Glimpses of the Anti-Sweatshop Movement

It is this low profitability of actual manufacturing that leads the core apparel firms

to outsource most, if not all, of the production to smaller companies (Gereffi 1994; Ross 2004). While the resulting production process is highly decentralized, power remains concentrated in the retailers, marketing and merchandisers who control the most

profitable part of the production process (Moody 1997). Retailers may charge as much as a 55-60% mark-up from what they pay the manufacturers/ contractors (Appelbaum and Gereffi 1994). Some of the contractors who do the actual production are themselves large, transnational firms, based out of Taiwan and South Korea, although they may do much of their production in other, lower cost countries (Gereffi and Pan 1994). Most contractors, however, are small operations, often owning only a single factory. In seeking to manufacture goods for the brand name companies, these contractors are essentially in a bidding war with each other--whoever can produce the goods for the lowest cost while maintaining a certain quality will get the contract. Most contractors operate at very slim profit margins, often just scraping by (Bonacich et al. 1994; Ross 2004).
This relationship between the firms at the different nodes in the production process in turn defines the relationship between the owners of the contracting firms and their workers (Dolan 2004) and thus the sort of decisions management is likely to make within these arenas. Because the contractors operate at such slim profit margins, they in turn must shift the burdens of the drive to cut costs onto their workers, thus producing sweatshops. These asymmetries of power between the brands and their contractors and between the contractors and their workers have important consequences for the anti- sweatshop movement. On those occasions where suppliers have been successfully pushed to recognize unions, raise their wages, and improve working conditions, these victories have proved short-lived. Typically, we see the same pattern as in the Camisas Modernas factory--the factories that make such deals shut down within a year or two, since they can no longer afford io stay open. When contractors improve conditions for their employees, they raise their own costs of production--and consequently loose out in the bidding war to do business with the brands. The suppliers are simply not in a structural position to change the way business is done and how labor is treated. That power lies with the brand name companies that dominate the commodity chains, which thus have become the focus of the anti-sweatshop movement’s campaigns (Armbruster-Sandoval 2005; Esbenshade 2004b) (multiple interviews, 2007).