APPAREL’S ETHICS DILEMMA

Byline: Joanna Ramey

WASHINGTON — Pressured by human rights groups and the glare of publicity, apparel makers and retailers are rethinking their strategy when importing from Third World countries.
The turning point for most apparel importers came in 1992, when David Glass, chief executive officer of Wal-Mart, appeared on national television and questioned the validity of photographs depicting Bangladeshi children sewing shirts for the discount giant.
“The pictures you showed me mean nothing to me,” Glass said, a comment widely viewed by his peers as a massive public relations blunder, particularly since there appeared to be enough evidence of a problem.
This sound bite on “Dateline NBC” and the resulting flood of adverse publicity continue to reverberate in the importing operations of all U.S. retailers and apparel makers. The lesson: Make sure your foreign contractors are aboveboard or you, too, could be accused of reaping profits on the backs of exploited Third World garment workers.
Wal-Mart was the first to get stung. The latest is The Gap.
J.C. Penney, Dayton Hudson, Columbia Sportswear, Liz Claiborne, Eddie Bauer and Philips Van Heusen, among many others, have had to publicly deflect allegations about human rights, child labor or other abuses involving factories and countries where their goods are made.
These days, companies faced with such accusations are more likely to respond with promises of an inquiry. They point to strict codes of conduct that their contractors must now sign, which threaten withdrawal of business if labor abuses occur. Many companies are asking their quality control people to look out for worker abuses while also watching that zippers are sewn on straight.
Nevertheless, in the eyes of activists pressing the cause of factory workers abroad, apparel makers and retailers alike largely fall short of their ethical obligation as importers.
“It’s neverending,” says Robin Lanier, vice president of international trade for the International Mass Retail Association. “I think companies are doing a lot more, but I’m not sure they can ever do enough to please the activists.”
How companies view their role in the business of socially responsible importing varies. Some have embraced the idea pushed by human rights groups of establishing independent monitoring programs to keep tabs on contractors. Others say periodic, announced inspections of contractors and reports by quality control employees are the most they will require.
With thousands of products and myriad commercial relationships to keep track of, stores say they would be unable — and ill-equipped — to police workplace conditions around the globe.
As a spokesman for Sears, Roebuck said, “To say we can actively monitor every place where merchandise is made for Sears is ridiculous.”
But one point on which most importers and retailers involved in this debate do agree is that they can encourage Third World contractors and governments to improve conditions.
“That’s where we need to look for further improvements,” said Rob Hall, vice president and international trade counsel for the National Retail Federation.
Hall will bring this message to an October meeting of the International Labor Organization in Geneva, where worker issues in the worldwide apparel, textile and footwear industries will be discussed.
“The foreign manufacturers and governments are the ones who can develop better standards,” Hall said. “It shouldn’t be run out of an activist office in Chicago or New York.”
After doing battle for four years, retail and apparel company officials are often on a first-name basis with human rights activists. They keep clashing — as in the case of The Gap last year — and, in many cases, corporations are acceding to demands for change.
The Gap case is a good example. Charles Kernaghan, executive director of the New York-based National Labor Committee, was furious that the San Francisco-based chain had pulled its business from an El Salvador contractor amid accusations of sexual harassment and violent repression of union organizing at the factory.
The Gap had investigated the charges and, because it was unable to determine who was telling the truth, ended the contract. Because The Gap’s sourcing guidelines call for immediately cutting off factories that abuse workers, officials said they were doing the right thing.
In Kernaghan’s eyes, The Gap indirectly was punishing the almost all-female 350-person workforce at the factory with the message that if workers speak up, they lose their customers and livelihood. With $4.4 billion in sales, Kernaghan said The Gap had an ethical duty to use its sizable leverage over the factory to insure that changes were made.
His next step: nationwide picketing of Gaps, with the help of like-minded union, student, consumer and religious activists.
The leaflets Kernaghan’s troops handed out — which were quoted on local television stations and in newspapers — were not subtle.
“Do you have what it takes to be a real Gap Kid?” one flyer asked. “Are you a young girl between the ages of 12 and 15? Can you work 18-hour days for 56 cents without bathroom breaks? Can you shrug off sexual assault? If you answered yes to these questions, then we need you! Come make Gap clothes at the Mandarin factory in El Salvador.”
“We argue to win,” says Kernaghan, who has taken the cause of Central American and Caribbean garment workers as a life’s mission after living in the region as a freelance photographer.
“The campaign with The Gap was a tough one. We really went after them. Some of the stuff was very personal,” said Kernaghan, who, in his leaflet campaign against The Gap, pointed out the disparity between the 36-cent-an-hour Salvadoran garment worker wages and the income of Gap chairman Donald Fisher, who in 1994 had a salary of $2.17 million.
Now Kernaghan has nothing but praise for The Gap, which eventually capitulated and reinstated its contract in El Salvador. Just as significant — and considered a milestone by activists in the larger battle with importers — is that The Gap agreed to help develop an independent monitoring program at the factory, which, if effective, may be extended to other Gap contractors. Many importers — particularly retailers — have resisted demands for independent monitoring.
Gap officials declined to be interviewed directly about this case, but referred all questions to an outside publicist, Jim Lukaszewski, who specializes in the new hot topic of contractor compliance.
“This is an evolutionary process,” said Lukaszewski, dating the start of The Gap’s human rights learning curve to 2 1/2 years ago, when it instituted its guidelines for ethical importing. “Things are done one step at a time.”
Last year, Kernaghan ran his campaign on a $254,000 budget, two-thirds of which came from private foundations and individual contributions, the rest from unions. He says he ended 1995 $10,000 in debt.
The group maintains an office at the New York headquarters of UNITE, the apparel and textile workers’ union. Critics say the union’s support implies that Kernaghan has a hidden agenda to discourage manufacturers from leaving the U.S.
“What he really wants to do is organize workers in Central America,” said one retail official, who sees Kernaghan’s pressure tactics driving corporations away from that region to other countries.
Kernaghan says he understands why companies may think he has ulterior motives. Yet he says he simply views UNITE and other union support as another source of revenue for his worker rights agenda. He says his goal simply is to improve the lot of a depressed workforce.
In his current campaign, to persuade U.S. apparel makers with operations in Haiti to increase wages there, Kernaghan issued a report called “How to Get Rich on 11 Cents an Hour.”
As for independent monitoring, Lukaszewski said Gap officials are willing to explore the possibilities, but don’t see their role as overseer of contractor operations. Many importers feel the same.
“We seem to lose sight of the fact, in this rather emotional discussion, it is the factory owner’s property and assets we’re talking about,” said Lukaszewski.
More than one apparel maker frequently uses the same factory, and relationships with these contractors are often temporary, sometimes lasting only six months. Therefore, long-term change must emanate from the local companies and governments, Lukaszewski said.
It’s almost two years since officials at sportswear giant Liz Claiborne began focusing on how to keep tabs on their roughly 300 contractors worldwide. Company officials always considered their policies to be on the side of worker rights. Then they were branded as a party to the exploitation of foreign workers.
This time, in September 1994, the drama unfolded on Capitol Hill in a hearing called by now-retired Sen. Howard Metzenbaum (D., Ohio), one of the earliest advocates of making accountable companies that design and market goods for the treatment of the foreign workers who produce them. (See related story, page 14.)
At the hearing, arranged by Kernaghan, Lesly Rodriguez, then 15 and a worker in a 600-employee Honduras contractor, held up a Liz Claiborne cotton sweater identical to ones she had sewn since she was a 13-year-old working 12-hour days. This image, accusations of oppressive conditions at the factory and the Claiborne logo played well on that evening’s network news.
Claiborne was aghast. As The Gap executives would do later, Claiborne officials first reacted by pulling their business out of the factory.
Kernaghan’s group protested, and proposed a trip by Claiborne officials to Honduras; Jack Listanowsky, then executive vice president, accepted. Kernaghan later applauded Claiborne for meeting with the factory owners — a step considered the first of its kind — and insisting on worker rights being protected.
That trip was Claiborne’s initiation into the complex world of monitoring human rights at foreign contractors. Roberta Karp, its vice president of corporate affairs and general counsel, has just returned from another fact-finding trip to the company’s garment contractors in El Salvador and Honduras. The trip was prompted by reports on Canadian TV of alleged worker abuses in factories sewing Claiborne sportswear.
“One claim was there was pregnancy testing in factories,” Karp said. Other charges were that workers were not being paid overtime and factories were employing workers under 15.
Karp and her delegation — including officials of the International Labor Rights Education and Research Fund, another group working on the contractor issue — met with local government and U.S. Embassy officials to assess the countries’ political and economic climates and how they affect worker rights and conditions. Karp let everyone know that Liz Claiborne wouldn’t tolerate abuses.
“I wanted to get a better feel, directly, for these areas,” said Karp. “These are poor countries. We know that. We can’t go and make dramatic changes, but we can make small changes that are significant. Our focus right now is insuring compliance with Claiborne’s code of conduct within the factory and how we can create an environment that is good in advancing worker interests.”
Among Karp’s accomplishments were gaining assurances that pre-employment pregnancy testing would end and that contractors would make an effort to hire workers who are at least 15 years old.
Contractors with which Claiborne does significant business agreed to open their books so Claiborne could examine payroll records. Karp also laid the groundwork for establishing independent monitoring of Claiborne’s Central American contractors.
Importers looking into independent monitoring of contractors are beginning to realize it’s not simply a matter of hiring someone to keep an eye on things. Reliability, whether factory owners will even allow unannounced inspections, what to do when violations occur, who should assume the cost of monitoring and how to avoid assuming the role of local government oversight are among the issues being tackled.
“Partnerships are very important here,” Karp said.
Another group to which Claiborne has reached out for help is Business for Social Responsibility, a San Francisco-based nonprofit organization started three years ago and designed to help member companies address the question of rights in factories abroad. Other BSR members include Levi Strauss, Patagonia, Reebok and Timberland.
“It’s an issue that’s not going to go away and companies investing time to create policies are better served than those who try and deal with these problems on an ad hoc basis,” said Bob Dunn, BSR president and chief executive officer. “Creating policies is the first step. The greater challenge is implementing the policies so they have integrity. It may involve making an investment, but the cost of that pales in comparison to doing nothing and finding the retail franchise jeopardized because a store is linked to unacceptable conduct.”
Levi’s typically is cited as a pioneer by most people involved in the ethical sourcing debate. Its work in Bangladesh in helping to attack child labor in the garment industry there is considered a model program. In 1994, the company discovered a Bangladeshi contractor employing several underage girls, a violation of Levi’s ethical sourcing guidelines, which set 14 as the minimum age for contract workers.
Company officials faced the dilemma of what probably would happen if the kids were fired: They’d either go to another factory or be forced by family circumstances to bring in money through panhandling or prostitution.
Although their guidelines didn’t cover that particular problem, Levi’s decided the ethically correct solution was to open a school for the children at that contractor, pay them what they would have earned if they were working and, when they turned 14, offer them jobs in the factory.
Michael Kabori, Levi’s public policy manager, said the Bangladesh case illustrates the complexity of problems at foreign contractors that are largely the problems of the society at large.
“You can develop a set of guidelines you feel reflects your corporate values and aspirations. Then, in practice, you get new information and you’re confronted with new situations like in Bangladesh,” Kabori said. “We responded in a way that took us out of the four walls of the factory. We were able to look a little broader as to how these girls might be affected if they weren’t working anymore.”
But, as importers readily point out, Levi’s solitary school doesn’t make a dent in the child labor problem in the two-million-worker Bangladeshi garment industry.
The International Labor Rights Education and Research Fund, joined by UNICEF and some Bangladesh nonprofit groups, is trying to find a long-term solution that doesn’t directly involve importers. Using a threatened U.S. boycott of Bangladesh-made apparel, last fall these groups gained the cooperation of the Bangladesh Garment Manufacturers and Exporters Association to develop an industry-wide schooling program along the lines of the Levi’s model.
The initiative, funded by the BGMEA and overseen by the nonprofit groups, should have already gotten off the ground, but organizers continue to encounter roadblocks after establishing one school.
Another boycott is ready to go if Bangladesh garment officials continue to stall, said Pharis Harvey, ILRERF executive director. Nevertheless, he remains hopeful about this first attempt to reverse a socially acceptable practice of a desperately poor country.
“We’re a little discouraged by the tack things have taken,” Harvey said. “They are running way behind the established timetable. We still hope it will lead to something significant, but at the moment, it really is just a promise.”
Another effort at improving worker standards at foreign factories is a handbook on how to prevent child labor, prepared by the Council on Economic Priorities, a New York-based think tank that analyzes national issues.
The CEP prepared the handbook for the International Labor Organization with a $25,000 grant and the help of several leading apparel importers, including Levi’s, Claiborne, L.L. Bean, Nordstrom, Sears and The Limited. The handbook is directed at the four industries that employ children under 14: apparel, footwear, toys and carpets.
Deborah Leipziger, director of CEP’s international programs, said the problem of child labor remains prevalent throughout South Asia, Central America and Brazil. While retailers and other importers are keenly aware of the problem, she said it has been difficult to persuade them to take on the cause, beyond demanding vendors and contractors run child-free shops.
“I don’t think companies realize how much influence they have in developing areas,” she said. “They can start by meeting with local government officials and stressing how the child labor issue is important. They can insist on governments conducting factory inspections. That kind of pressure is very effective. The governments want foreign investment.”
Eileen Fisher Inc., the Irvington, N.Y.-based wholesale and retail apparel company, worked with CEP on the child labor handbook. The company is looking at other ways to enter into the growing debate of human rights in foreign factories.
David Zwiebel, vice president, said he would ask importers to establish a set of internationally accepted compliance standards, much like what is being done by the television industry to curb violent programming. This would be particularly helpful for small to medium-size importers like Eileen Fisher that don’t have the wherewithal of a Levi’s to embark on a company-wide endeavor, he said.
“The complicated part is then monitoring compliance,” Zwiebel said.
While Eileen Fisher is looking at employing independent monitors at its contractors in China, it is now training its quality control employees to be cognizant of worker rights.
In the long run, keeping a tight rein on foreign contractors pays off because workers are happier, which translates into a stable workforce and consistent production quality, said Roger McDivitt, production manager at the high-end outdoor apparel company Patagonia in Ventura, Calif., a firm known for being environmentally and socially responsible.
“There is a growing consciousness that these issues need to be part of the decision matrix of a company,” McDivitt said. “Companies can’t simply say, ‘My hands are tied. I had to use child labor to fill the order.’ ” — Fairchild News Service

Part One appeared March 4.

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