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Tyler Hussey ‘17W

WORK CONDITIONS IN
International Human Resource Management
MANUFACTURING
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The manufacturing industry is one of the most globalized industries in modern business.

According to the International Trade Administration, “free trade agreements have proved to be

one of the best ways to open up foreign markets,” (International Trade Administration). These

free trade agreements allow countries to trade products with ease. The manufacturing industry

has been able to capitalize on these agreements. Companies around the world began looking for

ways to reduce their overhead, which includes manufacturing costs. Companies, like Apple and

Nike, have found several benefits to making their products in different countries around the

globe.

As of November 2016, Nike has factories in forty-two countries around the globe and

employs approximately 1,068,000 people to work within those factories (Nike, Inc.). Apple uses

several different companies to fulfill manufacturing requirements, however, it has eighteen final

assembly locations within four countries across the globe (Apple, Inc.). Companies are working

globally to produce the best products with the highest possible profit margins. “In 1990, [China]

produced less than 3% of global manufacturing output by value; its share now is nearly a quarter.

China produces about 80% of the world’s air-conditioners, 70% of its mobile phones and 60% of

its shoes,” (The Economoist). We have seen a rise in companies looking to move their facilities

to the cheapest location. China has seen a significant increase in manufacturing, while the sector

continues to face troubles in the United States. Multinational companies that work with

manufacturers around the globe are often faced with several problems regarding the work

environment and employee safety due to different regulations around the world.

Companies are faced with new challenges regarding employee safety and the overall

conditions within the work environment as the global manufacturing environment continues to

grow. According to the United States Department of Labor, Bureau of Statistics, out of every one
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hundred manufacturing employees three were injured at work during the last year (Occupational

Injuries/Illnesses and Fatal Injuries Profiles). This makes manufacturing one of the most

dangerous industries in the private sector. According to the Occupation and Safety and Health

Administration, manufacturing is the industry with the most employee safety violations (OSHA

Enforcement Data). Safety in the manufacturing environment is an extremely important area of

concern for companies and human resources departments amongst internationally operating

organizations.

Every country has an individual set of standards set forth by their individual

governments. For example, in China, it is illegal to picket or strike and employees are often

faced with harassment and jail time. Companies often use the various loopholes in legislation to

cut corners and make a higher profit margin. Coca-Cola campaigned against unionized work and

gave raises to non-union members and fired workers that protested an overtime ban in Guatemala

(Burrow). The culture within a society has a large impact on the legislation that is introduced. In

America, we believe that child labor and forced labor should be outlawed. However, other

countries, like Nigeria and Sudan, have extreme rates of child labor (Hunt). Luckily, for

employees, there are several international organizations that take a stand on employee safety and

have helped make changes to regulations around the globe. Companies often utilize third party

manufacturers to manage or run their operations in foreign countries. The increasingly popular

utilization of these other companies has increased over recent years and has led to a number of

companies facing backlash regarding their ethical practices in regards to workers in their

manufacturing facilities.

In early 2000, news was released that several employees at a Coca-Cola had accused the

company of using military representatives to threaten employees in Colombia (Forero). The
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manufacturing industry was facing severe scrutiny as several union-member employees were

brutally murdered in Colombia (Forero). Union lawyers filed lawsuits against Coca-Cola and its

bottling companies in Colombia. The suit alleged “that the bottlers contracted with or otherwise

directed paramilitary secutirty forces that utilized extreme violence and murdered, tortured,

unlawfully detained or otherwise sliced trade union leaders” (Forero).

The Colombian union, Sinaltrainal, filed the lawsuit in Miami, Florida and alleged that

the company was allowing unionized manufacturing employees to be targeted by the militant

groups (Brodzinsky). Sinaltrainal also alleged that Coca-Cola was intentionally targeting

members of the union because they were calling for safety improvements within the factory. The

suit also stated “that managers at a bottling plant in the town of Carepa in northern Colombia

directed paramilitary fighters to kill two union leaders in 1994. Two years later a member of the

union’s executive board was killed at the plant by paramilitary gunmen” (Brodzinsky).

The International Labor Organization (ILO) and United Nations (UN) have several

guidelines set forth that address issues with unions and workers’ rights to being part of a union.

The United Nations Universal Declaration of Human Rights, as established in 1948, states in

Article 23, subsection 4 that “everyone has the right to form and to join trade unions for the

protection of his interest” (Assembly). The ILO also has a set of standards, International Labor

Standards on Freedom of Association, that require member states to allow employees to join a

union without facing punishment or disparate treatment. Number 87 allows “workers and

employers to establish and join organizations of their own choosing without previous

authorization” while number 98 states “workers shall enjoy adequate protection against acts of

anti-union discrimination, including requirements that a worker not join a union or relinquish

trade union membership for employment, or dismissal of a worker because of union membership
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or participation in union activities” (International Labour Standards on Freedom of Association).

Colombia is a member state of the United Nations and the ILO which requires they abide by the

regulations set forth by both groups. Coca-Cola responded to the employee incident.

In January 2006, Coca-Cola made an official announcement on their website. The

statement addressed several issues that were brought up during the lawsuit and media coverage.

Coca-Cola stated, in part:

Over the past several decades, Colombia has experienced much internal
conflict, which affects trade union leaders and other people from all walks
of life…In a country where violence against union members has deterred
all but 4 percent of workers from unionizing, 31 percent of Coca-
Cola bottler employees belong to unions. Coca-Cola bottlers enjoy
extensive, normal relations with 12 unions in Colombia and currently have
collective bargaining agreements in place covering wages, benefits and
working conditions…Through both collective bargaining agreements and
their own initiative, Coca-Cola bottlers work with unions and the
government to provide emergency cell phones, transportation to and from
work, secure housing, and a host of other measures to protect employees.
Additional security measures are routinely provided to union leaders and
special measures are undertaken when a threat against unionized
employees is brought to the attention of the bottler's management. We've
also established a 24-hour hotline for employees to confidentially report
any workplace concerns and/or complaints. We share global concerns
regarding the unfavorable labor environment in Colombia. Ed Potter, our
director of global labor relations, serves on the Applications of
Conventions Committee within the International Labor Organization
(ILO) (The Coca-Cola Company).

Coca-Cola felt pressure from constituents across the globe and announced their actions to

help alter the heated climate faced by union employees in Colombia. Coca-Cola showed

responsible corporate citizenship by outlining their previous history in Colombia and how they

have assisted in changing the labor climate. For example, Coca-Cola states that their “director of

global relations serves on the Applications of Conventions Committee within the International

Labor Organization, which evaluates implementation of ratified ILO treaties” (The Coca-Cola
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Company). The company also noted that they were actively working on finding additional third

party auditors to assess the situation in Colombia.

Nike is another example of a company that been in hot water from unfair treatment of

employees. In 1991, a report was released stating that Nike was running factories with “low

wages and poor working conditions in Indonesia” (Nisen). People around the globe began to

protest and started to create a real issue for Nike. Nike reacted by releasing its first supplier Code

of Conduct (Nisen). In 1997, an additional plant was named unsafe for workers in Vietnam.

“Ernst & Young wrote that workers at the factory near Ho Chi Minh City were exposed to

carcinogens that exceeded local legal standards by 177 times in parts of the plant and that 77

percent of the employees suffered from respiratory problems” (Greenhouse).

The report also included information about a Korean subcontractor that Nike utilized to

staff the factory. Employees “were forced to work sixty-five hours a week, far more than

Vietnamese law allows, for ten dollars a week” (Greenhouse). The report also detailed dangerous

air quality and that employees were working like slaves in horrid conditions. “The report painted

a dismal picture of thousands of young women, most under age twenty-five, laboring ten and a

half hours a day, six days a week, in excessive heat and noise and in foul air, for slightly more

than ten dollars per week,” (Greenhouse). Nike was also found guilty of not providing employees

with proper safety equipment when they dealt with dangerous chemicals. Nike began to feel

increasing pressure and saw a significant drop in their sales during this time period. A Nike

spokesperson made a statement to the media stating that “We [at Nike] believe that we look after

the interests of our workers,” and continued to say that the company had developed an action

plan to make corrections (Greenhouse).
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In 1998, the company began to realize that the way it treated employees was becoming

the definition of the brand. The CEO released a statement saying, in part, “The Nike product has

become synonymous with slave wages, forced overtime, and arbitrary abuse,” and added, “I truly

believe the American consumer doesn’t want to buy products made under abusive conditions,”

(Nisen). Knight, the CEO at the time, also stated that Nike would begin allowing “outsiders from

labor and human rights groups to join the independent auditors who inspect the factories in Asia,

interviewing workers and assessing conditions,” (Jr.). Knight went on to list more improvements

in the factories, including raising “the minimum age for hiring new workers at shoe factories to

eighteen and the minimum for new workers at other plants to sixteen,” (Jr.). Nike also stated they

would be increasing air quality standards and following the same standards set forth by the

United States OSHA. The company also formed the Fair Labor Association, which works to

create acceptable conditions for employees across the globe (Nisen). Although the worst seemed

to be in the past, Nike’s issues didn’t end in 1998 as it continued to behave unethically.

In 2011, several employees of a factory in Indonesia stepped forward to report abusive

conditions and unsafe conditions. Employee’s reported being slapped in the face, called dogs,

and having objects thrown at them (Associated Press). According to a report, Nike was aware of

the poor treatment in Indonesia and claimed “there was little it could do to stop it”, (Associated

Press). One employee reported that in her Taiwanese factory, six female employees were forced

“to stand in the blazing sun after they failed to meet their target,” (Associated Press). The

Associated Press also obtained an internal report that stated “nearly two-thirds of 168 factories

making converse products worldwide fail to meet Nike’s own standards for contract

manufacturers,” (Associated Press).
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In 2014, Nike and Adidas began to experience a worker strike in China. Employees

reported that they “earn as little as $1.67 an hour making shoes that sell for up to 100 times as

much in the United States,” (Jamieson and Baculinao). This strike directly impacts Nike and

Adidas, but is a gauge of the general climate in the Chinese workforce. Employees are becoming

“more aware of [their] rights,” (Jamieson and Baculinao). The employees are demanding better

pay and more commitment to their safety at work. The companies are currently working with the

plant owner to determine what can be done to improve the environment in the factory. Adidas

reported that the “supplier is in discussion with the local government and the trade union

federation to seek ways to address the concerns expressed by the workers,” (Jamieson and

Baculinao).

The shoe industry is not the only one to have witnessed severe backlash after allegations

of unfair treatment. Apple, one of the world’s largest technology companies, contacted the Fair

Labor Association, formed by Nike, to perform a workplace audit of its factories in China

following complaints that conditions were unbearable (Guglielmo). “Between March and

October 2013, more than half of the workforce on average worked beyond the Chinese legal

limit of 36 overtime hours per month,” (Guglielmo). In 2014, Apple came under fire for

exposing employees to extremely dangerous chemicals that could cause “cancer, nerve damage,

and paralysis,” (Sparkes). After an investigation found that the chemicals were utilized in four

plants, Apple announced that “they were able to work with managers to find safer alternative

products,” and that “Apple will explicitly prohibit the use of benzene and n-hexane in cleaning

agents and degreasers in its final assembly process,” (Sparkes). Did the conditions really change?

“The FLA conducted onsite inspections over 15 months through July 2013. There were

also follow up visits in late October and early November 2013. Apple and Foxconn created an
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action plan of 360 items that needed to be addressed at the Foxconn facilities,” (Guglielmo). The

FLA later reported that 99% of the items on the Apple-Foxconn list had been corrected, however,

the BBC disagrees. “Exhausted workers were filmed falling asleep on their 12-hour shifts at the

Pegatron factories on the outskirts of Shanghai,” (Bilton). Undercover reporters said they were

forced to work eighteen days in a row and the longest shifts could be almost sixteen hours

(Bilton). Apple released a statement that said, in part, “we work with suppliers to address

shortfalls, and we see continuous and significant improvement, but we know our work is never

done,” and added that it was “common practice for workers to nap during breaks, but it would

investigate any evidence they were falling asleep while working,” (Bilton).

Companies are not free to act as they please. The United Nations has created the UN

Global Compact to “align strategies and operations with universal principles on human rights,

labor, environment and anti-corruption, and take actions that advance societal goals,” (United

Nations) amongst member states and the companies that operate within them. According to the

global compact, it is a voluntary initiative that “[stimulates] change and [promotes] corporate

sustainability and [encourages] innovative solutions and partnerships,” (United Nations). The

Global Compact has had a positive effect on several companies in the manufacturing industry.

DuPont, a global manufacturing conglomerate, is one of the biggest supports of the

Global Compact. “The company’s core values of Safety and Health, Environmental Stewardship,

Highest Ethical Behavior, and Respect for People are directly aligned with the values set out in

the Global Compact” (DuPont). The Global Compact was endorsed by DuPont in 2001 and

continues to guide the company’s actions and beliefs. “DuPont believes that creating a

sustainable world cannot be accomplished by any one sector of society. We continue to seek

alliances and partnerships, particularly with organizations that recognize the constellation of
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values important to sustainable growth” (DuPont). The Mansour Manufacturing and Distribution

Group (MMD) created a detailed document in 2006 stating how they support and respected the

Global Compact. MMD CEO, Yousesef Mansour stated, “one of the major objectives of MMD is

to make the 10 principles of the Global Compact an integral part of the group’s culture…we

embrace this initiative, and thank the United Nations for its effort in making this world a better

place,” (Mansour). The Global Compact certainly makes an impact on the international business

community, however, it is not the only agency or group aimed at making work better for

employees.

The Fair Labor Association (FLA) “is a collaborative effort of universities, civil society

organizations and socially responsible companies dedicated to protecting workers’ rights around

the world” (Fair Labor Association). The FLA has worked with several companies to improve

standards for employees across the globe. Electronic Arts underwent a FLA audit in 2009 that

“uncovered that some of the more than 400 workers at a factory… were not using earplugs and

eye protection in work areas where they were mandatory” and that “deductions from pay for

workers savings plans exceeded the legal 30 percent limit” (Association, Ensuring Fair

Compensation and Worker Safety in Mexico). After the audit report was released, the FLA

worked with Electronic Arts to ensure that the HR “department had modified their payroll

software to detect and prevent deductions greater than 30 percent,” and “confirmed that a

training course for workers on proper protective equipment was implemented,” (Association,

Ensuring Fair Compensation and Worker Safety in Mexico). An audit of an Indonesian factory

producing garments for Liz Claiborne found that employees were not given the opportunity to

appeal terminations and that there was “inadequate space in the fusing area… which did not

allow workers to have free body movement,” (Association). After the audit, “the factory installed
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a procedure for employees to… appeal termination,” and “the factory also reorganized its

layout,” (Association, Protecting Workers' Health & Safety in Indonesia).

The United States Occupational Safety and Health Administration (OSHA) is the US

enforcer of employment regulations. OSHA hires “approximately 2,200 inspectors responsible

for the health and safety of 130 million workers, employed at more than 8 million worksites

around the nation,” (Labor). OSHA has seen a budget increase for the previous three fiscal years

and has performed more inspections than ever before. In 2015 nearly 4,380 employees died on

the job (Labor). OSHA is helping companies follow regulations and continues to improve worker

safety. “In four decades, OSHA and our state partners, coupled with the efforts of employers,

safety and health professionals, unions and advocates, have had a dramatic effect on workplace

safety,” (Labor). Along with OSHA, companies are also working to improve conditions.

Coca-Cola has taken a strong stand against unethical behavior in the supply chain and has

worked to make changes to their business practices since the event in Colombia. Coca-Cola

states on their website that “an essential ingredient in every one of [their] products is [their]

profound commitment to human rights and workplace rights,” (The Coca Cola Company). The

company goes into further detail about how they believe in the principles set forth by the United

Nations and the International Labor Organization. The sustainability report includes transparent

information about workplace rights policy cases and issues reported by employees. Apple has

also increased safety for employees and has taken a strong stance on workers’ rights. According

to Apple, the “Supplier Code of Conduct outlines our high standards for creating safer working

conditions, treating workers fairly, and using environmentally responsible practices. It’s one of

the strictest in our industry and often requires practices above and beyond local law,” (Apple). In
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2017, it is evident that companies are realizing how important employee safety is, however, there

is still room for improvement.

In 2013, a factory in Bangladesh collapsed “killing at least 96 people and injuring more

than 1,000” (Engel). Companies had been populating the Bangladesh area in an effort to reduce

production and labor costs. The collapse, although it did not directly affect Nike, showcases that

“large parts of the industry still haven’t changed,” (Nisen) and that the manufacturing industry is

still one of the most dangerous around. Employee safety in the manufacturing environment will

continue to be one of the largest factors for the Human Resources department to improve upon.

“Manufacturing related activities among global nations are rapidly evolving” (Deloitte

Touche Tohmatsu Limited- Deloitte Global). Deloitte released a manufacturing progress report in

late 2016 and found that the manufacturing industry will continue to grow. They announced that

China is still the most competitive manufacturing nation, talent is the most critical factor for

global manufacturing competitiveness, and “the five Asia-Pacific nations of Malaysia, India,

Thailand, Indonesia and Vietnam are expected to be included into the top 15 nations on

manufacturing competitiveness over the next five years” (Deloitte Touche Tohmatsu Limited-

Deloitte Global). Although manufacturing continues to grow, employee safety is still a major

concern. According to the United States Department of Labor, Bureau of Statistics, out of every

one hundred manufacturing employees three were injured at work during the last year

(Occupational Injuries/Illnesses and Fatal Injuries Profiles). Employers must continue to tackle

safety issues and promote employee health and safety within the manufacturing environment.
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