Where workers run the show

By Will Parry

The United Steelworkers, the nation’s largest industrial union, has announced a potentially historic collaboration with the world’s largest worker-owned cooperative, Mondragon International, based in the Basque region of Spain.

The objective of the union is to bypass the greed of financial speculators and private capital and take the burning issue of job creation into its own hands.

The union has the world’s most experienced cooperative enterprise as its partner. The Mondragon Cooperative Corporation (MCC) has championed economic democracy and social entrepeneurship for more than 50 years.

Begun in 1956 in a small shop making kerosene stoves, MCC has been built into a network of some 260 cooperatives employing 100,000 worker-owners in 40 countries. Its products include high-tech machine tools, motor buses, household appliances, and a chain of supermarkets. Its annual sales exceed 15 billion Euros.

The Steelworkers are proceeding cautiously.

“We’ve made a commitment here,” said Rob Witherell of the union’s Organizing Department. “But for that reason, we want to make sure we get it right, even if it means starting slowly and on a modest scale.”

The union is seeking viable small businesses in appropriate sectors whose owners are interested in cashing out. At the same time, it is lining up financial institutions – credit unions and cooperative banks – with a focus on productive investment.

“It can get complicated,” Witherell said. “Not only do you have to fund the buyout, but you also have to figure out how to lend the workers the money to buy in, so they can repay it at a reasonable rate over a period of time and still make a decent living.”

Once the start-up problems are resolved and workers begin running an enterprise they own, the payoff is dramatic. The worker-owners cannot be fired. In regular assemblies, they hire and fire their managers, as well as set the general policies that govern the firm’s direction.

A worker-owner can “cash out” upon retirement, but his or her share cannot be sold. It is available only for purchase by a new worker-owner at the enterprise.

The workers also determine the income spread between the lowest-paid worker and the highest-paid manager. In the U.S. today, that ratio is 400 or more to one. In Mondragon cooperatives, the ratio currently averages about 4.5 to one.

The core Mondragon model starts with a school, a credit union, and a shop, all owned by the workers. These three basic components enable the cooperative to rely on its own resources for financing and training.

Mondragon principles are already being applied in Cleveland, a city hard hit by the current economic crisis. The Evergreen Cooperative Laundry, a worker-owned, industrial-size, thoroughly “green” operation, is up and running in the depressed Glenville neighborhood, where the median income is about $18,000.

The laundry is the first of ten major cooperative enterprises in the works in Cleveland. A second green, employee-owned enterprise – Ohio Cooperative Solar – opened last fall. It is undertaking large-scale installations of solar panels on the roofs of Cleveland’s largest non-profit health, education and municipal buildings. Its role in the city’s weatherization program ensures its worker-members year-round employment.

As the Steelworkers launch cooperative enterprises, they will insist that the Mondragon formula be modified in one respect: The worker-owners will be organized into the union, and the union will negotiate a collective bargaining agreement with the management team.

“What we are announcing,” said Josu Ugarte, president of Mondragon International, “represents a historic first – combining the world’s largest industrial worker cooperative with one of the world’s most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complementary visions can transform manufacturing practices in North America.”

Somebody has to check banker-capitalist greed. Somebody has to create living-wage union jobs. Somebody has to plant the flag of worker-controlled industry in U.S. soil.

Stay tuned. The Steelworkers are serious.