October 28, 2016 Garrett Brown 1Comment

I have just returned from a whirlwind trip in Vietnam inspecting a Korean-owned garment factory complex of 10,000 workers that produces university logo apparel for Nike and clothes for a dozen brand-name companies like Pink and Ralph Lauren’s Polo.  Lots of problems with the working conditions and a non-existent occupational health and safety program – more to come later on all that.  We conducted our inspection on behalf of the Washington-based Workers Rights Consortium.

But with wages in China becoming “too expensive,” Vietnam has become the new destination for many brands in apparel, electronics and other consumer goods.  According to a breathless article in The Economist in August, “Foreign direct investment in Vietnam hit a record in 2015, and has surged again this year.  Deals reached by $11.3 billion in the first half of 2016, up by 105% from the same period last year.”

Foreign investors now account for 25% of annual capital spending in Vietnam, and trade – that is shipments from Vietnam’s version of maquiladora export factories – accounts for about 150% of the country’s national output (GDP) and two-thirds of exports.  Nike is now reportedly sourcing 40% of its production in apparel (clothing and sports shoes) from Vietnam.

In addition to tight social control in Vietnam by its nominally “Communist” government, global brands are excited by the demographics of the country.  Vietnam’s median age is only 30.7 years, compared to China’s 36 years.  “Seven in ten Vietnamese live in the countryside, about the same as India – and compared to only 44% in China. The reservoir of rural workers should help dampen wage pressures,” The Economist noted with satisfaction.

In the Korean plant in the Cu Chi industrial park we inspected, workers make around $250 a month for four six-day work weeks of 50-58 hours ($1 to $1.25 an hour) including all bonuses.  The plant had two wildcat strikes last fall about low wages – it is nearly impossible for workers to reach the factory’s high production quotas and earn productivity bonuses – and abusive treatment by Korean managers.  Korean supervisors throughout Asia and Latin America are notorious for a brutal style of management that includes screaming at workers, physically pushing and even striking them.

Ironically in this plant, like many others in Vietnam, 16 of 17 of the Executive Board members of the Communist Party-controlled union are senior managers of the factory complex.  Needless to say, the union did not defend the strike actions of the 1,000-plus workers involved.

One of the haunting images we brought back from the inspection this month, was visiting one of the 12 factory buildings on site during the lunch hour.  Many workers quickly eat at the factory canteen and then, until recently, return to their work stations to work through their lunch break in an often-vain attempt to surpass the high production quotas.  Following the strikes last year, the plant management responded to criticism of workers’ unpaid work hours during lunch by cutting the power and lights to the plant during the 60-minute lunch period to prevent workers from operating their machines.

Walking into the darkened factory during the lunch hour, my American colleague on the inspection team nearly tripped over the body of a worker lying on the floor.  In fact, hundreds of workers were laid out on the factory floor, trying to sleep or rest in the darkened facility before returning to the crazy pace of production and the relentless chase to meet the production quota.  My colleague said the hundreds of people lying in semi-darkness on the floor “looked like they had all been shot and that it was the scene of some terrible massacre.”

They weren’t killed, of course, because their labor is needed to keep the shelves of many retail stores filled with the latest fashions, and the profit ledgers of global brands bulging.  Women’s Wear Daily reported that, in 2015, Nike had gross profits of $6.2 billion on sales of $27.7 billion; VF Corporation (a holding company of Nautica, North Face and others) made $6 billion in profits on sales of $12.2 billion; and The Gap Inc., had profits on $6.2 billion on sales of $15.4 million – for gross profit rates of 46%, 49% and 40%, respectively.

One other interesting fact discovered during the inspection was that in 2015 this plant was audited 26 separate times by the brands themselves or by their “corporate social responsibility” consultants.  All these CSR audits are secret, of course, so no one knows if any of the issues that sparked the wildcat strikes were identified.  But it is clear that a work life so intolerable that workers put their jobs and their liberty on the line to illegally strike did not change a bit despite audit after audit after audit.

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