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Worker cooperatives are not a new idea but then ideas don’t need to be new to be revolutionary. With many companies tiptoeing out of Australia in favour of cheaper, offshore facilities, it’s worth examining the models that work to keep local manufacturers profitable.

Perhaps most famous (and most relevant) of these is the Mondragon worker collective model.

Mondragon: a model for manufacturing efficiency

While it sounds like a character from Lord of the Rings, there’s nothing mythical about Mondragon. The juggernaut of a company is the tenth-largest in Spain and number one in the Basque region. At last count, the business had 74,117 workers and 257 organisations under its umbrella.

The company took its name from the Basque County town it resides in: Mondragoe. In the forties and fifties, Mondragoe was still recovering from the Spanish civil war and its residents were struggling. A priest endowed with a name one letter short of matching the length of the alphabet—José María Arizmendiarrieta—settled in the town and, after residing there for a short while, had a vision.

Of all the things you’d expect a priest to have a vision about, manufacturing probably wouldn’t be high on the list. But the priest was not given to flights of fancy. His vision bore no angels, demons or otherworldly denizens. What he saw was his region in the future. He saw a population that would always be poor unless they began to build a manufacturing economy. And he saw the first step to prosperity was to build a polytechnic school. So that’s exactly what he did.

Now, decades later and businesses across the world have slowly been adopting the Mondragon model. There’s a killer brewing company in Austin Texas.

blackstar beer

Image Credit: Blackstar Brewery

Black Star Brewery

Image Credit: Blackstar Brewery

And a polytechnic school in a different Austin—one of Chicago’s poorest neighbourhoods—which is entirely modeled after Mondragon.

Education and cooperative manufacturing

Dan Swinney, founder of the polytechnic school (which is now part of the Austin College and Career Academy) explains the key elements to reviving the manufacturing industry are:

  • A cooperative approach to business structures;
  • An educational system that encourages people into manufacturing and provides multiple pathways and opportunities.

For the Mondragoe priest (José María Arizmendiarrieta), combining these two approaches meant teaching the young people of the town about welding, machining, engineering, and math, while also infusing social values into their education. So the purpose of the company was not to just make somebody rich. The purpose of the company was to build the community. And the role of work was to make people stronger and healthier mentally and physically.

Dan Swinney—who is like a modern day José María Arizmendiarrieta but with a much more pronounceable name—is doing the same thing in Chicago. The unified approach allows you to rebuild the industry to take care of present day requirements while simultaneously putting in place the education and systems to make it endlessly viable for the future.

Dan speaks glowingly of the priest he modeled his school after:

“He took his first five students, and they bought a manufacturing company and organised it as a cooperative. Every worker had a vote so it was the employees who made the decisions that directed the company. And the highest paid didn’t make more than three times the lowest paid.”

This egalitarian approach meant they poured most of their revenue back into innovation, new technologies and development. The company was so successful they soon started another company and then another; which is how they’ve come to have 237 organisations under their belt (and counting).

“It’s a real model of how you can use manufacturing to build a community and build a regional economy. It’s a sophisticated example of ground-up ownership. You provide people with meaningful work, they’re more focussed on what they’re putting in. It’s more than just a job.”

Giving employees ownership of and power over the company, as a collective, creates a positive cycle of contribution, collaboration and development. If you own the company, and you work in the company, you’re going to make sure its safe. You’ll know what needs to be improved, where investment should go. You aren’t going to risk your community. It changes the whole employment dynamic, creating a positive alternative to what has, in many instances, been destructive.

Putting the Mondragon model into practice

Along with his polytechnic school program, Dan operates a non-profit organisationManufactring Renaissancewhich advises struggling companies on how they can recover. Through this initiative, he has been able to show others the benefits of the Mondragon model and has seen it successfully implemented across the globe.

“I ran across a small, full service printing company that employed about 25 people. The owner had throat cancer, and wanted to sell the company, had no one in his family to buy it. I asked him if he’d ever considered selling to his employees.”

The business owner’s first response was a startled ‘no’. The idea was far from the structure he was used to of keeping businesses within the family. However, Dan was able to explain this was the same concept, just with a broader and more inclusive definition of ‘family’. The owner agreed to let Dan field the idea with his employees. As you probably guessed, the workers were all for it so Dan took them through the whole process.

“I was able to raise money from the city of Chicago and we did a study that determined it was a very healthy business, worth about $250,000. We made an offer to the owner, and the workers bought the company.”

This is just one example of a successful approach to saving a company that would have otherwise closed. And the global list of worker cooperatives is increasing every year. They certainly make a strong case for adopting a cooperative structure within Aussie manufacturing operations.

Worker Cooperatives: A Solution to the Manufacturing Crisis?
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Worker Cooperatives: A Solution to the Manufacturing Crisis?
Experts in the manufacturing industry weigh in on the case for adopting a cooperative structure within Aussie manufacturing operations.
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