Saturday, March 31, 2007

Gildan Sweat Wear

As I have reported Gildan Active Wear, North America's largest T-Shirt manufacturer , based in Quebec, has spent the last few years moving its operations to Occupied Haiti under the protection of Canadian/American/French and UN forces.

This week ,despite a two year tax break for manufacturers from the Conservative government, Gildan announced it is moving more of its operations to Haiti, Nicaragua and the Honduras. In fact the irony here is that because of NAFTA this move will mean that the largest impact of plant closings will be felt by Mexico.

Approximately 465 employees in Canada and the U.S. and 1,365 employees in Mexico will be affected by the manufacturing restructuring. The Company will make every effort to alleviate the impact of the closures on all of its employees in all of the communities affected. In addition, the Company will work closely with the Fair Labor Association and both North American and Mexican NGO’s to ensure that best practices are followed in managing the closure of its Mexican sewing operations. Gildan recognizes that the employees in the operations which are being closed have contributed significantly to the Company’s growth and success in recent years, and regrets that the relocation of its production capacity to its offshore manufacturing hubs is unavoidable in order to be globally cost-competitive in the intensely competitive North American apparel industry.

The demand of Fair Labour Practices and unionization campaigns for worker justice have made Mexico less attractive than Haiti where such practices are non existent. And the newly emerging Maquiladora's, Free Trade Zones, in the Honduras and Nicaragua are still relatively union free, meaning that the Fair Labour Standards are toothless. And even when there are unions Gildan subcontractors still violate their rights.

Five fired union leaders from the Nicotex factory in S├ębaco, Nicaragua, a supplier of Gildan Activewear (t-shirts etc) have been reinstated at the factory following strong union action and an international campaign which followed their sackings in November 2004. NSCAG took part in this campaign.

But the crocodile tears shed by Gildan over it's need to move, are a bit much. As their bottom line shows, they have made mucho dinero over the last four years as they off shored more of their operations.

(in millions of $)

2006 $773.2
2005 $653.9
2004 $533.4
2003 $431.2
2002 $382.3
2001 $329.1

Earnings before interest, taxes, depreciation and amortization.
2006 $147.3
2005 $117.7
2004 $ 91.8
2003 $ 81.5
2002 $ 66.8
2001 $ 19.9

Net earnings
2006 $ 106.8
2005 $ 86.0
2004 $ 60.2
2003 $53.2
2002 $ 42.4
2001 $ 0.7

They are not being forced by globalization to do this, they are actively doing this in order to increase their bottom line.

And with the U.S. eliminating trade quotas on foreign-made socks as of January 1, 2006, Gildan is spending some $500 billion through 2010 partly to expand sock production facilities in Central America. Of two new Honduran factories, one will be able to make 20-million dozen pair a year making it the world's largest sock-making plant.
Resulting in the latest offshoring announcement from Gildan. One they have been planning for since last year.

``It's an indication that things are going very well for the company offshore,'' Jessy Hayem, an analyst with Desjardins Securities Inc. in Montreal. ``The extent of the savings is very positive news in terms of 2008. The $45 million figure seems very substantial,'' Hayem said.

By March 2008, Gildan will have spent about $400 million since 2002 to shift production to new plants primarily in Honduras and the Dominican Republic, Chief Financial Officer Laurence Sellyn said in a telephone interview.

And the plants they are closing in Canada are their only unionized facilities.

Gildan respects all laws, including those relating to freedom of association in Canada and elsewhere. Our internal Code of Conduct ensures the right to associate and it is furthermore a key element of WRAP and FLA's Codes of Conduct. In Canada, two of our plants are unionized.

The irony is that when Gildan went public it was supported by union dollars.

The Quebec Federation of Labour invested $6 million in Gildan in 1996

And while they give lip service to workers rights the reality is quite different. They fail to protect their workers abroad. Instead they avoid compliance with voluntary labour codes they agree too. When they finally do it is too late for the workers.

Final update report on gildan activewear honduras

WRC Affiliate Colleges and Universities
Scott Nova (WRC), Lynda Yanz (MSN), and Maritza Paredes (EMIH)
September 27, 2006

Update on Gildan Activewear (Honduras)
This memo is the second and final update on the verification of Gildan Activewear’s compliance with an agreement reached in January 2005 with the WRC and the Maquila Solidarity Network (MSN) aimed at remedying code of conduct violations related to a mass termination of workers that accompanied the closure of Gildan’s El Progreso facility in Honduras. Central to the agreement was Gildan’s commitment to providing priority hiring opportunities to former El Progreso workers.

The investigation found, in short, that Gildan did not comply with the agreement during a key early stage of implementation, though Gildan’s compliance with the accord improved in later stages and was accompanied by other constructive measures. Generally speaking, we must report that the agreement did not lead to substantial remediation of the wrongful terminations that the agreement was motivated to address. As discussed below, given the difficulties posed by the mass termination and the time that had elapsed between the closure and the agreement’s adoption, it is unlikely that the harm done to the workers involved would have been fully remediated even if the agreement had been fully adhered to.

Just like it is too late for their unionized workers in Canada. Despite the Conservatives corporate tax breaks and the Bloc's moaning and groaning about the harm this does to Quebec's textile industry.

Gildan is a capitalist success story. For Quebec, for Canada, the corporation Head Quarters and finances stay here while it ships production abroad. It is not a success for workers in North America, Mexico or at it's new sweat shops abroad.

While the Conservatives brag about closing loopholes for corporations using offshore tax havens, they have done nothing about Gildan offshoring production.

Also See:

Boom Times For Canadian Capitalism

Haiti Atrocities


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janfromthebruce said...

So we don't buy their socks. Besides that, all the CO2 environmental costs related to shipping across places which will thus require Air travel. Buying these socks contributes to global warming. All products should be sold with CO2 emissions tags so consumers know that they are contributing to global warming. This cost, ultimately, should be born by the company that insists on ignoring global warming.

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