Copyright 1996 U.S. News & World Report
Santa's Sweatshop
December 16, 1996 It's a perfect Kodak moment. On Christmas morning under the tree, Amanda is thrilled with her trendy new pair of Guess jeans and her Songbird Barbie doll. Joey thinks his new Nike cross-trainers are way cool, and he's in love with his Disney 101 Dalmatians jogging gear. Baby Sis is already kicking her new hand-sewn soccer ball in an imaginary game with her new 51-inch giant Bernie St. Bernard, which Mom bought from the world's most exclusive toy store, F.A.O. Schwarz, in New York City.
But if the kids knew how some of these gifts were made, it might cast a decided pall on their holiday cheer. Former workers and union organizers allege that some Guess clothing is made by suppliers who use underpaid Latino immigrants in Los Angeles, sometimes in their own homes. Mattel makes tens of millions of Barbies a year in China, where young female Chinese workers who have migrated thousands of miles from home are alleged to earn less than the minimum wage of $ 1.99 a day. Nike is criticized for manufacturing many of its shoes in tough labor conditions in Indonesia, and some of Disney's hottest seasonal products are being made by suppliers in Sri Lanka and Haiti--countries with unsavory reputations for labor and human rights. The soccer balls are sewn together by child laborers in Pakistan, and F.A.O. Schwarz's $ 150 Bernie St. Bernard was made in Indonesia; the company won't reveal who made the doggie, or under what conditions, for proprietary reasons.
Eye of the beholder. In an era when the economy is necessarily a global one, it is impossible for consumers to avoid products made under less than ideal labor conditions. Moreover, what may appear to be horrific working environments to most citizens in the world's richest nation are not just acceptable but actually attractive to others who live overseas or even in "Third World pockets" of the United States. Anyone even casually familiar with how some Americans recompense their (usually immigrant) housekeepers or nannies is well aware of the vast potential for hypocrisy when those same Americans then decide to sit in judgment of corporations.
Still, a growing number of manufacturers and retailers are coming under fire for how the goods they make and sell are produced. It started in earnest with the discovery of indentured Asian workers in a California garment factory in 1995. Then came reports about conditions in factories in Indonesia that make Nike products and plants in Central America and New York that produced clothing under the brand name of TV personality Kathie Lee Gifford for sale at Wal-Mart. A No Sweat campaign by Labor Secretary Robert Reich against U.S. sweatshops has turned up the heat. And a presidential task force debating the issue of sweatshops in the apparel industry is expected to issue its report early next year.
In short, labor, civic, religious, investor and consumer groups are pushing to improve the conditions of workers at the lowest end of a global supply chain. Some of these groups are advancing their own self-interests, to be sure--including labor unions that for decades have seized on arguments to oppose imports. But the cumulative effect of their campaigns is growing. Aided by Internet connections, for example, student groups are joining in, publishing lists of companies that allegedly make or sell goods produced in abysmal working conditions. "It's driving us nuts," says Tracy Mullin, president of the National Retail Federation, which represents the bulk of the nation's $ 1.3 trillion (not counting cars and groceries) retail industry. A U.S. News poll shows that 6 in 10 Americans are concerned about working conditions under which products are made in the United States and more than 9 in 10 are concerned about the working conditions under which products are made in Asia and Latin America. But few consumers possess enough information to make informed buying decisions (box, Page 60).
What makes the issue so staggeringly complex is that the current system of global sourcing isn't all bad. The search for inexpensive labor benefits U.S. consumers, who enjoy far lower prices than their European and Japanese counterparts. Apparel prices have actually declined in real terms in recent years, thanks in large part to global sourcing. That eases inflationary pressures for the whole economy. In many cases, global procurement networks provide badly needed income, and often the only chance of work at all, for workers overseas, whether Pakistani families in that nation's soccer-ball capital of Sialkot or Salvadoran immigrants in tough L.A. neighborhoods.
Moreover, today's Third World nation can be tomorrow's developmental success story. Take South Korea. A decade or so ago, Nike had most of its sneakers manufactured there; now, South Korea has evolved into an industrial powerhouse with a higher living standard, and Nike makes most of its shoes in Indonesia and China.
Even the most zealous advocacy groups urge major U.S. manufacturers abroad not to shut down their factories, just to improve them. Some major U.S. manufacturers and retailers are already responding. Levi Strauss & Co., the nation's largest apparel manufacturer, which works with contractors in 50 countries, is an acknowledged leader in imposing higher standards on its contractors. Levi's also refuses to do business in countries with subpar human-rights records, such as Burma. Similarly, Reebok has just announced that it will reorganize the way it buys 350,000 soccer balls a year in Pakistan. Rather than cut the panels of soccer balls in a factory and send them out to villages to be sewn together, often by children, the company now insists that all the work be done at the factory, where better control is possible. Each ball sold here will then carry the label: "Guarantee: Manufactured Without Child Labor."
Hired monitors. Elsewhere, a four-year-old San Francisco-based group, Business for Social Responsibility, is teaching 800 member companies how to better manage their international purchasing. Concerns have even given birth to a new industry: There are now businesses, such as California Safety Compliance, that charge companies for monitoring work conditions in their plants around the world.
Some retailers also are responding. Sears, which carries 200,000 products from manufacturers operating in virtually every country, is tightening up on buying goods from suppliers with dubious records. The Gap, after enduring months of withering criticism, also has become a model for manufacturing and sourcing products abroad, experts say.
But abuses persist, even in the United States. From New York to Los Angeles, apparel is still being made in ways that resemble turn-of-the-century-style exploitation of at least 1 million immigrant workers, many of whom speak little or no English and don't understand their rights. Manufacturers can play contractor against contractor, constantly driving down prices for their goods.
A bitter labor dispute involving apparel maker Guess is emblematic of problems affecting many companies. Guess designs high-end jeans and cuts the denim at its headquarters in an industrial district of eastern Los Angeles. Like other clothing makers, Guess turns to subcontractors to actually sew and condition the jeans. Unlike many other makers, Guess has kept its subcontracting system in America rather than eliminate all U.S. jobs by moving it overseas. The company then markets the jeans and other accessories as "An American Tradition" and sells them at premium prices in department stores.
The biggest problems arise in the subcontracting network, made up of people like Cristobal Perez and Emilia Hernandez. The 30-ish Mexican couple with two small children worked for Kelly Sportswear, a Guess contractor, for five years until the Vietnamese owner, known only as Roberto, closed the factory in the L.A. suburb of El Monte. Roberto allegedly forced workers to pay money back to consumers a meaningful choice. Usually a union-made item costs more.
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