Union Co-op Overview

In 2009, the USW announced its collaboration with Mondragon to develop unionized, worker-owned cooperative businesses (“union co-ops”) in the U.S. and Canada.

About Mondragon

The Mondragon Corporation is comprised of over 100 separate worker-owned cooperative businesses in industrial, retail, finance and knowledge sectors, and was established in 1956 in Mondragon, Spain with the formation of its first co-op, ULGOR, comprised of 5 worker-owners. With over €12 billion in annual revenue and 74,000 employees, Mondragon is now the largest worker-owned business in the world. Overall, only about half of the workers are also owners, although within its historical core industrial sectors, 84% of workers are owners.

What is a Union Co-op?

Union Co-ops are for-profit businesses that are owned and directed by workers, which utilize the collective bargaining process and are guided by the core principles of sustainability, solidarity, accountability, and community.

In 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) jointly released an initial template for the Union Co-op model, to provide a starting point and rough road map for others interested in developing Union Co-ops and to respond to some of the more frequently asked questions about our efforts.

Why are the USW and other Unions interested in Co-ops?

We are engaged with co-ops and worker-ownership for two general reasons, to help our current members and to organize new members.

For our current members, worker ownership has the potential to improve their jobs, improve their earning potential and to improve job security. Studies have shown worker-owned companies to be more productive and as owners, workers would have greater earning potential sharing in all of the profits. With the potential for greater rewards, however, comes some degree of added risk. Even in difficult circumstances, workers have more options as owners (and more incentive) to help the business survive and/or to sustain jobs. As a result, layoffs are rare and unemployment is low. To use Mondragon as an example, amid 26% to 27% unemployment throughout Spain, the Basque region, where Mondragon is headquartered and which has a high rate of worker ownership, has about half as much unemployment. The Basque region also has the lowest poverty levels in Spain, and the highest average income.

Worker ownership also provides a unique way for us to organize new members. Whether by helping workers to buy-out or to start-up a business, we get the opportunity to demonstrate the value of a having a union. In comparison to a traditional organizing campaign that has low success rates due to overwhelming employer opposition, worker-owners that already have some relationship with us are much less likely put up those types of barriers. Even when we win a traditional NLRB campaign, improving wages, benefits, and working conditions through collective bargaining can be a long and difficult road. In the context of a worker-owned business that journey is likely going to be much smoother and shorter.

Why do Co-ops need a Union?

Probably the most common question is “Why would a co-op need a union if the workers own the business and run it democratically?”.

The first part of the answer is co-ops are still very much like traditionally owned businesses, in that workers who have a union, benefit from gaining due process protections, a means of communicating their needs and concerns without fear of reprisal, and a stronger voice to improve compensation and working conditions through collective bargaining. Workers in a co-op may democratically elect a Manager and/or a Board of Directors, but their ability to influence and impact the day-to-day management of the business is too often limited. The bigger the co-op, the less “ownership” (meaning ownership as an experience, not just an account balance) a worker might have in the daily business. By integrating collective bargaining, the workers gain an additional avenue to exercise their “ownership” and to help keep management accountable to the worker-owners as workers. In other words, worker-owners elected a Board of Directors to advocate for their interests as owners, but also benefit by electing a Union bargaining committee to advocate for their interests as workers.

The second part of the answer is derived from the network and connectivity among co-ops that has made Mondragon resilient and successful. The connectivity of local unions into larger unions and larger unions into federations means that unions are able to network and pool resources to learn, build relationships, develop expertise, and pool resources that co-ops in the U.S. may be lacking. Whether that means access to a health and welfare fund, a pension fund, staff that have expertise in finance, connections to and relationships with potential investors, knowledge of and relationships within state and federal governments, knowledge of and relationships with thousands upon thousands of employers, or the ability to identify and understand best practices drawn from all of those relationships and connections, unions bring a lot to the table. In essence, unions can become co-op lead generators as well as co-op incubators, as well as a provider of benefits and services, lobbyist, and advisor.

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