Framework Agreements Experience And Strategy Of The Itglwf


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Fashion, apparel, textile, merchandising, garments

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Framework Agreements Experience And Strategy Of The Itglwf

  1. 1. Framework Agreements: Experience and Strategy of ITGLWF International Textile, Garment and Leather Workers’ Federation
  2. 2. Aims of session <ul><li>1. Types of multinationals and their interrelationships in the TCF sector. </li></ul><ul><li>2. Some of the peculiarities of this sector - parts are truly global </li></ul><ul><li>3.Problem of existing codes </li></ul>
  3. 3. <ul><li>4.Why an IFA ? </li></ul><ul><li>5. Specifics of the ITGLWF draft agreement. What is in it ? </li></ul><ul><li>6.Initial employer responses </li></ul><ul><li>7. ITGLWF emerging strategy </li></ul>
  4. 4. The Nature of the Beast ...….. Players in the Garment Industry Apparel merchandisers Apparel Manufacturers Buying agents/supply chain managers Trading companies/import export firms Retailers Suppliers
  5. 5. Apparel Merchandisers <ul><li>In general no manufacturing, only sourcing </li></ul><ul><li>Since no manufacturing assets, they are very mobile </li></ul><ul><li>hundreds of suppliers </li></ul><ul><li>buy only finished garment, not components </li></ul>
  6. 6. Manufacturers <ul><li>Loyalty to the national base now undermined by low cost competition. </li></ul><ul><li>Some maintain own production but increasingly outsource. </li></ul>
  7. 7. Suppliers/Subcontractors <ul><li>Coats (Component manufacturer) </li></ul><ul><ul><li>Must chase the manufacturers </li></ul></ul><ul><li>Pou Chen (subcontractor) </li></ul><ul><ul><li>Spreads its risk </li></ul></ul><ul><ul><li>Aims to own whole chain of manufacture </li></ul></ul>
  8. 8. Supply Chain Managers Can provide fully comprehensive service - may acquire some manufacturing facilities themselves Explosion of Internet based supply chain brokers
  9. 9. Retailers <ul><li>Wield enormous power which affects wages and intensification of work </li></ul><ul><li>Decision on sourcing policy critical </li></ul>
  10. 10. Garment sourcing in the global era Licensee Merchandiser/retailer Buyer Research,Design Supply Chain Manager Marketing,
  11. 11. The global subcontracting chain…. First subcontractor Sub-subcontractor “ Shop-house” Home workers Supplier Home workers
  12. 12. A Global Product Zip made in Japan Cotton from Benin Dyed in Milan using German indigo Brass rivets made in Italy ( Namibian copper and Australian zinc) Thread from Northern Ireland Polyester core from Japan Assembled in Tunisia
  13. 13. Cotton from Benin Jeans assembled in Tunisia Thread from Northern Ireland Brass rivets made in Italy from Namibian copper and Australian zinc Zip made in Japan Polyester Thread Fibre made in Japan Denim dyed in Italy
  14. 14. International Sourcing into the New Millenium European Union Own production 26% Imports 74% USA Own Production 18% Imports 82% Asia 27% 36% Intra EU 22% Central Europe & North Africa 20% Rest of the World 5% 3% Caribbean & Central America 29% Mexico 14%
  15. 15. Shifts in Global production
  16. 16. Market Scenario = <ul><li>Enormously competitive-global warfare, short brand life cycles </li></ul><ul><li>Result is apparel manufacturing migration to low cost countries </li></ul><ul><li>always changing race to the bottom </li></ul>
  17. 17. Anatomy of a Nike Sweatshirt V167G6N <ul><li>Sent to the Dominican Republic for assembly </li></ul><ul><li>detailed work study specification 22 operations: </li></ul><ul><li>5 steps to cut </li></ul><ul><li>11 steps to sew </li></ul><ul><li>6 steps to inspect and pack </li></ul><ul><li>Time allowed 6.6 minutes </li></ul>
  18. 18. Anatomy of a Nike Sweatshirt V167G6N <ul><li>Hourly rate in the EPZ in the Dominican Republic 70 cents </li></ul><ul><li>worker earns 8 cents for each sweatshirt they sew </li></ul><ul><li>sweatshirt retails in the US for $22.99 </li></ul><ul><li>if Nike doubled the wage it would be still only 7/10ths of 1% of the retail price </li></ul>
  19. 19. The Corporate Response <ul><li>Unilateral corporate codes of conduct </li></ul><ul><li>Creation of Global compliance teams to monitor codes </li></ul><ul><li>Signing up to multi-stakeholder initiatives </li></ul><ul><li>Propaganda counter-offensives </li></ul>
  20. 20. Company Codes - Problems <ul><li>Codes are often unilaterally introduced </li></ul><ul><li>not all ILO core standards are included </li></ul><ul><li>No ongoing dialogue with the workforce </li></ul><ul><li>Generally no disclosure of locations with codes </li></ul><ul><li>Verification of monitoring process usually company controlled </li></ul>
  21. 21. Extract from a Code of Conduct <ul><li>Sara Lee Corporation </li></ul><ul><li>Sara Lee Knit Products </li></ul><ul><li>International Operating Principles : Labour Unions </li></ul><ul><li>SLKP believes in a union free environment, except where laws and cultures require us to do otherwise. The company treats people with equity and fairness, and believes that employees themselves are best able to voice their concerns directly to management. SKLP is committed to the strict observance of laws and regulations related to union activity and encourages individual freedom and direct dealing between employees and management while actively discouraging union representation of employees where the law allows. </li></ul>
  22. 22. Key ITGLWF aims <ul><li>Framework agreements are negotiated </li></ul><ul><li>Agreements include all core standards </li></ul><ul><li>Ongoing dialogue - ideally via a world council </li></ul><ul><li>Full disclosure of the subcontracting chain </li></ul><ul><li>independent verification sought </li></ul><ul><li>The determination of a decent employment relationship through effective national legislation and collective bargaining </li></ul>
  23. 23. Employer Problems with IFAs <ul><li>Have their own standards or terms of engagement with suppliers - why a separate document ? </li></ul><ul><li>Problems of scope of the agreement - legally nervous - what is the company ? </li></ul><ul><li>Wish to extract responsibility/duties from the ITGLWF </li></ul>
  24. 24. Employer Problems with IFAs (cont.) <ul><li>What is rationale behind disclosure of locations ? </li></ul><ul><li>Verification : have their own designated verifiers under other initiatives - e.g. FLA. </li></ul>
  25. 25. Strategic Options <ul><ul><li>Consensual and direct dialogue with a multinational – probably brokered by a national affiliate in the HQ country. </li></ul></ul><ul><ul><li>As a result of dialogue brokered by other MNCs who have commercial relationships with the MNC in question. </li></ul></ul>
  26. 26. Strategic Options (cont.) <ul><ul><li>Dialogue resulting from a corporate campaign arising from a specific dispute within a part of the subcontracting chain. </li></ul></ul><ul><ul><li>Dialogue resulting from pressure resulting from a co-ordinated recognition campaign launched from key points in the supply chain around the world. </li></ul></ul>