The Wal-Mart Weekly: Retailer accused of sweatshop conditions in Bangladesh

Posted Oct 13th 2008 3:00PM by Brian White
Filed under: Wal-Mart (WMT), Columns

Welcome to the 80th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.

This week, Wal-Mart Stores Inc. (NYSE: WMT) is under fire for alleged major human rights violations in some of its Bangladesh factories. Although global manufacturers have often come under fire for slave labor conditions in PacRim-area factories, could this really apply to a retailer? After all, a retailer is a distributor, not a manufacturer.

In most cases, this is true -- but not when it comes to Wal-Mart. According to a SweatFree Communities report, Wal-Mart workers in Bangladesh were made to work 19-hour days while being paid $20/month. Sounds like a raw deal, so let's take a look.

Sweatshop manufacturing is nothing new

In the quest for the almighty dollar, many large companies have made the decision to work with contract manufacturers who bid so low for projects that they are forced to barely pay employees while working them on an inhumane schedule. Think your 60-hour work week is a toughie? Try manufacturing widgets in some Chinese factories six days a week.

SweatFree Communities, an activist organization, accuses the world's largest retailer of buying school uniforms that were made under extreme sweatshop conditions in Bangladesh. There is a distinction, here: Wal-Mart itself did not make the uniforms under these conditions; one of its suppliers did. SweatFree is a five-year-old organization that works to get agreements from employers to not buy or use products that have been produced by violating the human rights of employees. No matter how you cut it, working 19-hour days, being kicked and beaten for showing up late to work and making below a national minimum wage is a human rights violation.

These results were gleaned from talking to 90 employees outside of work by SweatFree representatives. Wal-Mart received a draft of the SweatFree report in August, and released a statement to BusinessWeek a few weeks ago that stated: "Consistent with our concern for the workers and their working conditions, we took immediate action when we received the SweatFree draft report. We visited the factory unannounced and then met with the principal factory owner and our suppliers to ascertain conditions. Additionally, we proposed using an independent third party to work with factory management over the next twelve months to monitor factory operations."

Do you believe them? Wal-Mart admitted that it requested - several times - that SweatFree not release its findings, instead seeking to partner with the watchdog group to uncover labor industry abuses in Bangladesh. Wal-Mart reported that at least five other brands and/or retailers use the same factory for apparel production and that it was not alone in partnering with the facility in question. This brings us to the point of this column: do retailers and brand companies have any code of ethics publicly available that specifically references the use of sweatshop conditions with its own factories or those of manufacturing or marketing partners? Doubtful. If you find any, please list them in a comment below and tell me where you found it.

Why SweatFree singled out Wal-Mart

Wal-Mart was targeted by the labor watchdog group due to the belief that it was indeed the factory's largest customer, estimating that about 15% of the annual $11 billion of Bangladeshi garment orders went to Wal-Mart. SweatFree Communities' Executive Director Bjorn Claeson told BusinesWeek that "Wal-Mart has incredible economic muscle in that country ... if it takes the leadership position as a retailer and works with other brands, there is no question that it can really have an impact."

In typical watchdog fashion, SweatFree did not hold back the report. Censoring any results - regardless of who or what is affected - would be against everything a legitimate watchdog organization stands for. Of course, Wal-Mart reacted to the report that was released, agreeing to "partner" with SweatFree to find out just what was wrong with labor conditions at supplier factories where it has billions of dollars in apparel made annually.

Here is the problem, and one that global companies constantly fail at: labor conditions and supplier contracts are most likely left very vague. With such vagueness, retailers and manufacturers both can cut costs to the bone and gain more business. Thus, consumers see lower prices, the retailer sees more orders, the manufacturer sees larger shipments and the employees at the end of the food chain see rampant abuses. The entire burden falls upon them. What do you know: labor practices are conducted with nightmarish precision to eek out every single penny possible to keep the twisted commerce chain in place.

Sheepish customers

One thing I have constantly noticed with many middle-class American consumers is that they want so much for so little. The word "Free" in any area of marketing is met with sheep-like, numbing response. The cheaper the price, the more "value" many consumers see in the material items they purchase. The entire chain of raw materials to manufacturing to labor to shipping to distribution to shelf stocking does not occur to the bargain basement shopper. Would you rather pay $34.97 for a sweater that has been produced with organic cotton and "with pride" by employees here in the U.S. or pay $17.97 for a decent quality, sweatshop-made garment that is about as generic and cheap as possible? You can probably guess what the majority of American shoppers would choose.

Stay tuned right here next week for another edition of The Wal-Mart Weekly. Until then, have a safe week.

Tags: featured, Inc., Wal-Mart, Wal-Mart Stores, wal-mart weekly, Wal-martStores, Wal-martWeekly, WMT

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Reader Comments (Page 5 of 5)

10-14-2008 @ 9:10PM

Jessy Scholl said...

Most of the votes are right on the money. Americans want to buy American, but they can't for some reason or another. My guess is that most of our jobs were stolen by greedy CEO's that wanted a major raise and would walk over a working class American to get it. Right now, their favorite pastime is running companies to the ground so that they can have the $100 million dollar payday and retire knowing that the current administration would protect them and hope against hope that we would have some electronic malfunction that would allow for John McCain to be elected President, and avoid Barack Obama going after them because it is unlikely that the evidence would be gone prior to January 20, 2009.

Now let's see what Jesus says about this in Matthew 25:31-46. Now I am just going to summarize what it says, but you can read the full passage in the bible. It says that Jesus will divide the sheep from the goats and will say to the sheep, come into the Kingdom of God while the goats are thrown into the Lake of Fire.

Using the above passage as an example, lets compare the activities of the CEO of the Make-A-Wish Foundation vs Walmart CEO Lee Scott. Based on Matthew 25:31-46 the CEO of Make-A-Wish would make it into heaven because they spend mounds of money making dying children happy and, at least make a few of their remaining days carefree.

On the other hand, Lee Scott would find that his business practices would lead to him feeling very hot. It is true that he allows for new product sourcing, as explained on the CNBC special, but think about all the pressuring he does to get his suppliers to cut costs? Right now it is 1,000% clear that Lee doesn't care what his suppliers do or what happens to his competitiors as long as his income and bonuses increase.

Right now, he doesn't care about the 700 people laid off from a textile mill in South Carolina so their jobs could go to China. Yes some chinese woman is getting a job getting paid $50 per month at 18 hours per day. However Jesus is mad about that single South Carolina woman, with four young kids and a husband that left her for another man, that was struggling to make ends meet at that textile mill working full time at $9.50 per hour with a 35 hour work week though she is working 60 hours per week with just a $1 extra for overtime including pay on Sunday and with a total gross pay at $357.50 per week before deductions. The only way Lee Scott can escape this charge is to accept Jesus Christ as his Lord and Savior and reject the Walmart way.

10-15-2008 @ 2:09AM

Dennis said...

10-13-2008 @ 4:11PM
Betty Peck said...
Sam Walton would be turning over in his grave. I remember when there used to be signs bragging about things "made in America."

I have joined Costco, which is suppose to have agreements for human rights working conditions with their suppliers. I also read recently that they do spot checks for pesticides on their foods to make sure companies are in compliance.
I also like their mission statement that they want to treat their customers, employees and share holders fairly.

Also, I would be interested in how Target compares to Walmart in their policies. I hope better, because that is who I prefer to shop with instead of Walmart.
---------------------------------------------
I worked for Walmart. I helped to open the first store in St. Charles MO. in 1984. I met Mr. Sam. He was nice, and plain. You're right. He's probably turning over in his grave.

Listen to Clark Howard, an Economist, who has a radio show, or call him, regarding Target. He was talking about Target, tonight.

Dennis

10-15-2008 @ 2:20AM

Dennis said...

10-14-2008 @ 7:34PM

Lynda said...
I agree walmart takes people for what they can get and uses people and the reason they take the jobs from here to other countries is because they will work for nothing! We as Americans need to boycot all stores until they sell American made products only! All these sweat shops are bad and Tommy H. is also one of them I read about him too.

Lynda, I'd like to agree with you. But, greed, being a normal, and natural human emotion, all of us want to buy everything, for less. If I'd had to pay an American to manufacture each of my TV'S I probably could only afford to have two, instead of the five, that I know have. How much more, are you willing to pay, American manufacturers for your toaster, microwave, can opener? Look at all your "stuff" in your house, kitchen, garage. Are you willing to pay an American three times as much, for your blender, or mixer. If these items, are newer than 15 to 20 years old, they've been made in Asia. Are you a part of the problem, Lynda?

Dennis

10-15-2008 @ 2:32AM

Dennis said...

10-14-2008 @ 8:55PM

TERRY said...
Roudy, that is the kind of attitude that gets nothing positive done. I have to watch my dollars, but I NEVER shop at WalMart, period.

That's your right, Terry. You, being an American, have the right to "waste" your money, at any place, and by any means that you choose. From whom, do you buy your Asian/Chinese manufactured goods? I buy a small can of Van Camps, pork & beans from Walmart for 52 cents. I've bought the same can of beans from Save a center, or Winn Dixie, for one dollar. Which purchase makes more sense, Terry? You're giving away 20 to 30 percent of everything you spend. I hope your reason is good enough.

Dennis

10-22-2008 @ 11:25AM

susan said...

Wal-mart is evil. I am a lawyer that worked with Wal-mart, the things I learned are horrific

10-24-2008 @ 11:15AM

ColoGirl said...

Speaking from experience, Walmart does treat their employees like dirt, they have you work three and four jobs but you better not go over your hours or they will write you up and or fire you, Sam is definately turning over in his grave, and not in a good way either. there are 16 lawsuits against Walmart and how they are treating people, and Inviromental hazzards. Wake up

10-27-2008 @ 11:12AM

Larry said...

Wake up America most of the items people purchase are not necessary just something they want. Ipods,Cell Phones ( why do children need cell phones), Video games, everyone in the family has a camera, car, CD VCR DVD's, everyone has to have their own bedroom. The American people just waste products and spend way to much. Save your money, do not share your wealth, it is yours to keep.