Co-operation can kick-start the Welsh economy

Derek Walker gives examples of communities within Wales that are developing by working together

The Wales Co-operative Centre recently hosted a stand at the International Co-operative Alliance international Expo in Manchester. This massive event showcased co-operatives of every shape and size – with over ten thousand co-operative members from 1,500 co-operatives and 45 countries attending. Welsh companies were well represented by dairy co-operative Calon Wen, contract packers Primepac, and renewable energy specialists Dulas. This wasn’t just a massive international trade event, it was a super-sized example of a key co-operative principle in action.

‘Co-operation amongst co-operatives’ is sometimes a secondary consideration when setting up new co-operatives. The priority is often to address a community issue, take over an existing company or to lever cost or purchasing advantages from working together. The Expo was set up to encourage co-operatives from across the world to share knowledge and expertise. More importantly, however, the aim was to encourage them to trade with each other.

Earlier this year, as part of the United Nations International Year of Co-operatives, I joined a delegation in a visit to the Mondragon Corporation  in the Basque region of Spain. The historic reason for the trip was to revisit the inspiration behind the creation of the Wales Co-operative Centre over 30 years ago. This time, as 30 years ago, a group of politicians and co-operative campaigners visited one of Spain’s strongest economic regions. As before, the visit occurred in the midst of difficult economic times, and, as before, the Mondragon area’s economy was outperforming the rest of the Spanish economy.

Why is the Mondragon Corporation doing so well during such difficult times? The answer is simple. It applies the co-operative principle internally to all its activities. It is one of the ten largest Spanish companies in terms of turnover, comprises 120 co-operatives, employs more than 83,000 members, has a turnover of €14 billion, has a bank and numerous research institutes, and has founded a university with some 3,600 students.

The corporation has a planning cycle which identifies sectors where new co-operatives can be established, based on the potential for job creation as well as the surpluses that can be made. Current priority sectors include ICT, new materials, health and food, renewable energy and care services for older people.

Co-operative businesses work together to develop these new businesses. As part of the deal of being a member of the Mondragon Corporation, businesses agree not to compete with one another and to contribute 10 per cent of their gross profits each year. This money is used to invest in new businesses. It’s that co-operative principle in action again – co-operation amongst co-operatives.

It has been acknowledged that the Mondragon approach cannot be lifted wholesale and applied to Wales. Mondragon is unique. But so is Wales. So could elements of the model be applied here but with a Welsh twist?

The Wales Co-operation Centre has just published a report on the benefits of community co-operatives – the fourth in our series of reports that examine the impact that the co-operative approach can have on the communities and economy of Wales. The reports have identified the benefits of worker co-operatives and employee ownership approaches, examined the gains that can be made from consortia approaches to business growth and valued the co-operative and mutual level.

Community co-operatives are broadly described as businesses which provide services to a particular neighbourhood, village or town, which have adopted co-operative principles and values and use them to guide their activities. The businesses are owned by and accountable to their members. Examples include village shops such as Siop y Bobl in Llanmadoc, Gower, which has not only safeguarded a valuable community resource but buys its produce and goods from local producers or suppliers, helping to keep them in business and retaining income in the area.

In Wrexham, Saith Seren is a group of “ordinary people doing extraordinary things” to quote its Chair, Marc Jones in a rescued pub formerly known as the Seven Stars. Today the pub is more than just a community watering hole. It is a performance venue, a learning centre for the Welsh language and a community hub.

4CG in Ceredigion has already bought three shops, two warehouses and car parks, as well as two offices and a house in the Pwllhai area of Cardigan. The sites have been redeveloped to create a range of community facilities including a children’s centre, market and low-cost car parks.  The co-operative is currently raising money to buy an old police station and court house to convert to community offices and possibly a hostel. It is aiming to raise £250,000 through community shares and has managed to raise £220,000 in just one month from the initial offer. The potential economic benefits for this area of Cardigan are obvious. As this co-operative develops and grows it will build supplier and purchasing relationships with local businesses, spreading the benefits out into the community and the local economy.

The opportunities for the Welsh economy are obvious. Wales is dependant on micro-businesses and individual entrepreneurship but it also has a thriving co-operative sector and a thriving social enterprise sector. We can take some of the lessons learned from Mondragon and the principles advocated by the co-operative movement and use them to support and stimulate indigenous growth in Wales. Sole traders, micro-businesses, community co-operatives, worker co-operatives and social enterprises should endeavour to inter-trade with each other, support each other, swap knowledge and experience and grow together. At the Wales Co-operative Centre we work with co-operatives, social enterprises and small businesses to encourage them to work together and make a real impact in their local communities and economies and to use that stimulus to grow further.

One of the key messages we have been promoting this year is that businesses that work together grow together. Maybe that should be expanded. Local economies that work together can grow together. And thrive together.

Derek Walker is Chief Executive of the Wales Co-operative Centre. The IWA report to which he contributed, Leading the Dragon – lessons from the Basque Mondragon co-operative, is available here

One thought on “Co-operation can kick-start the Welsh economy

  1. Co-operative businesses can work well if they can foster and maintain the right culture and ethos. Not all succeed in doing so. But surely a business has either to be a workers’ co-operative or a customers’ mutual. This article seems to be talking about both forms of co-operation but I don’t think you can be both at once. One interest has to be in charge otherwise there is confusion in a well-meaning but unfocused fudge, which comes all too naturally to us in Wales. Workers’ co-ops work fine in a competitive market (like John Lewis) but you don’t want them providing a monopoly service. That is where the customer mutual is needed. Glas Cymru works a bit like one of those although it is not technically a mutual.

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