EYE OF THE NEEDLE

Kellwood's taking fashion forward by making virtually all our clothes in the Third World. But the St. Louis giant carefully cloaks its operations, its plant locations and its monitoring of labor conditions.

The resolution was soundly defeated. But since then, Nike and Reebok have increased wages in Indonesia by 40 percent, sharing the cost with their suppliers. After years of insisting that it was absolutely impossible to disclose factory locations, Nike gave in to college students this October and revealed the 42 factories where college-logo products are made. The same month, Reebok released the first independent factory audit by a human-rights group, and so did one of Kellwood's top two competitors, Liz Claiborne. The latter allowed the Commission for the Verification of Corporate Codes of Conduct (COVERCO), a coalition of Guatemalan human-rights and religious organizations, to inspect one of its suppliers' factories, and bravely published the report, which included an account of a pregnant worker whose supervisor refused to let her leave the floor when she went into labor. (Her baby was stillborn the next day.)

Kellwood has used Pricewaterhouse Cooper, Ernst & Young and, now, STR of Enfield, Conn., a firm that does apparel quality testing as well as monitoring of fair labor practices. Asked how they inspect and monitor labor conditions, operations manager Ed Kozloski replies, "I don't have any information at all that I could actually provide to you." But Kellwood insists they're doing a good job -- why be "transparent" to human-rights groups?

The groups counter with questions: How often are inspections unannounced? Do they go beyond a perfunctory tour of the factory floor? Are workers interviewed in private, away from their supervisors? Does Kellwood consult with local people about the cultural norms? (In Indonesia, industrial relations are governed by the principle of Pancasila, emphasizing harmony and consensus over individual rights -- and that changes the way workers answer Western questions.) Above all, can the monitors win workers' trust? Kernaghan recalls "hundreds of interviews with workers who tell us they lie.... They are told before the monitors get there, "You have to be very careful; there are people in the U.S. trying to steal your jobs."

Apparel corporations fast earned the nickname "swallow companies" because they so easily fly away to another country when the climate shifts. Inspections can easily be perfunctory; buyers and supervisors and even hired auditors all have incentives to preserve the status quo.

Take JC Penney, one of Kellwood's biggest customers. "Absolutely we've had our inspectors in there," rebounds JC Penney spokesman Duncan Muir, sounding a bit like Tigger. "They have a pretty sophisticated monitoring program themselves. They're a good supplier." So when was the last JC Penney inspection? "There is no really easy answer," Muir says. "They have 11 suppliers, which in turn have numerous factories. All I can tell you is that there are three suppliers either owned by or associated with Kellwood where factory evaluations are pending." Supplier-retailer confidentiality, a force akin to the Roman Catholic confessional, prevents Muir from divulging names, dates, locations, inspection methods or results, but he does admit it's JC Penney staff, not independent auditors, who go in. "They look first for the quality of the production of the merchandise, certainly. But they also check for any violation of labor laws." Who sees their report? "It goes to the buyer for that kind of apparel, and the buyer decides whether the conditions are acceptable."

But what if the buyer wants those cheap cashmere sweaters really bad?

HEMMED INKernaghan's first insight into the Kellwood mindset came back in 1995, when he showed up at the Miami Conference on the Caribbean and found himself sitting next to James Jacobsen, the company's executive vice president. Jacobsen confided how moved he'd been at the plight of Indians in this country, and how he'd suggested putting a Kellwood factory on a reservation and subsidizing meals to help the workers.

Then he found out they'd have to pay minimum wage.

"Can you believe it that government regulations apply to Indian reservations?" he reportedly asked Kernaghan. "Here's an incident of government regulations hurting workers and hurting human rights."

At the time, Kellwood was paying Haitians 17 cents an hour -- one-twentyfifth of what they would have had to pay the Indians.

Is the global economy Kellwood's fault? Apparel manufacturing has always thrived where the women are poor, with no other options. In the 1930s, St. Louis' garment district leaned -- hard -- on immigrant Italian hand-sewers who went home at night and threaded the next day's needles, gaining maybe 15 cents. By the time the International Ladies Garment Workers' Union had won fair wages and air-conditioned factories, there was a shortage of women willing to do the work.

Today, the women in developing countries line up eagerly, and so do their governments. Sri Lanka, which proudly lists Kellwood among its resident multinationals, pushes workers forward like parents bragging about shy children. "The high degree of manual dexterity and hand-to-eye coordination displayed by the workers is ideal for precision production.... Foreign expatriates are able to enjoy a high quality of life ... memberships of resorts and golf clubs, prime office rentals and condominiums are among the lowest priced in the Asian region."

It's easy for corporations to feel they're doing these countries a favor and pleasing their stockholders. Yet former Kellwood CEO William McKenna, who's also a Roman Catholic deacon, has admitted that when you're sourcing in poor countries overseas, problems are inevitable. "I would prefer to have our total production in the U.S. in wholly owned Kellwood plants where we could more fully control activities," he wrote a concerned parish priest, the Rev. Steve Robeson, back in 1996, "but that is impossible. If I were to do that tomorrow, I would put Kellwood out of business and adversely affect the lives of, by my count, over 50,000 persons. That is not part of my Christian ministry." Even Scott Littlehale, an economic researcher for the Union of Needletrades, Industrial and Textile Employees (UNITE), concedes that though "Kellwood's in a position to change the treatment of workers, they're in less of a position to afford people a living wage. What Kellwood pays its contractors is in large part determined by what the retailer pays them." That's why many activist groups have shifted their attention to retailers and why economists insist it's ultimately the consumer's choice. "If you bought that blouse for $12 at Wal-Mart because it was made by El Salvadoran women who are thrilled to be paid six dol -- sixty cents an hour," Kathie Lee Gifford said on the Nov. 16 Dateline NBC (nearly slipping up and substituting a U.S.-style wage), "if you took that work from them, and brought it to America, and put it in a union shop, you would then probably have to pay $60 or $70 for that blouse. Now that's a choice only the American consumer can make."

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