Friday, September 16, 2011
"It should help promoters plan their projects and then find outside investor-partners in return for a share of each project’s income rather than its profits. This is essentially how the Mondragon co-ops’ bank used to work," Kjellberg says.
"Imagine yourself as a bank manager in a small community 50 years ago. Your friends and neighbours have their current and savings accounts with you and when they need to borrow they come to tell you about their ideas. You know most of the locals and it is not difficult for you to tell whether a proposal is going to work. Your decision is based not only on the idea’s potential commercial viability but also on the individual’s personal ability, skill and support network.
"But times have changed. Bank managers in small communities do not have the authority to give bigger loans any more. Instead, the bank that owns the branch channels the community’s savings into what it believes to be the most profitable segments of a near-global capital market. It will only lend to the people in the community if it can get a safe mortgage charge over their houses but, even here, the bursting of the housing bubble has made the bank wary about their ability to repay," Kjellberg continues.
Kjellberg proposes that we go back to the future to the way the Mondragon cooperatives began.
"The institutions I envisage would work in much the same way as did the bank at the heart of the Mondragon co-operatives in the 1960s," he says.
"There, if a group wanted to start their own business as a workers’ co-operative, one of the group would join the bank staff, on normal pay, to work on the business plan with a ‘godfather’ — someone who specialised in helping new businesses start up.
"Then, when the godfather judged that the plan and the group were ready, he (they were all men in those days) put the project to the bank board and funding would be approved. The godfather then helped the new business establish itself.
"The money the group received from the bank was nominally a loan, so the business knew how much it was expected to pay its partner each year; but in reality the risk was shared and the bank’s agent, the godfather, and the members of the group were equally committed to the project’s success. No projects failed under this arrangement.
"In its modern form, the institution we need could be a mixture of a (non-debt) savings bank and a meeting place for all the savers and entrepreneurs in a community. Instead of being a “credit union” it could be called an “investment union” (IU) to emphasise its co-operative character," Kjellberg proposes.
"The job of those running the IU would be to help an entrepreneur develop his or her idea, until the IU had sufficient confidence in it, and in the people involved, to be able to recommend that savers put up the required capital in exchange for a specific share of the project’s income. The IU would be paid for its efforts by taking a share of the income itself, as would the entrepreneurs. This would ensure that all the partners were fully committed to the project’s success.
"Once the project was running, the IU would make a market in the shares and, while savers would be allowed to sell whenever they wished, the IU and the entrepreneurs would only be allowed to reduce their holdings with the consent of everyone else involved.
"Some investment unions could be purely local and deal with a wide variety of projects. Others could be more specialised and work over a wider area. For example, they might confine themselves to energy projects and build up a lot of technical expertise. Some might be akin to unit trusts, so that every member had a stake in everything. Others might allow savers to decide on their investment portfolio themselves.
"Whatever form they took, investment unions would need to perform their social financial process continuously — because a continuous flow of saved money is required to help entrepreneurs finance their continuous stream of projects," Kjellberg says.
The Mondragon bank – an old model for a new type of finance (Fleeing Vesuvius)
Monday, September 12, 2011
The UN General Assembly Resolution A/RES/64/136 encourages all member States, the United Nations and all relevant stakeholders to take advantage of the IYC to promote cooperatives and raise awareness of their contribution to social and economic development and promote the formation and growth of cooperatives.
Goals for the International Year of Cooperatives are:
- To increase public awareness about cooperatives and their contributions to socio-economic development and the achievement of the Millennium Development Goals.
- To promote the formation and growth of cooperatives
- To encourage Governments to establish policies, laws and regulations conducive to the formation, growth and stability of cooperatives.
According to the UN, the International Year of Co-operatives, or IYC, "celebrates a different way of doing business, one focused on human need not human greed, where the members (who own and govern the business) collectively enjoy the benefits instead of all profits going just to shareholders".
"Having an International Year of Co-operatives provides an opportunity to captivate the attention of national governments, the business community and, most importantly, the general public on the advantages provided by the co-operative model," the UN says.
Official United Nations website for International Year of Cooperatives
UN General Assembly Resolution A/RES/64/136 - Proclamation of 2012 as International Year of Cooperatives
UN General Assembly Resolution A/RES/65/184 - Mechanisms for IYC
Wednesday, September 7, 2011
The new company resulting from this alliance, “Cikautxo Taurus Flexibles Pvt. Ltd.”, will be dedicated to the production of tubes for the Automotive market, a Mondragon statement says.
The company at present employs 200 people and has a sales forecast of of 9.5 million euros for the fiscal year ending March 2012.
This joint venture is a part of the globalization process which the cooperative is undergoing in order to meet the requirements of the key players in automotive manufacturing, who aim to set up a panel of suppliers able to offer global development and production. The new India plant will be the second Cikautxo facility in Asia, as this year production was commenced in China, in the plant located in the industrial park which MONDRAGON has in Kunshan, an area close to Shanghai.
Cikautxo, apart from its plants in the Basque Country and Aragón, also has production plants in Brazil, the Czech Republic, Slovakia, China and now India.
The Cikautxo Group, which develops and manufactures parts and groups in polymer materials for different applications, forecasts consolidated sales this year of 220 million euros, of which 85% will be from the Automotive market.
CIKAUTXO sets up a joint-venture in India (Mondragon)
CIKAUTXO starts production in China (Mondragon)