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  La Fageda: Social Integration Through Manufacturing 

Segarra, Montse; Ochoa, I.; Segarra, José Antonio
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In 1982, a team headed by psychologist Cristóbal Colón founded La Fageda cooperative. The aim was to overcome the social integration problems of mentally disabled people living in a particular part of Catalonia, Spain.

After working for a number of years in the field of clinical psychiatry, Colón came to realize that work was the key to achieving integration. Right from the start, however, it was clear to him that the answer did not lie in handicraft projects aimed at entertaining patients within the confines of hospitals or care-oriented workshops. People needed to be given real work: paid jobs that were meaningful and involved making products recognized by the market.

The only way to accomplish this, he believed, was to set up a real company, with real processes and products, and compete freely in the open market – a social project with exacting commercial structures, where workers would feel involved and be the true owners of the enterprise.

So intrigued were they by La Fageda’s unique commercial approach that research assistants Ignacio Ochoa and Montse Segarra, together with IESE Prof. José A. Segarra, decided to study the project in depth and make it the subject of this new case.

A Unique Commercial Approach
Initially a number of projects were organized – assembly work, nurseries for reforestation, milk production – but by 1993, the project organizers had experienced a series of setbacks. Demoralized by the limit defined by the quota on milk sales and by falling prices, they decided to reorient the business to focus on producing dairy products.

Perishable products required a finely tuned logistical system, and moving into this realm would be a huge leap into the dark. Besides, the dairy market was already dominated by Danone and Nestlé. This fledgling co-op taking on these market giants evoked the story of David and Goliath.

Sourcing milk from their own cows enabled La Fageda to exercise greater control over raw material from the point of origin. In the words of the organization’s founder, “The big multinationals have everything – except they don’t have a single cow. And it just so happens that cows are one of the few things La Fageda has.”

They also had integrated industrial processes and comprehensive quality control. This led to the introduction on the market of a yogurt that was less acidic and creamier, with more flavor and free of additives. The results showed that there was a segment of the population prepared to pay significantly higher prices for “farm-style yogurt.”

By mid-2008, there were 15 products on the market. These included low-fat yogurts, flavored yogurts and other dairy-based dessert products such as crème caramel and custards, as well as the first natural yogurt.

La Fageda products are sold at prices 40 percent higher than those of competing products. In a market that is saturated and experiencing only natural growth, their sales are increasing by between 15 percent and 20 percent a year.

At first, they distributed their products through institutional channels such as hospitals. Then they moved to the general food market. By 2008, La Fageda had the Catalan market covered: its products were available in 1,200 direct sales outlets, and in a further 400 outlets through other distribution platforms.

Their corporate communications focuses on public relations and guided tours of their facilities, which receive 30,000 visits each year. The cooperative rejects social marketing because it contradicts its principle of never exploiting disability.

As Colón explains, “Since social action can never be the focus of our communications, and we can’t afford the kind of expensive advertising campaigns used by our competitors, we have to make ourselves known through public relations and by inviting people to visit our facilities in the natural park, so they can see for themselves how we put into practice a production philosophy based on authenticity.”

Special Organizational Structure
Commercial and care activities coexist at La Fageda. The former must be carried out in accordance with the labor arrangements established for employment centers involving people with special needs, while the latter must comply with the guidelines that apply to occupational centers. The project needed a clear organizational structure to be able to effectively handle both types of activities.

Thus, the company was structured around three legal entities:

  • La Fageda SCCL. The institutional mission of the cooperative is to create jobs for people who are mentally disabled or have mental illness, and to construct a shared project in which all participants play an active role.
  • Fundación SAG. A foundation created in 1997 with the aim of separating care activities from those of a commercial nature. The foundation manages a number of services: occupational therapy provided at the premises of La Fageda, an assisted-living service in Olot and a community integration service.
  • Fundación Sentit. The growth of the cooperative led to a progressive increase in the size of the professional staff. In order to be classified as a special-needs employment center and benefit from the advantages that such centers enjoy, at least 70 percent of positions had to be held by people with disabilities. By 2004, there was a danger of this legal requirement not being met, due to the increased number of professional employees. The solution was to integrate the services that were common to all of the structures – financial department, sales, human resources, communications and production – into a single entity. The management structure was created by recruiting professionals interested in pursuing a new career direction.

Is Further Growth Necessary?
The numerous opportunities for growth included new products, a stronger presence in sales outlets, more capillary distribution, expansion of the distribution channel and the scaling-up of production with a second shift.

La Fageda had put the necessary business structures in place to support expansion. But was further growth a sensible move that would reflect the cooperative’s principles? Was it necessary to achieve La Fageda’s social mission?

Despite the commercial success, according to the cooperative’s founder, “La Fageda still needs to be put on a firm footing. The contradiction between the business and social aspects of the project, which has been inherent from the start, means we need to be cautious.”

The social project had been possible thanks to the success of the business project. As Colón saw it, growth needed to be approached with solid structures in place with respect to governance, the legal status of the business, internal culture and the brand.

For Colón, this raises the next question: “As long as we were managing poverty, the only issue it was possible to discuss was survival. Now the question is, will we be able to manage wealth and growth without endangering our commitment to our users and customers?”

This article is based on:  La Fageda 1982-2008: historia de una locura
Year:  2009
Language:  Spanish