Surrounded by jagged snow-capped peaks year-round, the Stubai Valley in the Austrian Alps is known for skiing, hiking—and steel manufacturing. Starting in the 14th century, iron ore deposits were mined here, sparking the valley’s nascent iron production and manufacturing industry. Now, the valley, which has a population of just 14,000, processes several thousand tons of steel annually and creates a product range of 5,000 different items that are exported throughout the United States and Europe.

The Stubai Valley’s success in the global metal processing sector is entwined with the creation and growth of the Stubai Co-operative. A group of local metal craftsmen formed the co-operative in 1897 out of their frustrations with business practices at the time, especially the stipulation that they were only allowed to sell their metal products to a sole trading house. To improve their lot, the co-op’s member craftsmen set up a joint factory in 1900, enabling the use of machines that would have been too expensive for each to purchase individually.

Now, the Stubai Co-operative employs 400 and has a subsidiary with an additional 120 employees, —yet its number of member enterprises remains approximately the same at 24, since membership is restricted to enterprises located within the Stubai Valley.

The co-op’s growth has relied on the benefits of economies of scale, including the purchase of raw materials as a co-op instead of by individual member enterprises. Growth has also depended on the diversity of its extensive range of metal products (from plumbing tools to mountaineering equipment), and rules that nip competitiveness among member enterprises. Each member enterprise, for instance, specializes in the manufacture of specific products, and no more than one member enterprise manufactures the same product.

It is rules such as these that have enabled what once would have been small, disparate manufacturers to grow together and compete as a sole, unified brand on the global market.

This story was made possible through research carried out by Elisabeth Rainer published as:

Reiner E. (2012), The Stubai Co-operative: Using Local Roots for Global Competitiveness, Euricse Working Paper, N.028 | 12