development centers, and a major supermarket chain. Employees in the Mondragon coop system number around 85,000.

After a week or so in that part of Basque country, we traveled to the town of Gernika [commonly called Guernica]. This town is known from the Picasso painting “Guernica” of what was a devastating airstrike by German and Italian Nazi war planes during the Spanish civil war that leveled the city in 1937. It has been rebuilt, but retains a central plaza and walking streets.

Maier, a factory on the outskirts of Guernica affiliated with the Mondragon cooperatives, produces plastic auto parts and employs 1,000 residents. Passing by one afternoon we struck up a conversation with two men leaving the factory. They explained some of the benefits they saw of working in the cooperative. With the recent downturn in the economy, the coop members voted to reduce their own salaries rather than lay people off.

The economic downturn has had a major impact in Spain, where unemployment is 20%. This provoked massive demonstrations particularly in the Plaza Puerta del Sol in Madrid where thousands camped for weeks. We saw tents pitched in the plazas of Bilbao and Vitoria in Basque country, but unemployment is only at 8% there.

This visit was a great introduction to the beauty of Basque country, and the people who proudly speak the Basque language unrelated to any other in the world, [but fortunately for us, also Spanish]. We are eager to return in the fall to film for the segment of Shift Change about the Mondragon Cooperative Corporation to show the impact of an economy organized around cooperatives after several decades.