Worker Co-op Model Migrates from Spain to Cleveland

The TakeAway: “The Cleveland Model” borrows from the highly successful Mondragón system of worker-owned cooperatives, adding sustainability practices.

On Monday we asked for your thoughts about what the sustainability movement in the US could do to address chronic unemployment and record levels of poverty.  CorpGov.net Editor James McRitchie contributed this idea:

Although perhaps mostly at the margins, the US might begin to build in more sustainability by encouraging worker co-ops or hybrid models involving significant worker ownership and participation in managing excess capacity resources.  Instead of shipping more jobs overseas, the development of cooperatives modeled after Italy’s Emilia Romagna and Spain’s Mondragón systems may provide an opportunity for laid-off workers to compete.  Such systems have been found to be significantly more productive based on the greater enterprise commitment of employees with a real stake in corporate success.

You don’t have to go to Italy or Spain to find examples of these kinds of initiatives, which are already taking root in “The Cleveland Model”, seeded five years ago with pledges from some of the city’s largest institutions to “buy local.” It’s also generated national  and international buzz from news outlets such as The Economist, The Nation, Time, and Al Jazeera English television.  In February, Bloomberg BusinessWeek’s John Tozzi described the efforts of the Greater University Circle Initiative, named after the 4-square mile area of low-income neighborhoods surrounding some of the anchor institutions, including the Cleveland Clinic, Case Western Reserve University, and University Hospitals.  They’re steering more of their $3 billion in spending to new worker-owned businesses.  Each business plans to hire 50 people, and will help finance still more startups by contributing at least 10 percent of pretax profits into a development fund providing low-interest, long-term financing.

Led by The Cleveland Foundation (the nation’s oldest community foundation), the collaborative Cleveland Model has started to close the wealth gap.  Its funding comes from the city of Cleveland, banks, and the Evergreen Development Fund—set up by the Cleveland Foundation and anchor institutions to underwrite the co-op businesses.  The Cleveland Model draws upon the experience of the Mondragón Corporation in the Basque Country of Spain, the world’s most successful large-scale cooperative effort.  It employs over 100,000 people in an integrated network of more than 120 high-tech, industrial, service, construction, financial, and other cooperatively owned businesses.

Mondragón is now the 7th largest business in Spain, so it isn’t “a small scale hippie mainstay,” according to Judith Schwartz in Time, but rather “it is huge, hard-nosed, business-wise, and successful.”  Last November, the United Steelworkers (USW) and Mondragón Internacional, S.A. announced a partnership framework for establishing manufacturing cooperatives in the US and Canada, integrating collective bargaining principles into the Mondragón worker ownership model of “one worker, one vote”.

Back in Cleveland, the Evergreen Cooperative Laundry opened last October in a LEED silver-certified building, one of 10 businesses envisioned to beta-test The Cleveland Model.  Another is Ohio Cooperative Solar (OCS), which performs large-scale solar panel installations on the roofs of Cleveland’s biggest nonprofit institutions. In April it hired its fourth weatherization and solar installation crew; OCS now has 14 employees and will continue to hire two or three new employees from Greater University Circle neighborhoods each month.

In May, The Cleveland Foundation appointed the University of Maryland’s Ted Howard to a two-year social justice fellowship to expand the Evergreen Cooperatives, while helping to replicate its principles and approach around the country in places like Detroit, southwest Wisconsin, Chicago, Baltimore, Atlanta, Youngstown and elsewhere.  The model can be scaled up or down to suit local circumstances.  Janet Redman, co-director of the Sustainable Energy and Economy Network at the Institute for Policy Studies (IPS) refers to these neighborhood-based initiatives as a means “for weathering economic, energy, and climate shocks—and creating a better quality of life in the process”.

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