NORTH AMERICA'S LARGEST INDUSTRIAL UNION AND WORLD'S LARGEST COOPERATIVE JOIN FORCES

This is what history looks like. The United Steelworkers are breaking union tradition in moving workers from representation to ownership, and the world's largest cooperative is moving into an economically troubled U.S.

United Steelworkers - The United Steelworkers and Mondragon Internacional havew announced an agreement for collaboration in establishing Mondragon cooperatives in the manufacturing sector within the United States and Canada. The USW and Mondragon will work to establish manufacturing cooperatives that adapt collective bargaining principles to the Mondragon worker ownership model of "one worker, one vote."

"We see today's agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada," said USW International President Leo W. Gerard. "Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities."

Josu Ugarte, President of Mondragon Internacional added: "What we are announcing today 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."

Highlighting the differences between Employee Stock Ownership Plans and union co-ops, Gerard said, "We have lots of experience with ESOPs, but have found that it doesn't take long for the Wall Street types to push workers aside and take back control. We see Mondragon's cooperative model with 'one worker, one vote' ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street."

Mondragon - The Mondragon Corporation mission is to produce and sell goods and provide services and distribution using democratic methods in its organizational structure and distributing the assets generated for the benefit of its members and the community. Mondragoon was started in 1956 in the Basque town of Mondragon by a rural village priest.

Today, it has approximately 100,000 cooperative members in over 260 cooperative enterprises present in more than forty countries; In 2008, Mondragon Corporation reached annual sales of more than sixteen billion euros with its own cooperative university, cooperative bank, and cooperative social security mutual and is ranked as the top Basque business group, the seventh largest in Spain, and the world's largest industrial workers cooperative.

USW - USW is North America's largest industrial union representing 1.2 million active and retired members in a diverse range of industries.

Carl Davidson, Daily Kos - Cooperatives are numerous and widespread in the U.S. and come in many flavors. There are some 30,000 of them, creating some 2 million jobs, with $652 billion in revenues, $3 trillion in assets, and $133 billion in income. Some 90 million Americans are members of credit unions alone. Purchasing coops and public utility coops are especially popular in rural areas. There are housing coops in many large cities, as well as a wide variety of consumer coops, from supermarkets to health food stores. There are coops for machinery repair and other services, and lastly, worker coops for manufacturing. Worker coops are relatively small in number in the U. S, only about 500 of which exist in a larger universe of some 10,000 U.S. worker-owned firms known as ESOPS.

What's the difference between an ESOP and a worker cooperative?

There's a good deal of difference, having to do with the legal structure and control. In an ESOP, a portion of the companies stock, ranging from a large minority bloc to 100 percent of it, is owned by workers but held in a trust. Its value fluctuates with the stock market and workers can get dividends as they are paid, buy more stock, or "cash out" when they retire. If they do "cash out," they are hit with taxes on the closing amount, unless they roll it over into an IRA. By and large, ESOPs are financial instruments and do not automatically lead to worker control over the workplace or a role in shaping the firm's capital strategies. Managers are hired by the firm's board of directors, in turn connected to the trust.

Worker cooperatives, on the other hand, are directly owned and run by the workers, with each worker holding an equal share and one equal vote. But even that's the "pure form." Many worker cooperatives are defined more loosely as firms where a majority of the workers own a majority of the stock. This means there are coops that hire workers as wage labor who aren't owners, as well as worker coops where ownership shares, at least a minority portion of them, can be held by non-workers-and sometimes there's a combination of both.

The Mondragon Coops in the Basque region of Spain. . . started 50 years ago with a small technical school, credit union and a small workshop manufacturing kerosene stoves. MMC was initially organized by a Spanish priest, Father Arizmendi, and is now highly successful and widely studied around the world. With nearly 200 coop firms involving120,000 work-owners, MCC is now the leading edge of the Spanish economy, manufacturing everything from kitchen utensils to motor buses, as well as Eroski, a chain of supermarkets, and a coop-owned bank, university and social agencies.

Some of the first questions that come up about Mondragon, ESOPS and cooperatives in general are from the trade unions. Should unions get involved in ESOPs? Should members of worker cooperatives join unions?

These were the core questions in [a] workshop pulled together by staff and organizers of the United Steelworkers, along with Michael Peck, Mondragon's North American Delegate, headquartered in Washington, DC. Peck was also a representative of GAMESA, a Spanish manufacturer of state-of-the-art wind turbines that recently partnered with the USW in opening two plants in Pennsylvania by converting shutdown steel plants and hiring hundreds of workers to produce the new green energy turbines.

"Our economy has been hijacked by the Wall Street types," stated Steve Newman, a USW researcher introduced by Steffi Domike, a USW associate who chaired the session. He presented a series of graphs showing how investment in manufacturing had declined in favor of "financialization," with the country's resources going into speculation. He ended by noting that public stimulus funds were being spent abroad, rather than more productively at home. All this served to lead the unions to begin to think in broader terms about new allies and projects to fight finance capital-hence the USW openness to things like green jobs programs and the coop movement.

"I'm a union organizer," said Rob Witherell of the USW, kicking off the discussion. "That means I'm mainly about collective bargaining and getting a contract. But with a worker-owned cooperative, who bargains with whom?"

It was a provocative question. The short answer was that the workers bargained with their managers. Even if they elected the managers from among themselves every few years, it didn't mean they didn't have problems with them day-to-day, along with the need to nail down other policies and agreements in a contract. Other reasons given for coop workers to join unions included access to pension and health plans.

MCC's Peck pointed out that in Spain, the coops all had a social committee in each firm that dealt with many day-to-day issues as a trade union might, but the annual workers assemblies set income scales, with the current spread between the average worker and top management being about 4.5 to one. By contrast, in the U.S. the spread is about 400 to one. . .