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Framework Agreements: Experience and Strategy of ITGLWF

Framework Agreements: Experience and Strategy of ITGLWF. International Textile, Garment and Leather Workers’ Federation. Aims of session. 1. Types of multinationals and their interrelationships in the TCF sector. 2. The global supply chain and worker rights abuses

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Framework Agreements: Experience and Strategy of ITGLWF

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  1. Framework Agreements: Experience and Strategy of ITGLWF International Textile, Garment and Leather Workers’ Federation

  2. Aims of session • 1. Types of multinationals and their interrelationships in the TCF sector. • 2. The global supply chain and worker rights abuses • 3.Fixing the problem - Codes of Conduct

  3. 4.Why codes are problematic • 5. Specifics of the ITGLWF draft agreement. What is in it ? • 6.Initial employer responses • 7. ITGLWF emerging strategy

  4. Multinationals in Textiles Clothing and Footwear

  5. Multinationals in Textiles Clothing and Footwear Apparel merchandisers Retailers Apparel Manufacturers Suppliers Buying agents/supply chain managers Trading companies/import export firms

  6. Apparel Merchandisers • In general no manufacturing, only sourcing • Since no manufacturing assets, they are very mobile • hundreds of suppliers • buy only finished garment, not components

  7. Manufacturers • Loyalty to the national base now undermined by low cost competition. • Some maintain own production but increasingly outsource.

  8. Suppliers/Subcontractors • Coats (Component manufacturer) • Must chase the manufacturers • Pou Chen (subcontractor) • Spreads its risk • Aims to own whole chain of manufacture

  9. Supply Chain Managers Can provide fully comprehensive service - may acquire some manufacturing facilities themselves Explosion of Internet based supply chain brokers

  10. Retailers • Wield enormous power which affects wages and intensification of work • Decision on sourcing policy critical

  11. The global supply chain and worker rights abuses

  12. The Supply Chain – Simple Model Retailer Merchandiser Supply Chain Manager Supplier Supplier Component Supplier Assembly factories Supplier Supplier

  13. The subcontracting chain…. “Shop-house” Supplier Sub-subcontractor Home workers First line subcontractors Home workers

  14. A Global Product Thread from Northern Ireland Polyester core from Japan Zip made in Japan Assembled in Tunisia Cotton from Benin Dyed in Milan using German indigo Brass rivets made in Italy (Namibian copper and Australian zinc)

  15. Denim dyed in Italy Thread from Northern Ireland Polyester Thread Fibre made in Japan Jeans assembled in Tunisia Zip made in Japan Brass rivets made in Italy from Namibian copper and Australian zinc Cotton from Benin

  16. Anatomy of a Nike Children’s Sweatshirt Sent to the Dominican Republic for assembly

  17. Anatomy of a Nike Sweatshirt V167G6N • Sent to the Dominican Republic for assembly • detailed work study specification 22 operations: • 5 steps to cut • 11 steps to sew • 6 steps to inspect and pack • Time allowed 6.6 minutes

  18. Anatomy of a Nike Sweatshirt V167G6N • Hourly rate in the EPZ in the Dominican Republic 70 cents • worker earns 8 cents for each sweatshirt they sew • sweatshirt retails in the US for $22.99 • if Nike doubled the wage it would be still only 7/10ths of 1% of the retail price

  19. Anatomy of a track shoe Design sent to Indonesia for manufacture

  20. Anatomy of a track shoe Supplier’s Costs 12% of which 2% are wage costs 5%Transport & Tax Retailer 50% Brand owner 33% 13.5% profit

  21. The Race to the bottom…. Hourly starting rate in the clothing industry in US dollars Feb 2000 $10.00 $5.00 $0.00 $8.42 $0.54 $0.30 $0.17 USA Mexico China Bangladesh

  22. Fixing the problem - Codes of Conduct

  23. Codes of conduct - the model Implementation Monitoring Verification Code Complaints and remediation Impact Analysis Accreditation

  24. Codes of Conduct in our sector 1. A corporate or company code of conduct (eg Adidas, Nike, Levi-Strauss) 2. A multi-employer code of conduct (WRAP with token NGO/ labour involvement) 3.A multi-stakeholder code of conduct (FLA, SA 8000, WRC, ETI Base Code) 4. A code of conduct negotiated between an NGO and a multinational (Clean Clothes Campaign)

  25. Codes of Conduct in our sector 5. A multi-employer code negotiated with a regional organization of the ITGLWF (ERO ECF – TCF sectoral agreements) 6. A multi-employer code negotiated with one or more international trade union organization (FIFA Code) 7. A code of conduct negotiated between a multinational and a European works council/national affiliate. (Triumph Code of Conduct, Benetton Code of Conduct)

  26. Why codes are problematic

  27. Codes are often unilaterally introduced not all ILO core standards are included No ongoing dialogue with the workforce Generally no disclosure of locations with codes Verification of monitoring process usually company controlled Company Codes - Problems

  28. Extract from a Code of Conduct • Sara Lee Corporation • Sara Lee Knit Products • International Operating Principles : Labour Unions • SLKP believes in a union free environment, except where laws and cultures require us to do otherwise. The company treats people with equity and fairness, and believes that employees themselves are best able to voice their concerns directly to management. SKLP is committed to the strict observance of laws and regulations related to union activity and encourages individual freedom and direct dealing between employees and management while actively discouraging union representation of employees where the law allows.

  29. Specifics of the ITGLWF draft agreement.

  30. Policy of 8th World CongressAdopted at Norrköping June 2000 • Develop a dialogue with MNCs to conclude international framework agreements • promote creation of world-wide company councils • seek to be represented where standards are set • where framework agreements cannot be achieved strive for multi-party sponsored corporate (ILO based) codes of conduct

  31. Policy (cont.) • Encourage affiliates to use framework agreements and codes as a a tool for organising and bargaining • campaign for uniform approach to codes internal monitoring, independent verification, regular impact assessments. • Demand that companies fully disclose their suppliers world wide

  32. Framework agreements are negotiated Agreements include all core standards Ongoing dialogue - ideally via a world council Full disclosure of the subcontracting chain independent verification sought The determination of a decent employment relationship through effective national legislation and collective bargaining Key ITGLWF aims

  33. Initial employer responses

  34. Employer Problems with IFAs • Have their own standards or terms of engagement with suppliers - why a separate document ? • Problems of scope of the agreement - legally nervous - what is the company ? • Wish to extract responsibility/duties from the ITGLWF

  35. Employer Problems with IFAs (cont.) • What is rationale behind disclosure of locations ? • Verification : have their own designated verifiers under other initiatives - e.g. FLA.

  36. ITGLWF emerging strategy

  37. Elements of ITGLWF Strategy • Corporate Research • Setting up Multinational Coordinating Committees • Developing dialogue with MNCs in the sector with a view to negotiating an International Framework agreement • Support local recognition campaigns via globally coordinated campaigns

  38. Key MNCs in the sector Coats (Thread manufacturer) Pou Chen (subcontractor – Nike,Reebok,Adidas) Vanity Fair Corporation (Wrangler /Lee) Daun & CIE AG - KAP

  39. Key MNCs in the sector Targets Benetton LEVIS Wholly owned Shoe production Denim & Jeans (Levis, Lee) Ramatex Berhad

  40. The ITGLWF Approach to MNC activity in the Africa region

  41. Africa (?) Growth & Opportunity Act Coats J.A.R Asian Capital USA Yarn & Fabric from the USA Yarn & Fabric Ramatex Nien Hsing Daun & CIE

  42. Coats plc • Facilities in Morocco and Tunisia • In Morocco factory is in an EPZ • Little information on conditions • Meeting with Coats management - Possible workshop in Morocco - plant visit

  43. J.A.R. • Located in Nairobi EPZ • Manufacturing for Jordache • Sold by Walmart • Organiser victimised - limited campaign

  44. Nien Hsing • Taiwanese denim supplier • Owns Nien Hsing & C & Y in Lesotho • Major recognition dispute in Nicaragua (Chentex) • Supporting local affiliate in Maseru

  45. Daun & CIE AG • 2 workshops – in Durban South Africa and • Inzell Germany (Czech Republic, Zimbabwe, Germany, South Africa, and Rumania) • Global Petition campaign for an IFA in the Daun group

  46. Ramatex Berhad • EPZ status • Environmental issues • Problem of recruitment policy • Trade union recognition - a problem also in Malaysia • Coordination with Sactwu – possibility of seconding an organiser • We will use codes of conduct -Nike, Puma,Adidas in our campaign

  47. Some conclusions • It is an over-regulated sector (proliferation of Codes) • We will struggle to get the type of IFA we think is necessary • Some positive signs however • Important to concentrate our efforts where it matters – local recognition, organisation and collective bargaining

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