Monitoring  ( Chapter III)
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  Child Labor Report 2005

III. Implementation Experiences of Codes of Conduct in the U.S. Apparel Industry

E. Monitoring

U.S. corporations responding to the Department of Labor survey described a variety of ways their codes of conduct were monitored. Several of the respondents referred to "pre-contract" evaluation of prospective contractors to identify and screen out potential violators of codes of conduct. Others referred to active monitoring schemes conducted internally, externally, and by outside auditors or NGOs. Still other respondents said that monitoring of their codes of conduct is carried out through contractual arrangements, whereby the contractor guarantees or certifies (in writing) that the goods have been produced in accord with the child labor policy of the importing firm.

Information regarding the monitoring of codes of conduct gathered by the Department of Labor during field visits is reported in this section, clustered around the following issues:

  • Are the labor standards components of the codes of conduct, including child labor, monitored? How is the monitoring carried out?
  • Are foreign plants subject to on-site internal visits (i.e., visits by U.S. company personnel to subsidiaries and foreign contractors), external visits (i.e., visits by U.S. importers and foreign buyers/agents to foreign contractors) or auditor visits (i.e., visits by paid auditors or consultants) to monitor their production facilities? What is the purpose of such monitoring? Are monitoring visits announced or unannounced?
  • With whom do monitors speak during visits? Do they speak with managerial personnel only, or do they also speak with workers? If they speak with workers, where do they do it? Are managers present when monitors speak to workers? Do monitors speak the native language? Are interpreters used?

1.Monitoring for Quality

Monitoring of foreign producers - including plant visits - by U.S. importers is a routine procedure in many industries. The garment industry, where the appearance of a product and timeliness of orders are critical, is well-known for the close monitoring of foreign producers by importers and their agents.

a. Purpose of Monitoring

All 70 plants exporting garments to the United States visited by Department of Labor officials confirmed that they are subject to regular visits by their U.S. customers or their agents to verify product quality and to coordinate production and delivery schedules. About 90 percent of the companies visited stated that monitors/inspectors verifying product quality generally also examined working conditions in the plant, with emphasis on safety and health issues (climate control, ventilation systems, fire escapes, etc.). Among the exceptions were:

  • In the Dominican Republic, Bonahan Apparel and Hingshing Textile companies, located in Zona Franca Bonao, received visits from their U.S. customers, including Chaus, Tuxedo Junction, and Jacob Sigel. According to the companies' administrator, Mr. Chunciob Lim, these visits were only related to product quality and did not address working conditions.
  • In India, Pankaj Enterprises (located in New Delhi) and Chenduran Textiles, Poppys Knitwear, and Yavraj International (located in Tirupur) stated that visits from U.S. customers or their agents were focused exclusively on product quality. Zoro Garments (located in Madras) stated that monitoring dealt only marginally with working conditions and no checklist was used.

b. Previous Knowledge About Monitoring Visits

Whether monitoring visits are announced or unannounced differs widely from company to company. In 41 of the companies interviewed (58 percent), monitoring visits by the U.S. importer or its agent or representatives were announced in advance, in 13 (18 percent) they were unannounced, and in 16 (23 percent) there were both announced and unannounced visits.

c. Pre-Contract Inspections

Consistent with the information provided by U.S. garment importers (Chapter II), foreign producers interviewed that operate as contractors indicated that, prior to receiving an order from a U.S. corporation, they were subjected to qualification inspection, which extended to working conditions. For example:

  • In Guatemala, Dong Bang, located in Chimaltenango, reported that JCPenney inspected their facilities - including working conditions - prior to entry into a contract. Once they became contractors, JCPenney had again conducted inspections and given them written ratings based on a point system.
    • Maquila Cardiz reported that JCPenney inspected its current facility before it could change locations and made recommendations for the new facility.
    • Confecciones Caribe had been subjected to a pre-contract inspection by JCPenney and received a point rating.
  • A similar experience with the JCPenney point rating system was brought up by management of Undergarment Fashions, a plant located in the Zona Franca San Pedro de Macor's in the Dominican Republic.

2.Monitoring for Codes of Conduct

While monitoring for product quality, and even for health and safety conditions, is customary in the garment industry, the field visits by Department of Labor officials suggest that monitoring for compliance with provisions of the codes of conduct of U.S. garment importers dealing with other labor standards - and child labor in particular - is not. Where it does occur, the degree to which such monitoring extends to all labor standards addressed by the codes - as opposed to exclusively safety and health issues - seems to vary widely across suppliers. Foreign suppliers that are wholly owned by a U.S. corporation, or contract directly with a U.S. corporation with a presence abroad, seem to be subject to the most frequent and most thorough monitoring of codes of conduct, including child labor and other labor standards.

Monitoring for implementation of child labor provisions of codes of conduct is a very challenging undertaking. As has been discussed in Chapter II, the garment industry is made up of a complex chain of actors, domestic and foreign.

  • On the domestic front, there are apparel manufacturers (which may be producers or buyers of cloth, contractors or subcontractors, and also retailers of finished product), apparel merchandisers, buying agents (which may be located domestically or abroad), and retailers (which may be department stores, mass merchants, specialty stores, national chains, discount, off-price stores, etc.).
  • On the foreign front, there are buying agents, company representatives, wholly owned subsidiaries of U.S. companies, U.S.- or foreign-owned contractors that have an established relationship with a U.S. importer ("captive" contractors), contractors which have relationships with more than one U.S. importer, and subcontractors.

Implementation of the child labor policies of U.S. apparel importers involves communication and interaction between many of these actors. The very long chain of actors and transactions in U.S. importers' procurement of foreign apparel products is illustrated in Box III-7 with an example drawn from the field visit by the Department of Labor to the Philippines. In the example, the procurement/manufacturing process of apparel imported by a U.S. retailer involved five different actors, each farther removed from the U.S. importer.

Generally, the closer the relationship between a U.S. company importing garments and the actual producer of the items, the greater the ability of the U.S. company to influence labor standards, including prohibitions on child labor, in the production process. Conversely, the longer the chain of procurement/production (five steps in the above example drawn from the Philippines), and the more levels of buying agents, contractors, and subcontractors, the more complex and challenging is the implementation of the labor standards policies and the less the ability of the U.S. importers to influence them.

BOX III -7

Organization of Production and Implementation of Codes of Conduct:
An Example from the Philippines

 

U.S. retailer JCPenney has "Foreign Sourcing Requirments" that apply to all of its suppliers. Among other provisions, the sourcing requirments state that " JCPenney will not knowingly allow the importation into the United States of merchandise manufactured with illegal child labor." With regard to the Philippines:

  1. JCPenney purchases infant and children's apparel from Renzo, a U.S.-based importer. Pursuant to its sourcing requirements, JCPenney requires Renzo to certify that its imports are not made with child labor.
  2. Renzo imports from its Philippines agent, Robillard Resources. Renzo communicates to Robillard the JCPenney sourcing requirements and its obligations and requires Robillard to sign a certificate that its products are not made with child labor.
  3. Robillard purchases from a number of contractors in the Philippines, one of which is Castleberry. Robillard requires Castleberry to certify that its products are not made with child labor. The owner of Robillard visits Castleberry from time to time monitoring for quality control, but also for compliance with the sourcing requirements. Occasionally, a representative from JCPenney also visits.
  4. Contractor Castleberry does cutting, finishing, and packing. its subcontracts sewing to about thirty plants.
  5. The thirty or so subcontractors who do the sewing do not sign a certificate stating that no child labor has been used, but are supervised by Castleberry line supervisors, who are each responsible for several subcontractors. They spend almost their entire time with the subcontractors. Occasionally, a production supervisor from Castleberry also visits. Its is apparent that their primary interest is quality control, but they also monitor compliance with other standards, including child labor requirements. It is safe to say, however, that none of these supervisors are familiar with the code of conduct other than an understanding that they are not supposed to allow child labor. Embroidery and "smocking" (a form of very small and intricate pleating, sometimes combined with embroideries) is subcontracted out to home workers; some is done within the plants as well.
  6. Homework contracts - piece work contracts - are made with heads of households. Children may help their parents with some of the simpler embroidery and smocking and with the trimming. This is not monitored by any company.

a. Monitoring Methods

As discussed in Chapter II, U.S. companies utilize a variety of means to monitor their codes of conduct or policies on labor standards and child labor.

  • Many companies use some form of active monitoring - which might include site visits and inspections by company staff, buyer agents or other parties - to verify that suppliers are actually implementing the provisions on labor standards and child labor.
  • Companies may also use contractual monitoring, whereby they rely on the guarantees made by suppliers, typically through contractual agreements or certification, that they are respecting the U.S. company's policy and not using any child labor in production. This latter form may be seen as self-certification.
  • Some companies use a combination of the two forms of monitoring, typically relying on contractual monitoring backed up with visits and inspections.

All three of these monitoring strategies were found in the field visits.

b. Active Monitoring

A few U.S. corporations - particularly manufacturers - tended to have structured monitoring of all aspects of their codes of conduct and subjected their foreign subsidiaries to such disciplines. Based on the plant visits, instances of active monitoring by U.S. corporations of their foreign subsidiaries include:

  • In the Dominican Republic, Hanes Caribe (Zona Franca Las Amricas) and Tejidos Flex (Zona Franca Santiago) were subjected to structured monitoring.
    • Both companies received periodic visits, sometimes as often as every 2-3 weeks, by upper level managers and occasional visits by Vice Presidents of Sara Lee Corporation.
  • In Honduras, Fruit of the Loom owns five plants (Confecciones Dos Caminos, 2 plants; Manufacturas Villanueva; El Porvenir; and Productos San Jos). A Senior Vice President makes monthly monitoring visits.
  • In the Philippines, Levi Strauss regularly monitors its subsidiary.

Some U.S. companies (manufacturers or retailers) that contract directly with foreign suppliers also appear to play an active role in monitoring their codes of conduct. In some instances, companies interviewed said that the monitoring activities by the U.S. importer covered all aspects of codes of conduct, including child labor policies. Responses from others were less categorical, suggesting that the emphasis of monitoring may have been only on safety and health issues.

  • In the Dominican Republic, Levi Strauss' contractors received periodic visits to their facilities to monitor compliance with all aspects of codes of conduct. Levi Strauss has an office in Santiago which is responsible for overseeing its Dominican operations.22
    • Some companies also received visits by U.S. importers or retailers. The General Manager of Undergarment Fashions, Inc. (Zona Franca San Pedro de Macor's) stated that JCPenney makes periodic monitoring visits to the company.
  • EuroModa is a Honduran company producing shirts for Oxford Industries, Tommy Hilfiger, May Department Stores, Dillard Stores, JCPenney-Stafford Executive, Polo Boys and Brooks Brothers. Oxford Industries monitors compliance with its "Contractor Sourcing Policy"; May Department Stores and JCPenney send their own inspectors for contract compliance; each label owner will have someone make visits 2 or 3 times per year for contract compliance.
  • Also in Honduras, The Gap has a country representative who makes weekly unannounced visits to KIMI, a contractor for The Gap, to monitor compliance with all aspects of the Code of Vendor Conduct.
  • However, another Honduran company, Certified Apparel Services, that produces for Wal-Mart, Sears, Mervyn's (Dayton-Hudson), JCPenney, Target (Dayton-Hudson), Kmart and other U.S. companies with codes of conduct, stated a regional representative of JCPenney made one announced visit regarding compliance with its code of conduct. Wal-Mart also made one announced visit to determine compliance with its code. According to this company, there is no systematic verification of compliance with codes of conduct by purchasers.
  • In India, the Department of Labor officials found an example of monitoring of codes of conduct by an outside monitor on behalf of a U.S. importer:
    • Triburg Consultants is an Indian company located near New Delhi which implements the terms of engagement and quality control requirements of U.S. garment importers. Triburg's clients include The Gap (for the last 12 years), Liz Claiborne, Banana Republic (The Gap), Polo Jeans, Sun Apparel of Texas, and Ralph Lauren.
    • Triburg administers Liz Claiborne's human rights guidelines: it conveys the guidelines to the supplier company, discusses them with the company, and confirms that the supplier abides by the guidelines. Triburg also conducts surprise visits to monitor compliance. Triburg hires a welfare officer to conduct programs for the children of workers and check on wages, food subsidies, and medical facilities.

While most monitoring visits by U.S. corporations or their agents appear to be regularly scheduled or announced in advance, there are some instances of unannounced visits:

  • In Guatemala, a Department of Labor official was consistently told that JCPenney conducted unannounced inspections of contractors. Unannounced monitoring visits of contractors by Kmart personnel were also reported by Dong Bang, a Korean-owned facility located in Chimaltenango, and Confecciones Caribe, a U.S.-owned company located in Mixco. According to Dong Bang officials, Kmart personnel recently completed the second unannounced visit to this plant in three months.
  • In India, Triburg stated that it conducts surprise visits on behalf of U.S. companies (particularly Liz Claiborne) to monitor code compliance by contractors.
  • In Honduras, it was reported that the Audits Department of Warnaco audits contractors three times per year. These audits are unannounced.
  • Also in Honduras, weekly visits by the representative of The Gap to KIMI are unannounced.
  • However, in the Dominican Republic, Interamericana Products (Zona Franca Santiago) stated that they had requested, and Levi Strauss representatives had agreed, to stop making unannounced visits to monitor compliance with codes of conduct. Interamericana Products indicated that under the agreement Levi Strauss would give at least a week's notice prior to any visits to the plant.

c. Contractual Monitoring

There was also evidence from the field visits of numerous instances of contractual monitoring of codes of conduct. Contractual monitoring of codes of conduct is most prevalent in the case of U.S. retailers which do not have a significant presence abroad.

In these situations, the burden of monitoring compliance with the U.S. importer's child labor policies rests with the foreign agent, contractor or subcontractor, typically through a self-certification process. In these instances, the role of the U.S. importers in monitoring compliance of their codes of conduct is minimal.23 For example:

  • In Honduras, Fabena Fashions is required by Macy's and Wal-Mart to sign a contract which includes a no child labor clause.
  • In India, Chenduran Textiles, located in Tirupur, exports about one-half of its output to the United States. The main U.S. customer is Tropic Textiles of New York City, a supplier to Wal-Mart. Tropic requires Chenduran to certify that no slave labor or child labor was used in the production of the goods through a paragraph in the contract/bill of lading. Tropic accepts Chenduran's self-certification of the clause and does not have any in-country monitoring, education, implementation, or enforcement programs.
  • Also in India, Pankaj Enterprises, New Delhi, is an exporter of mid-grade apparel items. Pankaj's U.S. buyers require that no child labor be used in the manufacture of garments. Pankaj buys fabric and guarantees that no child labor is used in the production of garments through self-certification; there is no monitoring from the importer or its agents.

d. Contractual and Active Monitoring

In some instances, U.S. importers use a combination of contractual and active monitoring, using auditors from the U.S. importer (or its agents) to verify compliance.

  • In the Philippines, Liz Claiborne has a policy of monitoring and supervising its contractors. Contractors must certify that they are in compliance with the code of conduct. In addition, they are subject to frequent visits from the Philippines office of Liz Claiborne, which monitors implementation of the code of conduct as well as quality control.
  • Warnaco, which requires that contractors certify that child labor has not been used, also audits suppliers in Honduras for full compliance with its child labor policies, including age verification.
    • Macy's, Wal-Mart, and The Limited have checked personnel records at Fabena Fashions to verify the age of workers.
  • In India, Zoro Garments supplies 75 percent of its production to the U.S. market. Zoro's major U.S. customers are Rustic River, Quick Silver, Blue Print, and JCPenney (Phillips-Van Heusen is a former customer).
    • According to Zoro's management, occasionally representatives from the U.S. customers have visited Zoro's factory to check on quality control. Most of these visits were walk-throughs with some general questions raised about the use of child labor, but no checklist of requirements was administered.
    • Two or three years ago, Phillips-Van Heusen raised the subject of codes of conduct with Zoro's management and asked the company to fill out a questionnaire. When Zoro was producing for Phillips-Van Heusen, there was a clause in its contract related to child labor.
  • In El Salvador, Primo Industries, a contractor for Liz Claiborne, Land's End, Polo and JCPenney, met with Liz Claiborne several years ago to discuss and sign the Liz Claiborne code of conduct. The plant manager told Department of Labor officials that Liz Claiborne is "the toughest on child labor." He also said that American inspectors visit the plant approximately twice a month to check on quality control and see whether their rules and regulations are being implemented.

3.Monitoring Procedures

Closely related to the above issues is how the monitoring of the codes of conduct is undertaken, specifically whether workers and members of the community in which plants are located are also approached by the monitors, whether monitors are able to speak with workers outside the presence of company officials, the ability of monitors to speak the language of the host country and workers, and the extent to which monitors are trained to review implementation of labor standards.

Based on the field visits, it appears that most monitoring conducted by U.S. corporations primarily covers quality control issues. As such, there seems to be relatively little interaction between, on the one hand, monitors, and on the other hand, workers and the local community. It also appears that monitors have a technical background in production and quality control and are relatively untrained with regard to implementation of labor standards.

Department of Labor officials found the following exceptions to these generalizations, however:

  • In the Dominican Republic, managers of plants contracting for Liz Claiborne (Grupo M) and Levi Strauss (Grupo M, Interamericana Products, and D'Clase Corporation) stated that monitors routinely speak with workers inside the plant regarding both product quality and working conditions. Monitors talk to workers about their ages when appropriate.
    • Mr. Roberto Rodr
      guez of Hanes Caribe stated that internal auditors from Sara Lee Corporation often meet with workers in private.
    • D'Clase Corporation stated that for a recent contract negotiated with the Kellwood Corporation, an outside firm had been hired by Kellwood to monitor compliance with quality and labor standards matters. Monitors would be expected to talk to the workers to verify age, among other matters.24
    • The General Manager of Woo Chang Dominican Industry (Zona Franca Bonao), a plant which sells to Samsung Corporation, stated that when Samsung representatives visit the plant, they ask the workers how they are being treated.
  • In El Salvador, management of CTM Corporation, a contractor to VF Corporation, indicated that the U.S. purchaser monitors the facilities approximately every six months. In the context of these visits, VF personnel review working conditions in the plant, and check on child labor by looking around and asking workers; occasionally they conduct private interviews with workers.
    • However, some workers at the same plant interviewed by the Department of Labor officials said that the (foreign) monitors do not speak with workers; they believe the monitors do not speak Spanish.
  • In Honduras, the country-based investigator for The Gap said that he monitors implementation of the company's code of conduct at different locations, saying that he talks to workers during plant visits.
  • In the Philippines, managers of two plants producing for Nike (Mactan Apparel and Globalwear Manufacturing, Inc.) as well as a representative from Nike stated that its auditors talk to workers and inform them about its corporate code of conduct and Filipino labor law.
  • In contrast, workers interviewed outside the Sam Lucas plant in Chimaltenango, in Guatemala, stated that they had never seen an inspector talking to a worker. They could not be certain that representatives from a U.S. corporation had ever visited the plant.

Child Labor Report 2005

 
This report was developed and provided by the U.S. Labor Department http://www.dol.gov/ILAB/media/reports/iclp/apparel/main.htm

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