How much responsibility does a downstream buyer have for how its suppliers behave? That has been a recurring question over the last several years as various news reports have highlighted tough working conditions in (largely) overseas factories. Apple’s relationship with Foxconn has been front and center here.
Now we have two stories that leave Wal-Mart facing similar questions. A horrible garment factory fire in Bangladesh killed over a hundred workers, some of whom were apparently making clothes for Wal-Mart. The problem, according to the Wall Street Journal, is that they weren’t suppose to be (For Wal-Mart, Sears, Tough Questions in Bangladesh Fire, Nov 29).
Wal-Mart says it followed its play book when it yanked its business from a Bangladesh garment factory after the retailer’s inspectors found problems. But the chain’s clothing was still being produced there when the factory went up in flames last weekend, leaving at least 112 workers dead. …
The world’s largest retailer said it had revoked the factory’s authorization to make its products months before the fire, but declined to elaborate. It would not name the supplier it said was responsible for giving its business to Tazreen Fashions Ltd., a modern factory set up in 2007 near the Bangladeshi capital of Dhaka. …
Wal-Mart’s system of inspecting factories grades them on a color scheme ranging from green to red. It said most of the audits are done by outside firms, though Wal-Mart has an internal team that conducts surprise audits and checks factories with known problems. Factories with repeated bad grades can be banned from doing business with the company.
Wal-Mart said it is the responsibility of the suppliers to use factories approved by the company, and warns suppliers in an extensive manual that they can be banned from doing business with the retailer if they fail to do so.
As the article notes, this example highlights the difficulties a firm such as Wal-Mart has in managing a distributed, global supply chain. The folks in Bentonville may well have the best of intentions and be willing to spend significantly on monitoring suppliers but all that only goes so far. If a supplier is willing to fraudulently subcontract some work to an unsafe firetrap, they may well get away with it.
It is also the case that good intentions on the one hand may clash with business imperatives on the other. As long as Wal-Mart is willing to reassign work to save a few pennies, suppliers are going to be under pressure to shave cost and look for cheaper but possibly ethically suspect options.
The second story is actually a three-part series from Marketplace that relates to a topic we have covered before: How miserable it can be to work in distribution centers.
Workers protest pay, conditions at Walmart warehouses (Nov, 26) [audio http://download.publicradio.org/podcast/marketplace/segments/2012/11/26/marketplace_segment21_20121126_64.mp3]
Walmart warehouse temps add flexibility — and save money? (Nov 27) [audio http://download.publicradio.org/podcast/marketplace/segments/2012/11/27/marketplace_segment21_20121127_64.mp3]
Warehouse ‘permatemps’ push Walmart accountability (Nov 28) [audio http://download.publicradio.org/podcast/marketplace/segments/2012/11/28/marketplace_segment21_20121128_64.mp3]
It turns out that some of Wal-Mart’s labor providers have been cited for labor law violations here in the States. That is, one doesn’t have to go to Asia to find examples of Wal-Mart doing business with dubious partners. Needless to say, this has led to some organizing efforts on the part of labor groups.
There is an interesting duality in Wal-Mart’s response. They, on the one hand, has emphasized that it holds its suppliers to high standards.
Walmart issued a prepared statement to Marketplace from V.P. of Communications David Tovar after the meeting, saying: “We had a very productive conversation with some of the workers who came to Bentonville last month. We appreciated their perspective, we listened very carefully. Criticism can be a helpful voice sometimes to hear. We’re taking these allegations very seriously, because we hold all of our service providers to high standards, and remain committed to ensuring that workers throughout our supply chain are treated with dignity and respect. We’ve spent the last few weeks developing protocols to have independent auditors inspect each of the dedicated third-party-run facilities that we utilize.”
(See here for information on Wal-Mart’s supplier standard.)
On the other, its relationship with labor here seems purposefully set up to avoid responsibility.
The employment structure at the warehouse where Caudillo and Rodriguez work is complex. The facility moves goods exclusively for Walmart. But it isn’t owned or operated by the giant retailer. Instead, Walmart contracts with a New Jersey-based company called NFI to run the warehouse. NFI in turn contracts with temporary-staffing agencies to hire and supervise the workers — several hundred of them.
“The [staffing] agency is Warestaff,” Javier Rodriguez explains. “But Warestaff works for NFI, and NFI works for Walmart.”
The articles also point out that this is a common set up across retailers. However, Wal-Mart has been targeted for worker action because they set the pace for the industry. That is, Target or Home Depot won’t change how they operate until Wal-Mart moves.