Inter-Cooperation Mechanisms in Mondragon: Managing the Crisis of Fagor ElectrodomÉsticos

The closure of Fagor Electrodomésticos in October 2013, the most iconic cooperative in the Mondragon Group, not only cast doubt on the economic and social management of the cooperative itself but also called into question the very viability of the overall cooperative model. In addition to describing the evolution of this cooperative in its last years in business, this chapter offers a comprehensive review of the mechanisms of inter-cooperation in the Mondragon Group and the way in which they were applied in the crisis at Fagor Electrodomésticos. The methodology applied is a qualitative research methodology mainly based on semi-structured interviews. The main conclusion of the chapter is that the closure of the cooperative was largely caused by market conditions. The chapter also highlights the validity of the mechanisms of inter-cooperation applied in managing employment which contributed to a rapid resumption of the employment situation of surplus personnel from Fagor Electrodomésticos. The main contribution of this chapter comprises a detailed description of the methods used by the Mondragon Group to manage employment adjustment at the time of closure of its largest industrial cooperative during the recent general economic crisis (2008–2014), and thus avoid large-scale unemployment, its concommitant problems, and deeper deterioration of social capital in the Mondragon area. Further research is needed to compare this process with other international experiences based on cooperation.