Word: labor
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...face. Auditing came into vogue at the same time that Western firms were pushing harder than ever for lower prices and faster turnarounds. From the mid-1990s onwards, "many multinationals were telling factories, 'Give me this cheaply, give me this quickly - and, by the way, comply with your local labor law, or our code of conduct, whichever is higher,'" says Ayesha Khan, a manager with BSR, a CSR consultancy...
...fierce, and their profit margins have shrunk. There's a glut of Chinese and Indian factories competing for Western clients, so if a factory doesn't pass audits, multinationals can just walk across the street. With the Chinese workweek capped at about 50 hours (including overtime), strict new labor laws and growing competition for workers, it's getting tougher to comply with the law, pay the minimum wage, make order deadlines - and earn a profit. Says Rosey Hurst, founder of Impactt, an ethical trade NGO based in London: "I have a large deal of sympathy for the fakers...
...safety codes, staffed by migrant workers who often put in 12-hour days seven days a week, these shadow factories are unregulated, but common. The craze for auditing has, paradoxically, led factory owners to create such factories. It also sops up resources that could be channeled toward improving labor conditions. "If factories are getting monitored on average 25 times a year, that's every two weeks you have to check your records and talk to workers," says Michael Kobori, head of supply chain social and environmental sustainability at U.S. garment manufacturer Levi Strauss. "It's no wonder management...
...Moreover, factory owners are frequently required to pay for their own audits - a fact that Auret Van Heerden of the Washington-based Fair Labor Association calls "something of a dirty little secret." One manufacturer with 15 factories in seven countries told Van Heerden that he had to deal with more than 250 audits a year, each costing an average of $1,600. Small wonder many factory managers see multinationals' codes of conduct as a plot to blunt their competitive edge. In a pre-audit pep talk to workers one Chinese factory manager railed: "Social responsibility is in essence trade barriers...
...Conduct Becoming Three years ago Nike, now among the most progressive companies on labor practices, took steps to curb what it saw as counterproductive auditing. In a daring move, it revealed its manufacturing sites - long seen as proprietary information - and suggested that companies manufacturing products in these same places collaborate on factory monitoring. Six months later Levi Strauss followed, and today is working with 15 other firms in 130 factories. Resources that once went to monitoring are now used on training overseas management, says Kobori, helping to create an environment in which factories have a bigger stake in how they...