Manos del Uruguay: Doughnut Design Case Study

01 | Brief Summary and Key Facts

A network of 12 rural, female-led workers’ cooperatives with a central office in Montevideo, Manos del Uruguay produces sustainable luxury wool yarns and clothing for domestic and export sale, including high-profile clients like Toast and Gabriela Hearst.

• Location: A central office in Montevideo, owned by 12 cooperatives spread throughout rural, inland areas of Uruguay 
• Founded: 1968
• Size: Between external providers, cooperative members, and central office and retail employees, Manos del Uruguay provides employment for around 300 people, and generates an average of $5-6 million annually.
• Sector: Sustainable luxury
• Legal form: The central office is a non-profit civil association owned by the 12 rural cooperatives. The cooperatives are independent, but most work exclusively for Manos del Uruguay. Representatives from the cooperatives make up the board of the central office.
• Website: www.manos.uy
• Main products/services: Manos del Uruguay produces wool garments and accessories. Cooperatives handle the production of garments, including spinning, dying and knitting wool. The central office handles product design, quality control, and logistics.

Highlight of their unique approach

Since 1968, generations of craftswomen in rural areas have worked in their cooperatives, enabling them to earn a living without needing to leave their hometowns. Their livelihoods are sustained through long-term commitment and support to the artisans. Manos del Uruguay practises Fair Trade terms across their entire business, including paying the artisans up front. Together, they produce very high quality garments.

Highlight of their unique design

Manos del Uruguay is a truly empowering worker-led business. The central office – a registered non-profit association – is employed and governed by a board made up of elected representatives from the 12 rural cooperatives. The central office’s CEO reports exclusively to the board and, by extension, to the cooperative assembly. An absence of external shareholders means that they reinvest all their profits in the business, making it resilient and beneficial to the craftswomen.

02 | Founding Story

Manos del Uruguay was established in 1968 by five wealthy women in Uruguay. Uruguay has a rich traditional wool industry, and their aim was to create job opportunities outside the home for women in rural areas, without the need for them to leave their hometowns. Cooperatives were set up in these rural areas for different phases of wool garment production – dying, weaving, knitting, and so on. The founders also set up a central office that operates as a non-profit to coordinate the business. Responsibilities of the central office include product design, logistics, sales, exports, quality control, and the supply of raw materials. The central office is, in legal terms, a non-profit association, and it is governed by a board made up exclusively of representatives from the cooperatives who are supported by volunteer advisors. Each cooperative has total autonomy, and is free to exit Manos del Uruguay, though this is unlikely given the opportunities that the network provides.

This model has remained in place from the outset, with the only real change being the number of cooperatives involved – there are currently 12. The founders were originally members of the board, but stepped down into advisory roles around 30 years ago. They have since all passed away, though a family member of one of the founders serves as an advisor to the board. The current CEO of Manos, Rodolfo Gioscia, has held the position for 26 years, and worked with a number of the founders while they were still involved.

Since much of Manos’ funding was provided by its founders, it has not needed significant external investment, and does not currently have external shareholders. Its largest single investment was a BID loan of $1 million around thirty years ago. It has since only taken on smaller loans and lines of credit through organisations such as Oikocredit and the Inter-American Investment Bank. Manos is currently seeking larger impact investment to improve machinery and production infrastructure, and to provide leadership training to the craftswomen who represent their cooperatives on the board. 

Manos’ annual revenue currently sits at $5-6 million per year, and it employs a total of around 300 people – 60 in the central offices and retail outlets, 100 external craftspeople whose products are sold at their retail outlets, and 140 in the cooperatives themselves. It has been a member of the World Fair Trade Organization since 2009.

03 | Industry Context

With well over half a century in business, Manos del Uruguay is a stable enterprise. Its products are high-end, as reflected by their export clientele, which includes luxury brands such as Gabriela Hearst, Chloé, and Toast. The handcrafted nature of their products is a unique selling point (USP).  Each of their garments has a handwritten label that includes the names of the craftswomen, known as artesanas, who made it. All stages of production use traditional, small-scale methods, such as dying 3kg batches of wool in kettles over a fire, and many of the knitting cooperatives work by hand with knitting needles.

Manos has a steady income stream and is able to cover its costs, but faces competition from cheaper, more industrial competitors within the fashion industry, in particular from fast fashion businesses. In recent years, they have branched out into producing yarns and patterns for hobby knitters. These products are available throughout the US, Europe, and South America. 

According to CEO Rodolfo Gioscia, the biggest challenge is selling more under their own brand. Around 30-40% of their sales are domestic, and depend heavily on seasonal tourists from Argentina. The remaining 60-70% is exported, primarily for clients who sell under their own brand (though not without Manos’ handwritten tags). While high-profile designers are among these clients, they do little to directly build Manos’ brand. Manos remains vulnerable to the whims of these corporate clients, and there is a strong need to build a more robust and loyal clientele of their own.

04 | Regenerative & Distributive Strategies and Actions

Empowerment is central to Manos del Uruguay, and to its business design. Through their initial involvement – both as investors and board members – the founders deliberately and carefully set up the business so that it could be operated by and for the artesanas. 

They were successful, as today the board is composed solely of elected cooperative members, who receive assistance from advisors. There are two steps to electing board members: each cooperative first elects a representative for the Manos annual assembly, and this central assembly then elects four of its members to the board. Each board member’s term has to be renewed every two years.

The board governs the central office, but delegates responsibility for business decisions to the CEO. As in any large company, the board can dismiss the CEO if performance is poor or mistakes are made, but no cooperative members are involved in managing the central office’s daily operations.

Production begins with product design at the central office, where pricing for the garment is decided based on material, labour and distribution costs. The central office then sends raw materials to the cooperatives, also moving the product between different cooperatives for different stages of production where required – the wool may be dyed in one location and then knitted in another, for instance. The cooperatives conduct initial quality control, and the finished product is then sent back to the central office where it is subject to final inspection.

The artesanas who make the products are paid per hour of work, and this is calculated before production. A scarf, for example, might require five hours of labour to knit, and the artesana who does this work will be paid for five hours per scarf produced. Importantly, they are also paid before the product goes on sale, meaning once a product leaves their cooperative they assume none of the direct risk associated with the business. This is in stark contrast to mainstream fashion businesses, who typically pay several months after receiving the items, forcing producers to take on expensive debt to cover their working capital needs. It is the designers and marketers in the central office who are responsible for developing products that will turn a profit.

When discussing Manos’ business design, CEO Rodolfo Gioscia draws a clear distinction between the central office employees and the artesanas. This is because office staff answer to the CEO, who in turn answers solely to the artesanas on the board. This inverts the traditional model of a private company, as the CEO is employed by the cooperatives and listed on their website under “Management” – even the highest ranking executives are “employees”, and therefore beneath the artesanas in the organisation’s hierarchy. However, responsibility for managing central office staff and operations is delegated to executives and managers, and the central office is run with minimal input from the board on a day to day basis.

In terms of environmental impact, Manos has a minimal footprint. It works with natural fibres, thus avoiding plastic and microplastic pollution, and its dyes, though not all natural, are compliant with EU standards. The small-scale production of its products also minimises its environmental impact – a far cry from the massive factories that dominate the fast fashion industry –  and this is a selling point for Manos products. In the CEO’s words, Manos is “the opposite of fast fashion.”

05 | How Deep Design Enables Strategies and Actions

Manos del Uruguay was established to promote and protect gender equality. Its founders sought to elevate the status of vulnerable women in rural areas by giving them a source of income. By bringing money into their homes and communities, these women gain respect and authority. Manos’ business design – with the workers’ cooperatives at the top – enshrines this in its operations, prioritising the authority and autonomy of its craftswomen over profit.

Rodolfo Gioscia sums up the philosophy underpinning Manos del Uruguay’s business design succinctly. He states that “from a logistical point of view, Manos is absolutely anti-economic; it is not designed to be efficient,” and that it exists “to serve the artesanas” by ensuring that they can make a living without being uprooted from their homes. He acknowledges that if Manos was owned by private equity, venture capital or listed on a stock exchange, it would have been pushed to abandon its model of production and trade with these craftswomen, and likely forced to adopt a mechanised model of fast fashion production. The craftswomen would probably be replaced by a factory in the outskirts of Montevideo, with 100 workers churning out products as close as possible to the central offices. However, its model of ownership and governance has ensured it retained its independence to pursue this socially and environmentally beneficial model. 

Regeneration and redistribution were therefore baked into Manos’ DNA from the very beginning, over 50 years ago, and the company was carefully structured around this mission in a way that safeguards it from outside interference – Manos’ statutes stipulate that board members can only be elected by a member cooperative’s assembly.

06 | Reflections and Lessons for other Businesses

By placing executives, the centres of power in a traditional business, in service to the workers, Manos del Uruguay offers a governance model that is both inspirational and robust. It is also a shining example of the strength of cooperative values – because of its longstanding history, multiple generations of artesanas have been employed by Manos del Uruguay, creating economic opportunities for themselves and their local communities.

Given the status held by CEOs in many large corporations, Manos’ structure is also radical, both by the standards of the 1960s and today. Rodolfo has been frank about the power balance in the organisation, stating that if he did not do his job well, the board could fire him, but that he has absolutely no power to oust an artesana from one of the cooperatives.

This case study was researched and written by Guerrilla Media Collective in collaboration with DEAL.