Book Examines Asian & Latin American Factories That Make Nike, adidas, Other Brands

The headlines have not been kind toward corporate management’s handling of global labor issues during the last decade.

The media, consumer advocates and global labor activists have exposed a series of well-known, global brands for sweatshop conditions and child labor practices in the foreign factories that produce their products. These exposés led entertainer Kathie Lee Gifford in 1996 to tearfully vow an end to child labor in the factories that produced her clothing line. It also led Nike CEO Philip Knight to pledge better labor standards after acknowledging in 1998 that “the Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse.”

But is this the whole story? What are Nike and other companies doing now to improve workplace conditions at overseas suppliers? And what can their experiences teach current and future managers of multinational firms about ethical decision-making? To explore these provocative questions, DePaul University Business Ethics Professor Laura Hartman gathered a team of four professors to embark in 2001 on an ambitious two-year field study of management responses to global labor challenges at factories in Asia and Latin America. The research is the basis of a new book titled “Rising Above Sweatshops: Innovative Management Approaches to Global Labor Challenges” (Praeger Publishers, November 2003) co-edited by Hartman, Denis G. Arnold and Richard Wokutch.

“The book is based on our belief that it’s not enough to tell multinational corporations what they are doing wrong in managing their supplier workplaces and workforces overseas — there’s also an obligation to show them what’s right,” Hartman said.

Hartman and the research team traveled thousands of miles and logged hundreds of research hours to identify and study beneficial labor management programs and practices initiated by Nike, adidas-Salomon, Dow Chemical Co., Chiquita Brands, Inc., Levi Strauss & Co. and General Motors Corp. They visited supplier factories and interviewed key stakeholders in Vietnam, China, Thailand, Brazil, Guatemala, Mexico, El Salvador and Costa Rica. The groundbreaking research was sponsored by the non-profit and independent Ethics Resource Center.

“The goal of the book is to showcase innovative management programs that promote workplace health and safety, worker dignity and respect so they can provide models for other companies that need to improve their global labor practices,” said Hartman, who is past president of the Society of Business Ethics, an international organization of business ethics academics.

To find these replicable solutions, Hartman’s academic team interviewed a wide array of stakeholders, including executives in charge of global workplace standards at multinational companies, supplier factory managers, workers, labor and child advocates, health and social service non-governmental organization directors, and business and economic officials in the countries where suppliers operate.

The project took Hartman to Vietnam to study suppliers for Nike, adidas and other companies in and around Ho Chi Minh City. She explored the suppliers’ child labor, health and safety, education, cultural diversity and micro-enterprise loan programs. The research revealed that finding solutions to global labor dilemmas often requires creative strategies.

One such example involved Kitty Potter, director of the adidas’ Standards of Engagement division in Asia. During a first-time audit of a Vietnamese factory seeking a contract to supply adidas footwear, Potter discovered nearly 200 workers under 17 – the age youths are allowed to go to work in Vietnam. Instead of having the teen workers fired or rejecting the factory as a supplier, adidas proposed an alternative solution.

The company worked with factory managers to launch an education program for the 14 and 15 year olds. For the 16 and 17 year olds, adidas mandated that the supplier institute a life lessons program, which provided training in financial planning, health issues and family management as well as academic lessons and internship opportunities.

“The significant detail is that they also had to pay the youth workers their average monthly salaries from the previous year,” Hartman said. “The youth workers were paid to attend school at the factory, but they were not allowed to work. And they were guaranteed jobs as soon as they finished the program.”

Hartman documented a similar, outside-the-box approach by sportswear makers to address the shortage of Vietnamese factories that meet their workplace standards. Adidas, Nike and Pentland, the maker of Speedo swimwear, launched an innovative joint consulting program to train potential suppliers about low-cost methods for raising workplace conditions and processes. “This created a better environment for workers. It also led to a greater supply of quality suppliers, giving companies more options when they hired for contracts,” Hartman said.

Finding the solutions to other ethical dilemmas remains elusive, Hartman said. The extent of corporate responsibility for overseas workforces is one such problem. “Right now, we presume that brands should bear responsibility all the way down the pipeline for everything that goes into the production of a sneaker,” Hartman said. “But how far does that go? Someone, somewhere is manufacturing lower on the vertical supply chain. Who makes the shoelaces? Who dyes the fabric? The supplier gets these materials from somewhere else. Are the multinational corporations responsible for the workers there?”

Another far-reaching and difficult problem for corporate decision-makers is the issue of providing workers with a living wage – earnings that allow them to support families with basic necessities.

“Many living-wage advocates ignore how raising wages in one plant may impact the entire economy,” she added. “In Vietnam, they found that if a factory raised its wages ‘too high,’ they had professionals such as police officers and dentists leaving their jobs because they would make more money as line workers. So the government went to the multinationals and asked them to explore other options.

“Labor advocates would say: ‘Tell the government to raise the wages everywhere else.’ But you are dealing with a developing economy, and things don’t happen just because they should,” she said.

Hartman, an associate vice president of academic affairs and management professor, often uses such vexing situations as discussion points in the ethics courses she teaches at DePaul. “At first, students think that the answers are black and white and that it’s easy to make a better decision than the firms,” she said. “Then we explore how little we, as consumers, really know, and that even if you know as much as you can know, the answers are not clear. Once we’ve talked about all of the ethical issues involved, they realize how challenging they are. We may not always find or agree on the answers, but hopefully, by exploring these issues, they develop a process to evaluate ethical decisions.”

Editor’s Note: Journalists interested in interviewing Hartman can reach her at 312/362-6569 or lhartman@depaul.edu. For a review copy of the book, contact James Lingle of Praeger Publishers via e-mail: jlingle@greenwood.com.