Mondragon Statement Regarding Future of Fagor Electrodomésticos

Date: Wednesday, October 30, 2013

According to the Corporation’s General Council, the proposal submitted by Fagor Electrodomésticos is not viable, and it has unanimously agreed the company no longer responds to market needs, and the financial resources it requests would not ensure its business future.

The Corporation has analysed the situation following the financial assistance given to Fagor Electrodomésticos in recent years both by the cooperatives themselves and through sundry corporate instruments, and it has considered that the feasibility plan submitted by Fagor Electrodomésticos is not viable.

The market. One of the key issues involves Fagor Electrodomésticos’ ability to compete on the global market and adapt to all the changes taking place in a sector featuring new competitors and new operating strategies. This is applicable to any company, regardless of its legal status.

The Corporation. This is an association of independent, self-managed cooperatives that have furnished themselves with a series of mutual support mechanisms. The Corporation protects the interests of all its member cooperatives, although the responsibility for their business management lies entirely with each one individually.
This means that the circumstances affecting Fagor Electrodomésticos have no bearing on the other cooperatives within the Corporation because it is not a business holding, but rather an association of independent, self-managing companies.

Support and solidarity.  In recent years, the Corporation has injected a total of 300 million euros into Fagor Electrodomésticos under the heading of inter-cooperative support and solidarity through its corporate instruments, contributions from all the other cooperatives and, last but not least, the more immediate solidarity of the cooperatives making up the Fagor Group.

Pledge made by the General Council

Furthermore, mindful of the impact this situation will have on the worker-members of Fagor Electrodomésticos and on its environment. MONDRAGON’s General Council pledges itself to the following:

• It shall continue to activate all the support mechanisms required to reduce to the furthest possible extent the impact on employment due to the circumstances of Fagor Electrodomésticos. These measures will range from reassignments to early retirements and the implementation of training schemes that will reinforce the employability of the worker-members of Fagor Electrodomésticos. All these actions will be coordinated, as indeed is already the case, by the Corporate Employment Office, which involves the personnel department at Fagor Electrodomésticos, the welfare company Lagun-Aro, EPSV, and the Corporation’s department of Corporate Management.
• The Corporation’s track record testifies to its ability to generate employment, and all the divisions integrated within it are currently maintaining that trajectory. The diversity of sectors and markets in which our cooperatives operate is an assurance that leads us to believe they will continue to launch new activities in the short-to-medium term, with a positive knock-on effect on job creation. The fact our businesses are competitive in their respective markets is good news for the absorption of any redundancies forthcoming at Fagor Electrodomésticos.
• It will intensify its business development. The General Council has already committed itself to drafting a working proposal that will use both ordinary and extraordinary channels for marshalling all the corporate agents linked to the development of new businesses.
• It undertakes to submit to the next Congress the projects that will provide the funding for these activities.
• It will cooperate with Fagor Electrodomésticos over the coming months with a view to safeguarding as many jobs as possible within those business units that are sustainable.

Corporate model

The MONDRAGON Corporation hereby reaffirms its commitment to the cooperative model. Within the context of a globalised market, the particular values of cooperativism (people come first, the sovereignty of labour over capital, participatory management and inter-cooperative solidarity) are now more than ever the keys to the management of the companies of the future, even though the economic scenario is challenging and posing difficulties for all kinds of business organisations. MONDRAGON therefore reaffirms its belief in the cooperative model and in the competitiveness of the bulk of its companies, with a successful business trajectory of proven efficacy in different sectors of the Basque, Spanish and Global economies.

As has been the norm over the Corporation’s nigh on 60 years of history, the cooperatives that form part of MONDRAGON will successfully negotiate this difficult situation on the back of business decisions made for adapting to the markets and through the use of all their instruments and mechanisms of mutual support.

MONDRAGON likewise wishes to manifest to society at large its steadfast commitment to the country from a position of fortitude and unity, as well as pledge itself to the transformation of the business fabric with a view to creating jobs of greater value added, as called for by today’s global scenario. Finally, following its assessment of the ramifications this decision may have and in full awareness of the strength of our management capability, the Corporation also wishes to send out a message of calm and reassurance.