Russell Athletic Provides Colleges with More Insight on Labor Disputes

 

As part of their efforts to dispel the myriad of charges made by pro-union and student activist groups, Russell conducted a tour of the Honduran factories in question and invited Sports Executive Weekly and a number of universities to join representatives from the company and review conditions in the country.

In February, Russell launched a Web site to provide greater visibility (www.russellsocialresponsibility.com) into its labor practices and the closing of a unionized plant in Honduras. But in a more proactive approach, Russell recently invited around 30 schools to a fact-finding trip from April 28 to April 30 to get a firsthand look at working conditions at its Honduran factories.

Russell's new openness around its labor issues also included a 1,684-word letter from Russell Athletic EVP Gary Barfied to its retail, team, university and licensing partners to fully defend itself against a “misinformation campaign” from pro-union activists. In the letter distributed on May 1, Barfied wrote, “Many of their allegations, while outrageous, can be easily disproved. I want to make sure you are getting accurate information directly from me so that we can defend our good name and reputation and protect the livelihoods of our employees.”

He added, “We have had numerous discussions with customers all over the country and we know that many of you fully appreciate the dubious motives and tactics of these activists.  My purpose in writing is not to confront these activists, but merely to continue to set the record straight.”

Activists claim that Russell closed one of its Honduran plants, Jerzees de Honduras (JDH), because workers there tried to unionize, and are demanding that the plant be reopened and all workers re-hired. Russell claims the plant closed solely because of a sudden and extensive global economic downturn that has forced the company to shut down a total of nine plants since the beginning of 2008. Of the factories closed, only JDH was unionized.

But the length of the letter underscores the complexity the issue has taken on since Russell announced its decision to close the factory in October 2008-which was promptly followed by one school canceling its merchandising and licensing contract with the company. Since then, Russell claims “more than 20” schools have terminated their contracts although the activist group's blog,  reininrussell.blogspot.com, lists 65 schools that have cut their ties, including UCLA, UConn, Marquette and Boston College, Louisville, Brown and Xavier.

Now activists are pushing to extend the campaign to retailers. In a note late last month, United Students Against Sweatshops (USAS), a national network of student groups, claims it has talked to TSA, Modell's, Dick's Sporting Goods, Sears and other retailers regarding its decision to “do business with such a toxic corporation.”

The activist movement has gained momentum as a result of a tour across U.S. college campuses of union organizers and alleged workers of the closed Honduran plant. As the issue has heated up, so have the allegations. Beyond union busting, Russell is now being accused of operating sweatshops, making or sanctioning death threats, and denying child and health care. An April article in The University of Maryland's student newspaper The Diamondback compared Russell's actions to “slavery.”

According to the University of Oregon’s Oregon Daily Merald, an employee named Norma Castellanos spoke on the tour about the harsh conditions at Russell's Honduran factory-including working 11-hour days with only a 10-minute break, unrealistic production expectations from managers, and the deteriorating health of many workers who worked with chemical dyes-among reasons for her to work towards unionizing.
“Our voices were not being heard,” Castellanos said. “We made a decision to unite. We kept it private, but Russell laid off 150 workers when they found out and threatened us with death.”

But accusations were largely dispelled following a “fact-finding mission” to four factories operated by Russell and its parent, Fruit of the Loom. Although Russell extended invitations to a number of presidents, chancellors and other college officials from around 30 schools, only a few took the company up on the invitation. 

Although the constant buzzing of sewing machines underscored the fact that apparel manufacturing, at its source, is not an easy job by any stretch, SEW found the plants to be modern, clean and fully air conditioned. Presentations from several local plant managers and officials spelled out a number of initiatives in place to improve both working and living conditions, including medical care, employee health fairs, prenatal care, paid holidays and paid vacations. All plants featured cafeterias offering healthy lifestyle items and rewarded free meals for perfect attendance. Local managers elaborated on issues focused around succession planning, idea generation from workers, and “quality of life” issues. They also detailed several steps employees can take to deal with issues involving mistreatment or harassment in the workplace.

Regarding compensation, Honduran officials also noted that the average take-home pay in the Russell and Fruit of the Loom factories is 26% above the country's minimum requirement, and many employees earn performance bonuses that raise their income significantly higher.  The roughly 20% employee annual turnover at the plant was estimated to be a little more than half the industry average in the region.

A separate conversation that SEW had with union organizers and former workers from the closed Honduras plant also underscored that the dispute mainly centered on pay and benefits rather than working conditions. Unionizing efforts appear to have been galvanized by Berkshire Hathaway's acquisition of Russell in August 2006.  As a result, Russell became a subsidiary of Fruit of the Loom and soon adopted many of the practices of Fruit's plants in the region.

The employees told SEW that soon after the Fruit merger, Russell's plants ramped up productivity goals to make it harder to attain bonuses. Since the productivity quotas were increased, workers said they had to work longer hours to get the same pay and would often have to work overtime to meet quotas. Other bonus opportunities focusing on quality and efficiency were also said to be removed. Under pressure to meet the more aggressive productivity goals, workers claimed that supervisors increasingly mistreated workers that complained or couldn’t keep up.  Although workers agreed that systems were in place to air grievances, they said there were long delays before any responses.

As some workers sought to unionize, the mistreatment became worse, according to the workers. The union organizer also claimed that in the past, Fruit of the Loom fired workers trying to unionize. After the closing of the plant, workers complained of not receiving all the salary, benefits and severance they were owed. The workers also claimed that, since their name was attached to a unionized plant, they were being blacklisted from getting jobs at other plants.

Russell admitted there were some problems surrounding union recognition that occurred at another unionized facility that closed in Choloma, Honduras in early 2007. In his letter, Barfield noted that Russell took full responsibility for rectifying the situation after learning of those issues, acknowledging some local managers acted improperly, and rehired affected workers and paid full back wages. Russell also recognized the unionization of JDH in October 2007.  Additionally, Barfield noted that verification audits at two of its plants, including JDH, credited Russell with making the necessary changes and correcting the situation. In February of 2008, an investigative team from a group of labor compliance experts called A.L.G.I. credited Russell for addressing the unionizing mistakes at the Choloma factory in a “most proactive” manner, and the moves appeared to be “sustainable and efficient on a long-term basis.”                         

In January 2008, a labor rights group called the Worker Rights Consortium (WRC) acknowledged that Russell's efforts to fix the problems had been “unusually successful” and the “result of effective cooperation between management and the union.”

Russell's Honduran officials said many of these issues that led to unionizing have since been resolved as workers better understood the Fruit of the Loom structure. One major adjustment for workers was a shift to a “cell” sewing production approach from a “line” approach. With greater efficiency under the new method, officials said many workers are now making more money than they were before.

Russell claims the union complaints at JDH only occurred after it announced plans to close the plant in October 2008. The company is also convinced the dispute is solely centered on preserving the union in a country that is heavily anti-union. Although by law it only requires 30 people to organize a union at a facility, only seven out of the 243 companies operating in Honduras have any unionized facilities. Only 6,597 (5.9%) out of 111,135 total industry employees are unionized, according to Russell.

“This is not debatable, and it is certainly not because of Russell Athletic,” wrote Barfield. “The desire to increase union participation in Honduras lies at the heart of the activists’ campaign against Russell.”
Barfield said that activists are focusing most of their attacks based on events that happened in 2007 at the Choloma plant while ignoring any of the corrective actions at plants that were taken in the meantime. They're also disregarding any fallout from the brutal downturn in the global economy that occurred just after the JDH plant was unionized in October 2007.

An independent report commissioned by the Fair Labor Association (FLA) and performed by A.L.G.I. documented that 25 Honduran manufacturing facilities closed in 2008 alone. Another report commissioned by the FLA and completed by The Cahn Group found there were two clear business reasons for closing JDH. The Cahn Group is a corporate responsibility consulting firm founded by Doug Cahn, Reebok’s former VP for Human Rights. The FLA found that demand for products sewn at the facility was lower than any of the other factories, and secondly, it was the only facility with a lease that permitted Russell to vacate immediately, conserving more than $2 million in costs. The FLA also stated, “If the primary motive of the company had been to frustrate the union, it could have closed JDH earlier and even switched production from Honduras to Mexico.”

Barfield also pointed out that the activists share no concern for the 10,000 workers who lost their jobs at the eight other closed plants since the start of 2008. Moreover, most of Russell's and Fruit's plants are already operating well under capacity, and further pressure on sales could lead to more layoffs in the region. Russell Athletic is the largest private sector employer in Honduras.

Yet many of Russell's school and licensing partners have been urging Russell not to go on the offensive against activists. Under their reasoning, corporations generally lose in the battle of public opinion against unions, which are seen by students as representing the best interest of workers. Such sympathy is only heightened at a time when corporate America is being held responsible for the economy's ills.
Looking ahead, Barfield said Russell is in the middle of implementing a Continuous Improvement Process in its corporate responsibility program, developed in response to recommendations received from the FLA. Among others, it includes a series of steps to assist displaced employees and to further protect the rights to freedom of association at its remaining plants.

As part of Russell’s ongoing commitment to social responsibility, which was noted to be a first of its kind in the region and a proactive initiative of its own, the fact-finding trip included a visit to two centers Russell established to help workers get new jobs and to provide ongoing medical care.

The FLA also recently visited Russell's and Fruit of the Loom's Honduran plants and is expected to present at their board meeting in June a follow-up report from an independent third-party monitor that could shed further light on the situation.

Barfield noted that more than 200 schools have decided to renew their agreements in 2009 after giving Russell a chance to tell its side of the story.

“We very much appreciate their willingness, and the willingness of schools like them, to make a principled decision and not succumb to political pressures,” said Barfield.  Although Barfield doesn't expect the pressure from activist groups to go away any time soon, he asks that “…everyone will consider the facts, engage in the process, and allow Russell to successfully complete their continuous improvement plan.”