Question

You are the CEO of a major US apparel company that contracts work to garment manufacturers abroad. Employees of one contractor report 20-hour workdays, pay below the minimum wage, overcrowded living conditions, physically abusive supervisors, and confiscation of their passports so they cannot quit. Local officials say labor laws are adhered to and enforced, though abuses appear widespread. You send inspectors to the offending factory abroad, but they uncover no labor violations. A labor-advocacy group claims that supervisors coached workers to lie to your inspectors about conditions and threatened workers with time in makeshift jails without food if they talked. Questions to be answered: 1-5. Should you implement a monitoring system to learn the truth about what is happening? 1-6. Do you help the factory improve conditions, withdraw your business from the country, or simply do nothing? 1-7. How might your actions affect relations with the factory owner and your ability to do business in the country?

Answer 1

1-5: Yes, you should certainly implement a monitoring system to learn the truth about what is happening. This is because the contractor is your vendor to whom you have outsourced the manufacturing of your garments and hence you are ethically and morally responsible for the plight of the workers who are involved in manufacturing the garments.

1-6: I will help the factory improve its conditions and will ensure that workers are treated properly and as per the labor laws and labor standards that is legally and morally acceptable. The contract vendor will not be allowed to exploit the workers and will have to pay them properly and provide them fair and safe working conditions as well. If the contract vendor fails to ensure this then I will search for another vendor within the company or leave the country and search for vendors in other countries where workers are not exploited and abused.

1-7: In the short run my actions will strain my relations with the factory owner and might also undermine my ability to do business in the country. However in the long run it will be beneficial for everyone. In the short run I may face difficulties and obstruction in my supply chain but once all the labor issues are sorted out the long run will see a smooth operational scenario for my business.