Sourcing practices at odds with compliance goals

This story from the Financial Times gives a bit more information about Nike's assertion that their business practices can exacerbate a factory's ability to meet compliance goals.

http://www.ft.com/cms/s/0/d609cf9e-a434-11e1-84b1-00144feabdc0.html#axzz1z67lVImy

If Brands are really interested in making improvements to working conditions in their supply chain, they need to take a long hard look at their own sourcing practices.
Maybe if I say this long enough and loud enough, someone might take notice.

1000 workers riot in Foxconn factory.

I was having dinner last night with a good friend who's opinions I value. He said that I come across in this blog as a bit of an Apple hater and that I should tone it down.  If anyone else thinks this then I apologize. Apple is no worse than any other US brand making in China. My goal here is not to vilify Apple so much, rather it is to point out some obvious inadequacies in their Labor Compliance process.

Unless they focus on Root Causes, and Yes, that might mean taking a good look at their business practices, the improvements they say they will make will not happen anytime soon.
In a a recent article about 1000 workers in a Foxconn factory rioting, workers said the improvements promised are not happening. Whilst the reason for the riot was not labor related, tensions between management and workers remain high.

Here's a report from the Guardian outling recent investigations from SACOM, an NGO in Hong Kong

http://www.guardian.co.uk/technology/2012/may/30/foxconn-abuses-despite-apple-reforms?newsfeed=true

I reiterate that unless Apple, or any other company engaged in Labor Compliance understands the probable impact that their business practices and sourcing decisions have on a factory's ability to meet their compliance objectives, they will fail to deliver on their promises.
Regards
Wally

Labor unrest continues in China and Cambodia.

Here are two reports from this month, one in China http://www.rfa.org/english/news/china/death-05292012103808.html and one in Cambodia, see below.  Both reports are from Radio Free Asia.

Heavy handedness by factory management and local police were a factor in both protests getting out of hand. Low wages, and non payment of wages also seem to be the trigger.

Thousands Protest Garment Factory Conditions

2012-05-21

On their third straight day of protests, Cambodian workers take their demands to the government.

Some 3,000 employees of a textile factory in Cambodia’s capital of Phnom Penh gathered to demand better working conditions on Monday, in one of the largest recent strikes to hit a garment industry plagued by complaints of low wages and few protections for labor rights.
On the third day of their strike, workers from the Chinese-owned SL Garment Processing Cambodia company’s two factories in the outskirts of Phnom Penh took their protest downtown, gathering in front of the Social and Labor Ministry building in the capital.
The protesters said they were determined to continue the mass strike until they receive better working conditions, benefits, and protection of their rights.
“If we don't have a solution, what will we do next? We will struggle until we can see a solution,” one worker shouted at the protest.
The demands are not an unusual refrain in the country’s garment factories, which are the country’s largest employers and hire more than 300,000 people, mostly women.
Art Thun, president of the Coalition of Cambodian Apparel Workers' Democratic Union, said the company should address the workers’ concerns.
“They will go to negotiate right at the factory, since whether or not the factory owner agrees [to their conditions] they still need to seek a proper solution for the workers. The owner can't avoid responsibility for this matter,” he said.
The factory’s management has condemned the strike as illegal and warned protesters not to try to take over the factory buildings.
“Don’t take any action to incite or lead workers to block the entrance gates to the SL factory companies,” a member of the management company shouted to the strikers through a loudspeaker.
Strikes and protests are not uncommon at textile factories, where laborers often work long shifts for little pay.
In February, protests by two thousand workers at the Chinese-owned Manhattan Textile and Garment Corp’s factory in southeastern Cambodia’s Kampong Cham province turned violent when workers blocked a national highway and vandalized the factory.
The industry has also been rocked by nearly a dozen incidents of mass fainting in the past year. The faintings are mostly blamed on workers' poor health, bad ventilation in the workplace, or exposure to dangerous chemicals, although some factory managements have disputed this.
Reported by Uon Chhin for RFA’s Khmer service. Translated by Taing Sarada. Written in English by Rachel Vandenbrink

Apple, meet Nike.

Leonie Barrie of Juststyle has posted this news from Nike.
In it, there is a snippet of information that Apple may need to take notice of if they are to achieve their stated goal of resolving their overtime issues.

I quote, "But the company says in some areas "progress was slower than targeted," including the reduction of excessive overtime within factories. Crucially, 68% of excessive overtime incidents in 128 factories were found to be due to factors that Nike itself could influence".

68%, just in case you missed that.

So Apple, tell me again how you are going to manage this task if you are not taking a long hard look internally and addressing the  impacts of your own purchasing/sourcing practices.

Thank you Nike for bring this to their attention

Bangladeshi workers fight back

Warning;

This report makes grim reading.

It also offers some hope that the violations detailed in the report are being taken seriously by the brands using this company.

"How did they not know this was happening?" you might reasonably ask.
Record falsification is a frequent and common problem. In this particular case, the management at both factories seem to be particularly aggressive in their use of it. Bribery and corruption of auditors by factory management are also common problems.

Read the full report here and ask yourselves, could this be happening in my supply chain. The answer is of course, it might. If you are not engaging with your factories first hand, and are not reviewing their management systems to see if they have the capability to meet compliance codes of conduct, this could well be you.

FLA finds evidence that dogs eat bones

Well, this isn't exactly what they found at the Apple factories, but it might have well been. Finding labor violations in factories in China is hardly rocket science. What they didn't find, as far as I can see, is why these violations occur in the first place. Without this critical information, their assertion that this will get fixed within 15 months is just not believable. If Apple don't take a hard look at their purchasing practices, this will turn out to be a very expensive PR stunt.
There are SO many reports and studies out there that indicate these have a significant impact on a factory's ability to meet the compliance demands.
Take the blinkers off Apple and take a look, you might learn something.

Mike Daisey's alleged Foxconn fabrications

For those of you who have been following the Apple/Foxconn story, you will be aware of  Mike Daisey's acclaimed one-man show "The Agony and the Ecstasy of Steve Jobs," in which he talks about visiting a factory in China that makes iPhones and other Apple products. This American Life show on NPR has issued a retraction because they can't vouch for its truth. He allegedly made up parts of his story, namely child labor, armed guards, chemical injuries etc.
Here's a link to the NPR retraction and interview with Mike Daisey. In the 3rd section, they interview the reporter from the NYT who describes what they actually found and also some of the statements made by Apple executives. There is a large part of the story that is not getting any airtime, and that has to do with why they, and many other companies, are working so much overtime in the first place.
I wrote to Ira Glass. See below;

Dear Ira,

I’d like to add some info that the NY Times team and Apple have not covered. I didn’t hear anyone discuss the reasons why so much overtime is being worked in the first place. In many cases, the buying practices of these companies are not compatible with corporate codes of conduct. Without getting to the root cause of these long term code violations, it will be impossible to correct or enforce. Faced with the need to meet a customer’s delivery and margin expectations, and also meet code provisions (60 hours), most factories falsify the records. Overtime and minimum wage violations are common, and never really go away. Why? Because in many cases, our corporate culture and business practices are at the root of it. Companies turn a blind eye to this as long as the factory has some improvements and is seen as willing to engage in continuous improvement. The factories know this and “play the game”, without ever addressing the long term issues.

One of the executives at Apple was quoted as saying if Apple wanted to, Apple could enforce codes of conduct and the factory would do it. This is not true. Unless they address their own business practices to make sure they are compatible with their own code of conduct, their factories will continue to be out of compliance.

Here’s a link to an article I wrote back in 2004. http://www.allbusiness.com/manufacturing/apparel-other-finished-products-made/4397949-1.html

As you can see, this is still not being taken seriously, except by a small number of brands, such as Nike, Gap. You can read their efforts to address this in their annual CSR reports.

Apple should know better.

Wally