Story of factory closing unravels

By Jennifer Wells
Saturday, July 24, 2004

There are two sides to the following story.

Here's one side. The Monday before last, Glenn Chamandy, co-chief executive officer of Gildan Activewear Ltd., flew to Washington for a face-to-face meeting with two workers' rights organizations. Gildan had been in discussions with the two outfits — the Fair Labor Association, and the Worker Rights Association — on the topic of alleged unfair labour practices at one of the company's manufacturing operations.

Gildan is based in Montreal and makes T-shirts. This understates the case: Gildan is one of the largest T-shirt manufacturers on the continent. Check your T-shirt labels. There's a very good chance you've got a Gildan T in some drawer somewhere.

The operation at issue is Gildan's El Progreso factory in Honduras. There are 1,800 employees at El Progreso and they manufacture 36 million T-shirts annually.

Late last year, a complaint was launched against the company, the substance of which was the alleged firing of El Progreso workers for attempting to unionize their shop. Investigations of those allegations were launched by the FLA and the WRC.

Both organizations had completed their assessment of El Progreso and had moved into joint discussions with Gildan about their findings and proposed remediation. It had been agreed that neither organization would release its report on El Progreso until after Gildan had had an opportunity to respond, and to advise what steps it intended to take, if any.

As far as the FLA and the WRC were concerned, Monday's meeting would be a continuation of those discussions.

Instead, in the meeting, Glenn Chamandy announced Gildan would be shutting the factory, effective Sept. 30. Chamandy presented the economic rationale for doing so, the nub of which was the lack of competitiveness of El Progreso against other Gildan operations. The company has two other sewing facilities in Honduras, and others in Mexico, Haiti and Nicaragua. It said in the past that its Honduran manufacturing hub has been key to its low-cost advantage in the marketplace.

The following day, Gildan informed the El Progreso workers of the closing, news of which subsequently found its way into media reports.

In a column I wrote in February, I quoted a comment previously made by Glenn Chamandy's brother, Greg. Gildan's broad intention, he said, was to "help to create a middle class for the first time in these countries." That, I wrote, was "a great pitch. But it would be a whole lot easier to swallow if the company went full bore for transparency."

Gildan took issue with my comment. In an e-mail, Stéphane Lemay, the company's vice-president for public and legal affairs, pointed out what he felt were omissions in my column, including the fact that Gildan had voluntarily agreed to make the results of the FLA audit public. My criticism of a lack of transparency was, he said, "very hard to understand, considering that we have demonstrated a willingness to be far more transparent than the average."

I called M. Lemay the other day and said I was seeking the company's press release on the El Progreso closing. "There's no press release," responded Lemay. "This, for us, was not constituting material information that would require disclosure. It's an operational decision to close the facility."

Let's accept that Gildan legally weighed what constitutes a material change in a company's affairs in making its decision not to release the news of the plant closing. But, I asked Lemay, how does the corporate quietude meet the test of transparency? This is what he said: "Well, I mean, transparency can be seen from different ways. I'm only talking from a legal perspective....It's really an operational issue and we're always, as you know, we're always re-evaluating the way we manufacture our products."

What is exceptional in this instance is the scrutiny under which the facility had been placed, and the sudden decision to pull the plug on the plant in the midst of remediation talks.

This decision, says Lemay, is in "no way related" to the audit of the plant. Gildan has consistently denied allegations of worker rights violations at El Progreso.

Let's give a moment to the other side of the story.

Scott Nova is the executive director of the Washington-based Worker Rights Consortium. The WRC, says Nova, had notified Gildan of its findings sometime in April and had commenced, alongside the FLA, face-to-face meetings with Gildan representatives in May. The Monday before last, Nova walked into a meeting that he thought would attempt to reach a final resolution on the mediation of worker rights violations that had been identified. Instead, Chamandy landed the surprising news of the plant's closing.

Were there worker violations?

Nova says yes. "The primary allegation was that Gildan had systematically fired workers who chose to form or support a union. We investigated this particular question through extensive interviews both with workers still employed at Gildan, which we conducted off-site, and also with workers who had been fired."

Here are the WRC's conclusions, in Nova's words: "The evidence was overwhelming. In fact, we've rarely encountered a case so cut and dried that the allegations were valid, that Gildan had in fact systematically sought to prevent workers from exercising their lawful right to unionize by firing."

Lemay declines any discussion of this point until, he says, the reports have been made public. The WRC expects to release its conclusions early next week. Lemay does say the company has and will commit to some corrective measures. The example he gives — replacing a missing cafeteria door — steps widely around the fundamental concern about Gildan's operational conduct and the WRC's recommendation that some 80 workers who had been let go should be reinstated, with back pay.

Rutledge Tufts is executive director of the Fair Labor Association and he, too, was at the meeting in question. "I have to say that was unexpected," he says of Gildan's decision to shutter El Progreso. The FLA had constructed what it refers to as its tracking charts on the facility and had, like the WRC, expected to discuss proposed remediation.

The FLA was born out of then-U.S. president Bill Clinton's anti-sweatshop initiative and will investigate third-party complaints of serious non-compliance issues. The El Progreso investigation was at Step 4 of the investigative process, meaning the FLA had found "a significant likelihood of non-compliance."

Tufts is a gentlemanly speaker, and emphasizes that the purpose of the association is "not to put a black mark on the company. Our goal is to get it fixed." The FLA has never before found itself in the situation it finds itself in with Gildan. Tufts says the FLA has not yet decided whether Gildan's status as a "participating company" in the association will be reviewed at the association's board meeting, scheduled for next week. And he adds that discussions with the company are ongoing.

Gildan has frequently touted that it was the first Canadian company to become a participating member in the FLA. And championed the association's "credible, transparent and open process" of seeking compliance with international labour standards.

Now what message is the company sending?

"The message that will be heard throughout Gildan's operations," says the WRC's Scott Nova, "is that if you want to have a job at Gildan you won't support unionization."

That's one side of the story.

The other side of the story is less clear. Next week, Gildan should be coming clean on what action it proposes. As I've said before, the company is taking an awfully long time to deliver on its promises.