Glimpses of the Anti-Sweatshop Movement

latest development in the anti-sweatshop movement’s strategy, the Designated Suppliers

Program, which the movement is still in the process of attempting to implement.

Chapter 2: The Globalization of the Apparel Industry

The Phillips-Van Heusen/ Camisas Modernas Campaign

In some ways, the Camisas Modernas factory owned by Phillips-Van Heusen (PVH), a major producer of men’s shirts, in Guatemala was a model factory. According to a report by Human Rights Watch (HRW),

The company’s employee welfare programs [...] were widely viewed by independent observers as exceeding the norm and arguably at the forefront of the maquila [production for export] sector. Managers expressed pride io Human Rights Watch in the company's support for a lunch room, at which the PVH subsidized hot lunches; a store, at which workers could make subsidized purchases; a clinic providing free medical attention on the plant’s premises (which we were told is to include dentistry in the near future); a provision for interest-free loans; and generous provisions for ad hoc payments to be made to staff members or their families in the case of deaths and other family emergencies (Human Rights Watch 1997).
Despite these perks, there were serious issues at the factory. The wages, ai roughly 75-90 cents an hour (pay was actually based on a piece-rate system), were only half of what was required to put a family of rave over the poverty line (Armbruster-Sandoval 2005; Bounds 1997a). There was also a long history on union-busting by management.
PVH opened up two Camisas Modernas factories in 1988, later merging them in January 1997. The first organizing campaign began in 1989, after management lowered the piece-rate payments, meaning workers would have to work longer and/ or faster--

producing more garments--to make the same pay as before. There was also a general atmosphere of disrespectful treatment by management, such as restrictions on access to bathrooms. It was in response to this organizing campaign that management began io put in place the socially responsible policies listed above, at the same time as they fired union supporters, hoping to undermine the union. In 1991, the organizing campaign took off again, leading to the formation of the Camisas Modernas Workers’ Union (Sindicato de Trabajadores de Camisas Modernas or STECAMOSA). They made contact with several US labor rights groups, including the US/ Guatemalan Labor Education Project (USGLEP, now the US Labor Education in the America Project or USLEAP). The company responded by essentially bribing the union’s leaders to resign, offering them extremely generous severance packages if they did so, at the same time that they put them

on poorly working machines, thereby dramatically lowering the money they could make through the piece-rate system if they remained employed (Armbruster-Sandoval 2005; Human Rights Watch 1997).
The HRW report documented the result—an unusually high turnover rate among

union members:

According to the company, union and labor inspectorate, forty-sin of the 131 union members registered with the labor ministry as of August 1995 had quit the company by August the following year: an attrition rate of 34 percent. This contrasts with company information from past years citing a turnover of from 2 percent to 5 percent overall (Human Rights Watch 1997).

In all this, the Guatemalan government, including the Ministry of Labor, remained complicit, refusing to grant legal recognition to STECAMOSA. USLEAP and several other US groups, however, was able to pressure the US Trade Representative (USTR) to review the case, which might have lead io the suspension Guatemala’s privileges under the Generalized System of Preferences (GSP). Faced with this, the government recognized STECAMOSA (Armbnister-SandovaI 2005) (Coates, interview, 2007).

The union still, however, needed to prove it represented at least 25% of the workforce in order for PVH to be legally required to bargain with it. This was not easy to achieve as management continued with their union-busting tactics. In August 1996, however, STECAMOSA undertook a clandestine organizing campaign, visiting workers at their homes. On September 2, in a surprise move, the union officially let management know that it had achieved the necessary 25% level. Rather than bargain, management refused to recognize that the union had gained the necessary number of employees, a move in which they were again supported by the complicity of the labor ministry. The company also hired armed security guards—an extremely intimidating move in the context of the pervasive political violence in Guatemala.² Union members were forced to work at broken machines, a move that pushed twenty of them to quit so they could find jobs elsewhere (Armbruster-Sandoval 2005; Human Rights Watch 1997).
The irony in all this is that Bruce Klatsky, the CEO of PVH, considered himself a human rights advocate. He sat on the board of Human Rights Watch and was involved in the Clinton administration’s efforts to create a coalition of apparel companies committed

to socially responsible labor practices. Jeff Hermanson (interview, 2007), a board

member of USLEAP, told me,

During the meeting of USLEAP in New York City-a board meeting-it came to our attention that Klatsky was scheduled to give a keynote speech at a fundraiser for Human Rights Watch ai the . . . it was at the Museum of Natural History if I’m not mistaken--[...] so we actually told Human Rights Watch that we were going io picket their fundraiser. And they [PVH] called us--called Stephen Coates, the director of USLEAP--and said, “What can we do to avoid this?" So we said, “Well, you can agree to send a Human Rights Watch investigation team to Guatemala arid we'll
rely on their findings. If they find that Philip-Van Heusen has violated Guatemalan labor law and international worker rights, we would call upon you to recognize the union and bargain.” And they said, “OK, we'll do that." And they did that. And, lo and behold, the investigation disclosed that rights had been violated.
Klatsky reluctantly agreed to bargain with the union, while expressing the usual concerns that a union would somehow be an outside force interfering with management’s relationship with its workers, saying, “When you can't have a direct dialogue with your own associates, then you get a labor problem” (Bounds 1997a, 1997b). He even went so
far as to tell workers that they did not have to join the union if they did not want to, when
he visited the plant (Ortiz 1997).

Fifteen months later, in December 1998, PVH closed the plant. They claimed to be doing so for economic reasons unrelated to the presence of a union, specifically the loss of a major client for the goods produced at Camisas Modernas. Many labor activists, however, regarded this claim with suspicion, seeing it as a move to eliminate the only factory in the Guatemalan maquila sector that had successfully unionized (Armbruster- Sandoval 2005; Greenhouse 1999d) (Hermanson, interview, 2007). “Upon examining PVH’s 1998 Annual Report, U.S./GLEP found that its profits on men’s dress shirts, which were produced at Camisas Modernas, increased from $45 million io $50 million" (Armbruster-Sandoval 2005). Additionally, the work that workers had been doing at Camisas Modernas was now being outsourced io four other factories, with far worse conditions, including lower pay, longer hours, and none of the perks that Camisas Modernas had had (Armbruster-Sandoval 2005).

lt is entirely possible that the decision was a strictly economic one and, at the same time, inspired by the presence of the union. The situation with Camisas Modernas was unusual not only in the benefits the workers received from the company, but in the very fact that PVH actually owned the factory. Most apparel companies actually manufacture very little of the goods they market and sell. Instead, outsourcing to contractors, often small companies barely scraping by, is the norm in the industry. In closing down Camisas Modernas and switching to outsourcing, PVH was simply following this established pattern. One of the reasons that most companies prefer outsourcing is that is cheaper. One of the reasons it is cheaper is that contractors generally do not have a unionized workforce--and therefore do not have to pay high

wages, provide benefits, or respect health and safety standards. Indeed, when contractors do recognize unions, they--like Camisas Modernas--are usually forced to shut down in a year or two. This is not because the major apparel companies are punishing the contractor in some knee-jerk anti-union response. In fact, under pressure from the anti- sweatshop movement, the major apparel companies have sometimes played a role in pushing their contractors to recognize the union in the first place. It is simply that, once the contactor recognizes the union, their costs of doing business go up and the major companies take their business elsewhere, to contractors who can produce for less--by ignoring workers’ rights.

In reporting on the PVH-Camisas Modernas case, Wall Street Journal reporter

Wendy Bounds notes (1997a), “The controversy cuts to the heart of a central question for

U.S. manufacturer competing in the global economy: Can they keep labor costs low and still respect human rights?" In short, the answer seems to be, no.