A recent comment in Bicycling magazine caught the attention of your author. To paraphrase, perhaps unjustly, the essential thesis was that bicycle buyers are not swayed by brand image but are instead focused on the frame build and components that can be obtained at various price points. Forget whether a bike is a Giant, Specialized, Trek, Colnago, or Sachs – it’s all about the specs.
It was perhaps a throwaway comment, a general observation that what a frame has on it matters as much as, if not more, than the label that adorns the downtube. Which may well be roughly correct: a consumer faced by a 105-ed Giant for the same price as a Ultegra-ed Specialized would probably chose the latter (although the price points seem to be mostly the same these days for many mainstream brands) and be unphased by minute differences in the frame.
The comment, though, did prompt some thinking about the importance of the brand in cycling. In fact, your author would go so far as to suggest that the brand of a bike plays a very important role when the buyer makes his or her decision. That this thesis is true is essentially the assumption of every manufacturer that sponsors a pro team; the company wants fans of the team to bask in the collective glory of the team by riding the same brand of bike. Witness, for example, the ‘I am Specialized’ campaign with Quick-Step’s Bettini and Boonen – that’s powerful advertising stuff!
In today’s increasingly fraught cycling world, team identification carries connotations. Think of all the CSC jerseys that can be seen on the roads, but the curious fall in the currency of the Phonak jersey after 2006. Turn up to a local crit in a Rock Racing jersey and some folks will take exception and deliberately chase such a rider down to prevent them winning the prime (le grimpeur does not condone this behaviour, bien sur). How many LeMond riders now have their steeds on ebay, or how many Trek riders are now wishing that they could say, “Actually I’m supporting a local team that rides Treks”?
These are not always questions for bike buyers to face, given that manufacturers may support many different teams at different pro levels. But a buyer may well feel that their choice reflects a certain image choice, such as identifying with Italy’s cycling heritage, confessing a support for the great Eddy Merckx, favouring the design power of a multinational manufacturer, or supporting a small artisan builder.
This should be no surprise, as we make many consumer choices – phones, computers, cars – based on these very image choices. With very little to differentiate many consumer goods these days, what our choice says about us to others is definitely a consideration, and one that advertisers prey on. With bikes, though, there can be some very real differences at certain price points, in frame design and construction, wheelset, components, and the many small aspects of bike design that enthusiasts love to fuss over. But the image choice is definitely a factor. Question: are some brands actually noticeably better than their competitors for the average rider, or do they just win more races at the hands of professionals?
Image choice, or perhaps a political choice, informed the decision made for your author’s ride; it was not the sole factor, but it was certainly a consideration. Now, I can certainly not claim to have the most high-end option available to buyers, but a choice seemingly commensurate with my riding ability. However, I am proud to have a bike made by the Spanish company Orbea. And that pride comes from a combination of factors elucidated below.
Mondragón Corporación Cooperativa
Orbea is one of some 250 companies that belong to the Mondragón Cooperative Corporation (MCC), which takes its name from the Basque town in Spain in which it was conceived. The MCC had, in 2007, total revenues of over 16 billion euros and employed over 100,000 workers. Despite its size, and organizational complexity, it retains the essential characteristics that guided its inception: it is owned by its workers, and half of the 250 companies in the MCC are cooperatives.
The growth of the MCC traces its history back to one Don José Maria Arizmendiarreta (often Arizmendi), a priest in Mondragón following the Spanish Civil War. Alongside his religious duties, Arizmendi was somewhat of a social activist and was active in establishing a technical school funded by the town as well as setting up a local soccer team (not a cycling team, sadly).
He saw work as a means of self-realization, that there should be dignity in work, and that there should also be collective solidarity. Such sentiments earned him the title of ‘the red priest’.
Mondragón in the 1950s was dominated, as far as industry went, by the metal working and foundry company Union Cerrajera. While the company provided welcome employment, labour relations were tense, and living under Franco’s dictatorship did not help either.
Cooperatives were not new in the Basque country, typically traced back to the late 1800s and early 1900s and building on the tradition of cooperative labour in the countryside and also the local guilds of craftsmen. An important early forerunner was Alfa, a cooperative that made firearms and supported 1,000 families prior to the start of the Civil War.
Arizmendi wanted to take the idea further, to have a cooperative owned by workers and remove the stratification between management and workers in private companies. He ideas came to fruition in 1956 with the formation of Ulgor, making household appliances, which took its name from the five surnames of its founders – workers educated at the local school: Luis Usatorre, Jesús Larranga, Alfonso Gorronogoitia, José Maria Ormaechea, and Javier Ortubay (who supplied the ‘r’).
The basic idea of the cooperative was that the company would be run by a general assembly, of which all workers would be members (which would later be representatives of the workers as they became more numerous). Workers had no shares in the traditional sense, but capital accounts which would hold the profits of the company. Workers would not have access to these accounts, which were an important source of capital for company growth, but would be paid interest on the amounts twice yearly. The company would also give 10% of its profits to community welfare.
Ulgor grew in size as other cooperatives formed to supply it with parts, or started other businesses on the same model. In 1966, five cooperatives, Ulgor, Arrasate (machine tools), Copreci (gas stoves and heater parts), Ederlan (a metal foundry), and Fagor Electrotecnica (electronics) combined to form a larger unti, ULARCO. After this the cooperative bank for the group, the Caja Laboral Popular, was also formed. By 1974, ULARCO had 3,500 workers.
There were further changes, with all household products marketed under the FAGOR brand from 1985. By this time there were 12 companies in the group (including Eroski, the supermarket cooperative started in 1969), with 21,000 workers. Expansion continued steeply from that point, with industrial sales climbing from 800 million euros in 1987 to 7.4 billion euros in 2007.
The organizational structure has become more complex, split in 1991 into the industrial, financial, and distribution sectors, but the basic idea of the cooperative remains. “The individual cooperatives constitute the basic level of the MCC’s organizational structure, with the General Assembly acting as the supreme body for the expression of the will of the members and the sovereignty of the cooperative and the Governing Council acting as the ultimate body for management and representation, being responsible for appointing the Managing Director,” according to the MCC.
The basic principles of the MCC, based on the Ulgor and ULARCO experience, where enshrined in 1987: open admission, democratic organization, the sovereignty of labour, instrumental and subordinate nature of capital, participatory management, payment solidarity, inter-cooperation, social transformation, universality, and education.
Workers retain ownership roles, so there are no unions. “Some of the typical functions of trade unions, such as those linked to the company’s social policy, the supervision of working conditions and ensuring that the workforce is properly informed, etc. are carried out in our co-operatives by the Social Council, an internal body which is elected democratically by the General Assembly,” says the MCC.
Despite these principles, there have been challenges to the cooperative ideal, as one might expect from a large industrial enterprise with substantial revenues, thousands of workers, and the challenges of an open European market and a global economy. One example is the principle of ‘payment solidarity’. This originally meant that there was little differentiation between the wages of the lowest worker and the highest executive, for many years at 1:3. One might immediately draw the comparison between this ratio and the ratio enjoyed by the chief executives of US automakers, which are currently facing bailout or bankruptcy. In recent years, with no doubt some controversy, executive pay rates have been adjusted to market levels, but with a 30% reduction to cover the principle of solidarity.
But the basic idea of the cooperative remains. “The Corporation does not own the cooperatives. Rather, it is the cooperatives themselves, along with the various complementary structures, that make up the Mondragón Corporación Cooperativa,” according to the MCC, with all the principles in play as noted above.
The cycling connection
Sharp-eyed readers will have already spotted the cycling connection of the MCC. Companies such as Fagor were involved early in international cycling sponsorship, with Mercier-Hutchison from 1970 and then the Fagor team under Stephen Roche in 1988. Eroski has also been a sponsor, perhaps most notably as part of the ONCE-Eroski partnership.
The main cycling connection currently is Orbea, bike sponsor for the Euskaltel-Euskadi pro team. Orbea traces its origins back to 1847, according to the company, to the Orbea brothers who made steel tubing and later, apparently, firearms. In 1930, the company turned solely to making bicycles, “a natural progression given that cycling is an integral part of the lives of the Basque people”, according to Orbea. It reorganized as a cooperative in 1960, inspired by the Ulgor model, and was an early member (sources seem to differ on the exact date) of the growing number of cooperatives that would make up the MCC.
Recent figures say that Orbea has a total workforce of over270 people and annually manufactures about 200,000 bicycles. In 2005, Orbea posted a turnover of 48.5 million euros, of which 62% came from sales abroad. Its presence overseas has been boosted and North American sales – no doubt boosted by team sponsorship – and the company expects the US to take nearly a third of its total sales. It has its own assembly plant in Little Rock (Arkansas), where 30 people work in a 3,000 m2 factory, and a factory in China has been mentioned. Many frames, like the author’s, are still built in Spain.
In Spain, Orbea supplies bikes not only to Euskaltel-Euskadi but also to the feeder team Orbea-Oreka. Former pro racer Alvaro González de Galdeano is the director of the latter and is also the brother of the director of the former, Igor González de Galdeano. It’s one big Basque family!
Euskaltel-Euskadi has its own community connections. Euskaltel, the telephone company owned by the Basque regional government and local public banks, is the main sponsor. The Fundacion Euskadi provides the other half of the budget, which comes entirely from over 2,400 Basque cycling fans and various local companies. The team is essentially a regional team supported by the Basque community.
To maintain community support, to give back to its supporters, and to perhaps find the stars of the future, the team supports local schools by teaching cycling skills to kids from age seven, funds a mountainbike school, supports up to a dozen local junior riders with pro-level facilities, and also has agreements with several Spanish amateur teams (as well as its own feeder team) to give up-and-coming amateurs opportunities to progress their careers.
One only needs to witness the feverish support of Basque fans at races that pass through their countryside and cities to see how their passion sustains local cycling, as well as the loyalty that having their own cycling team can engender.
A cooperative future?
The MCC is very careful in answering the question as to whether its cooperative system is an alternative to capitalist methods of ownership and production.
“We have no pretensions in this area,” it says on its website. “We simply believe that we have developed a way of making companies more human and participatory. It is an approach that, furthermore, fits in well with the latest and most advanced management models, which tend to place more value on workers themselves as the principal asset and source of competitive advantage of modern companies.”
In support of its case, the MCC points to studies showing higher per capita income, lower unemployment, and a ‘fairer’ distribution of wealth in the region in which it operates. Its cooperative model has been subject to numerous studies, and the growth of the network has had many controversies as the sheer scale of its endeavours has increased. Debates over its successes and failures, and possibly its compromises from its ideals, will be ongoing.
Orbea is at the tip of the cooperative iceberg, which represents an alternative business model to unfettered capitalism. The company also contributes to the community of Basque cycling, to regional passion for the sport, and to its future development. These seem like values worth supporting.
That’s not to say that Orbea is any better than any other cycling company, a debate beyond the scope of this overview. But the company has an identity based on specific principles. Like any consumer choice, buyers are free to reach their own conclusions whether or not such factors are important, just as others will draw their own conclusions about a fellow rider’s choice of ride, jersey, or product association.
Still, when I swing my leg over my bike I am thinking about the principles associated with its inception and I’m happy to be associated with its identity. Plus, I really like orange.