Framework Agreements Experience And Strategy Of The Itglwf
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Transcript of Framework Agreements Experience And Strategy Of The Itglwf
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Framework Agreements: Experience and Strategy
of ITGLWF
International Textile, Garment and Leather Workers’ Federation
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Aims of session
1. Types of multinationals and their interrelationships in the TCF sector.
2. Some of the peculiarities of this sector - parts are truly global
3.Problem of existing codes
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4.Why an IFA ?
5. Specifics of the ITGLWF draft agreement. What is in it ?
6.Initial employer responses
7. ITGLWF emerging strategy
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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
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Apparel Merchandisers
In general no manufacturing, only sourcing
Since no manufacturing assets, they are very mobile
hundreds of suppliersbuy only finished garment, not
components
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Manufacturers
Loyalty to the national base now undermined by low cost competition.
Some maintain own production but increasingly outsource.
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Suppliers/Subcontractors
Coats (Component manufacturer)
Must chase the manufacturersPou Chen (subcontractor)
Spreads its risk Aims to own whole chain of
manufacture
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Supply Chain Managers
Can provide fully comprehensive service - may acquire some manufacturing facilities themselvesExplosion of Internet based supply chain brokers
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Retailers
• Wield enormous power which affects wages and intensification of work
• Decision on sourcing policy critical
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Garment sourcing in the global era
Licensee
Merchandiser/retailer Buyer
Research,Design Supply Chain
Manager
Marketing,
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The global subcontracting chain….
First subcontractor
Sub-subcontractor
“Shop-house”
Home workers
Supplier
Home workers
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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
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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
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International Sourcing into the New Millenium
European Union
Own production 26%
Imports 74%
USAOwn Production
18%
Imports 82% Asia
27% 36%
Intra EU22%
Central Europe &
North Africa20%
Rest of the
World
5% 3%
Caribbean & Central America
29%
Mexico14%
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Shifts in Global production
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Market Scenario =
Enormously competitive-global warfare, short brand life cycles
Result is apparel manufacturing migration to low cost countries
always changing race to the bottom
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Anatomy of a Nike Sweatshirt V167G6N
Sent to the Dominican Republic for assembly
detailed work study specification 22 operations:
5 steps to cut11 steps to sew6 steps to inspect and packTime allowed 6.6 minutes
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Anatomy of a Nike Sweatshirt V167G6NHourly rate in the EPZ in the Dominican
Republic 70 cents
worker earns 8 cents for each sweatshirt they sew
sweatshirt retails in the US for $22.99
if Nike doubled the wage it would be still only 7/10ths of 1% of the retail price
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The Corporate Response
Unilateral corporate codes of conduct
Creation of Global compliance teams to monitor codes
Signing up to multi-stakeholder initiatives
Propaganda counter-offensives
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Company Codes - Problems
Codes are often unilaterally introduced
not all ILO core standards are included
No ongoing dialogue with the workforce
Generally no disclosure of locations with codes
Verification of monitoring process usually company controlled
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Extract from a Code of Conduct
Sara Lee Corporation Sara Lee Knit Products International Operating Principles : Labour Unions
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.
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Key ITGLWF aims
Framework agreements are negotiated
Agreements include all core standards
Ongoing dialogue - ideally via a world council
Full disclosure of the subcontracting chain
independent verification sought
The determination of a decent employment relationship through effective national legislation and collective bargaining
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Employer Problems with IFAs
Have their own standards or terms of engagement with suppliers - why a separate document ?
Problems of scope of the agreement - legally nervous - what is the company ?
Wish to extract responsibility/duties from the ITGLWF
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Employer Problems with IFAs (cont.)
What is rationale behind disclosure of locations ?
Verification : have their own designated verifiers under other initiatives - e.g. FLA.
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Strategic Options
Consensual and direct dialogue with a multinational – probably brokered by a national affiliate in the HQ country.
As a result of dialogue brokered by other MNCs who have commercial relationships with the MNC in question.
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Strategic Options (cont.)
Dialogue resulting from a corporate campaign arising from a specific dispute within a part of the subcontracting chain.
Dialogue resulting from pressure resulting from a co-ordinated recognition campaign launched from key points in the supply chain around the world.