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07005006CV_Mexicoxls - Nonprofit organization dedicated to ending


									FLA Audit Profile
Country                                      MEXICO                                                                       MEXICO
Factory name                                 07005006C                                                                    07005006CV
IEM                                          COTECNA QUALITY RESOURCES INC.                                               ACCORDIA GLOBAL COMPLIANCE
Date of audit                                AUGUST18-19, 2004                                                            JUNE 1-2, 2006
PC(s)                                        NIKE, Inc.                                                                   NIKE, Inc.
Number of workers                            188                                                                          188
Production processes                         CUTTING, EMBROIDERY, SEWING, FINISHING AND                                   CUTTING, EMBROIDERY, SEWING,

                           Findings                                                                                                                              Remediation
FLA Code/ Compliance issue Legal             FLA Benchmark                                       Monitor's Findings:      Best Practice            PC Internal   PC remediation plan                      Target            Factory Response   Company Follow Up                                                         Documentation
                           Reference                                                             Compliance, Non-                                  audit                                                  Completion Date
                                                                                                 compliance,                                       findings
                                                                                                 Indicator, Risk or
                                                                                                 Not Applicable
1. Code Awareness
Worker/management                            Ensure that all Company factories as well as        Although the Nike                                               Provide training to new hires on the     12/3/2004                            Human Resources provides regular training on the Nike COC to all
awareness of Code                            contractors and suppliers inform their employees    Code of Conduct                                                 Nike Code of Conduct and provide                                              employees playing a recording daily over the loudspeaker. Training is
                                             about the workplace standards orally and through    has been published                                              ongoing refresher training to current                                         also provided to new hires through the internal handbook that is
                                             the posting of standards in a prominent place (in   and a copy given to                                             employees on a regularly scheduled                                            issued and explained to them at the moment of hiring. This was
                                             the local languages spoken by employees and         the workers, they                                               basis.                                                                        verified during a compliance visit that took place after the FLA audit.
                                             managers) and undertake other efforts to            are not familiar with
                                             educate employees about the standards on a          Code elements. No
                                             regular basis. (POM)                                indication of training
                                                                                                 was shown to

Confidential non-compliance                  Develop a secure communications channel, in a       Manager stated he                                               Nike’s objective is to strengthen
reporting channel                            manner appropriate to the culture and situation,    did not know about                                              contract manufacturers’ internal
                                             to enable Company employees and employees           any confidential                                                grievance systems, so that direct
                                             of contractors and suppliers to report to the       communication                                                   involvement by Nike in their
                                             Company on noncompliance with the workplace         channel to Nike                                                 employee grievances should be
                                             standards, with security that they shall not be                                                                     considered a last resort. In alignment
                                             punished or prejudiced for doing so. (POM)                                                                          with Nike’s objective to strengthen
                                                                                                                                                                 contract manufacturers’ internal
                                                                                                                                                                 grievance processes, two pilot
                                                                                                                                                                 educational programs facilitated by
                                                                                                                                                                 local Non-Governmental
                                                                                                                                                                 Organizations are underway currently
                                                                                                                                                                 in Indonesia and China. In addition,
                                                                                                                                                                 Nike Compliance staff spend time
                                                                                                                                                                 listening to factory employees during
                                                                                                                                                                 one-on-one confidential interviews
                                                                                                                                                                 during in-depth Management Audits.
                                                                                                                                                                 More than 8,850 factory employees
                                                                                                                                                                 were confidentially interviewed by
                                                                                                                                                                 Nike Compliance staff from August 1,
                                                                                                                                                                 2002 through end of May 2004.

2.Forced Labor
There will not be any use of forced labor, whether in the form of prison labor, indentured
labor, bonded labor or otherwise
Other                                                                                            Risk.- No written                                               Nike Code is posted at the factory,
                                                                                                 management                                                      which includes policy against forced
                                                                                                 systems or policies                                             labor and factory Management
                                                                                                 on this matter.                                                 follows the Code as current business

3. Child Labor
No person will be employed at an age younger than 15 (or 14 where the law of the country of
manufacture allows) or younger than the age for completing compulsory education in the
country of manufacture where such age is higher than 15.

                           Findings                                                                                                                                 Remediation
FLA Code/ Compliance issue Legal                 FLA Benchmark                                               Monitor's Findings:      Best Practice   PC Internal   PC remediation plan                        Target            Factory Response               Company Follow Up                                                          Documentation
                           Reference                                                                         Compliance, Non-                         audit                                                    Completion Date
                                                                                                             compliance,                              findings
                                                                                                             Indicator, Risk or
                                                                                                             Not Applicable
Other                                                                                                        Risk.- No written                                      Nike Code is posted at the factory,                                                         In addition to following the Nike Code of Conduct as a policy and
                                                                                                             management                                             which includes policy against child                                                         current practice on this matter, the factory also follows Nike Age
                                                                                                             systems or policies                                    labor and factory Management                                                                Verification standard requiring a proof of age at the moment of hiring
                                                                                                             on this matter.                                        follows the Code as current business                                                        and keeping copies of these documents (both birth certificates and
                                                                                                                                                                    practice.                                                                                   Voter's ID) on file. Nike standard also states: "When a contractor is
                                                                                                                                                                                                                                                                found to have employees who are under Nike’s minimum age
                                                                                                                                                                                                                                                                standards and/or the local legal limits, the contractor will be required
                                                                                                                                                                                                                                                                to take all of the following actions:
                                                                                                                                                                                                                                                                a. Contractor must immediately remove the underage employee
                                                                                                                                                                                                                                                                from the workplace.
                                                                                                                                                                                                                                                                b. Contractor must pay for and enroll the underage employee in a
                                                                                                                                                                                                                                                                school education program to allow the employee to continue his or
                                                                                                                                                                                                                                                                her education. If no school education program is available, Nike
                                                                                                                                                                                                                                                                and the contractor will address the situation on a case-by-case
                                                                                                                                                                                                                                                                c. If an underage employee is able to provide documentation that
                                                                                                                                                                                                                                                                proves they are enrolled and attending school classes, the
                                                                                                                                                                                                                                                                contractor must continue to pay the employee the base wage until
                                                                                                                                                                                                                                                                the time he or she either finishes school or reaches the
                                                                                                                                                                                                                                                                appropriate working age (16 for apparel and equipment and 18 for
                                                                                                                                                                                                                                                                footwear factories). When the employee reaches the age of 16 or
                                                                                                                                                                                                                                                                he or she must also be given the opportunity to be re-employed at
                                                                                                                                                                                                                                                                d. If the employee chooses not to participate in a
                                                                                                                                                                                                                                                                school education program, he or she will forfeit the
                                                                                                                                                                                                                                                                right to receive continued financial compensation from
                                                                                                                                                                                                                                                                the contractor. The employee must acknowledge this decision in
                                                                                                                                                                                                                                                                writing." So, if a child is hired by accident the factory would have
                                                                                                                                                                                                                                                                to follow our standard requirements.
4. Harassment or Abuse
Every employee will be treated with respect and dignity. No employee will be subject to any
physical, sexual, psychological or verbal harassment of abuse.
Verbal abuse                                     Employers will prohibit screaming, threatening, or Workers said                                                    Factory must conduct a thorough        12/17/2004            Factory sent a written         The factory has conducted an investigation and applied disciplinary     (documentation provided to
                                                 demeaning verbal language                          Supervisor Antonia                                              investigation about these complaints                         statement explaining the       measures to solve differences between the workers and the HR            FLA)
                                                                                                    Rosales verbally                                                and apply appropriate disciplinary                           results of the investigation   employee X, and the Supervisor X. This process was documented
                                                                                                    harasses the                                                    sanctions for this type of behavior to                       and action taken.              and explained to the PC through a letter from the factory, and directly
                                                                                                    workers. Workers                                                those responsible to prevent abuse                                                          by X, the person responsible for compliance at the factory. Also, the
                                                                                                    said HR employee                                                from re-occurring. Results of the                                                           No Harassment & Abuse Polic y has been developed and sent to us
                                                                                                    ******** ******                                                 investigation must be documented.                                                           for revision in order to be posted and communicated to all employees
                                                                                                    verbally harasses                                               Provide training on No Harassment &                                                         including the two people mentioned above.
                                                                                                    the workers.                                                    Abuse policy to management and
Other                                                                                                        Risk.- No written                                      A "No Harassment & Abuse" policy       12/3/2004             Factory sent the written       As mentioned before, the factory has developed this policy and it              (documentation provided to
                                                                                                             management                                             must be developed and posted                                 policy.                        was sent to us in order to review that the policy is in accordance with FLA)
                                                                                                             systems or policies                                    according to the Nike's Code                                                                Nike Code leadership Standard on this matter. To communicate the
                                                                                                             on this matter.                                        Leadership Standards (CLS).                                                                 policy to all it will be posted and HR will advise about its publication
                                                                                                                                                                    Factory to follow up with training to                                                       for all at the factory to read. Also this policy will be part of the training.
                                                                                                                                                                    the management and workers.
5. Nondiscrimination
No person will be subject to any discrimination in employment, including hiring, salary,
benefits, advancement, discipline, termination or retirement, on the basis of gender, race,
religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin.
Hiring Discrimination                            Employment decisions will be made solely on the             Risk.- In the job                                      Contractor should modify the current       12/3/2004         Factory sent the new           The job application form has been modified and the question about          (documentation provided to
Practices                                        basis of education, training, demonstrated skills           application form                                       job application form to exclude the                          format of the job              applicant's past and current Union affiliation was removed.                FLA)
                                                 or abilities. All employment decisions will be              used there is a                                        question about applicant's past and                          application.
                                                 subject to this provision. They include: hiring, job        question about past                                    current Union affiliation.
                                                 assignment, wages, bonuses, allowances, and                 worker Union
                                                 other forms of compensation, promotion,                     affiliation.
                                                 discipline, assignment of work, termination of
                                                 employment, provision of retirement

Pregnancy Discrimination                         Information arising from pregnancy testing                  Risk.- Women                                           Contractor must not require                                                                 Factory does not require prospective employees to disclose verbally
                                                 undertaken voluntarily will not be used as a factor         interviewed stated                                     prospective employees to disclose                                                           information not pertinent to his/her ability to do the job, including
                                                 in involuntarily reassigning, firing or making any          that they were                                         verbally information not pertinent to                                                       pregnancy status during the initial hiring interview. This has been
                                                 other employment decision that disadvantages a              asked if they were                                     his/her ability to do the job, including                                                    verified by Nike auditors during the last M-audit.
                                                 pregnant woman                                              pregnant at the                                        pregnancy status during the initial
                                                                                                             initial hiring process                                 hiring interview.
                                                                                                             interview. However,
                                                                                                             no case of
                                                                                                             discrimination could
                                                                                                             be verified.
Other                                                                                                        Risk.- No written                                      Non-discrimination policy must be          12/3/2004         Factory sent the written       The factory has developed this policy and it was sent to us in order to (documentation provided to
                                                                                                             management                                             developed and posted according to                            policy.                        review that the policy is in accordance with Nike CLS on this matter. FLA)
                                                                                                             systems or policies                                    the Nike's CLSs.                                                                            To communicate the policy, as with the other policies, to all
                                                                                                             on this matter.                                                                                                                                    employees, it will be posted and HR will advise about its publication
                                                                                                                                                                                                                                                                for everyone at the factory to read it. Also this policy will be part of
                                                                                                                                                                                                                                                                the training for new hires.
6. Health and Safety
Employers will provide a safe and healthy working environment to prevent accidents and
injury to health arising out of, linked with, or occurring in the course of work or as a result of
the operation of employer facilities

                           Findings                                                                                                                      Remediation
FLA Code/ Compliance issue Legal            FLA Benchmark                                          Monitor's Findings:     Best Practice   PC Internal   PC remediation plan                        Target            Factory Response            Company Follow Up                                                        Documentation
                           Reference                                                               Compliance, Non-                        audit                                                    Completion Date
                                                                                                   compliance,                             findings
                                                                                                   Indicator, Risk or
                                                                                                   Not Applicable
Evacuation Procedure                        All applicable legally required or recommended         The three                                             Contractor must modify the exit doors 12/17/2004                                         Factory will modify the exit doors to open outwards. Nonetheless, the
                                            elements of safe evacuation (such as posting of        emergency exits                                       to open outwards and verify the width                                                    width can not be modified as per the structure of the building.
                                            evacuation plans, unblocked aisles/exits,              open inwards and                                      complies with local regulation.                                                          However, evacuation drills are conducted regularly and all employees
                                            employee education, evacuation procedures,             are too narrow.                                                                                                                                are evacuated within the time requirements (less than 3 min.).
                                            etc.) shall be complied with and workers shall be      They should be at
                                            trained in proper safety, first aid, and evacuation    least 44"wide.

PPE                                         Workers shall wear appropriate protective              In the embroidery                                     Contractor must require the                12/17/2004        Factory sent pictures as    The factory offers different types of hearing protection (adequate for   (documentation provided to
                                            equipment (such as gloves, eye protection,             section the workers                                   employees in the embroidery area                             evidence.                   the noise level), to the employees in the embroidery area. Also, HR      FLA)
                                            hearing protection, respiratory protection, etc.) to   were repeatedly                                       wear the appropriate hearing                                                             along with the Supervisors require employees to use the PPE at all
                                            prevent unsafe exposure (such as inhalation or         found not wearing                                     protection for the level of noise at all                                                 times. Its use will be reinforced through a training on the negative
                                            contact with solvent vapors, noise, dust, etc.) to     hearing protection,                                   times. Reinforce proper use of PPE.                                                      consequences of not using PPE. In addition, employees sign a
                                            hazardous elements including medical waste.            although they had                                     Factory to also provide alternate ear                                                    written compromise to use the PPE.
                                                                                                   the protective                                        plugs.
                                                                                                   equipment they did
                                                                                                   not wear them
                                                                                                   because they
                                                                                                   claimed they were
                                                                                                   too uncomfortable.
                                                                                                   They said they
                                                                                                   would rather have
                                                                                                   ear plugs.

Other                                                                                              Risk. No                                              Nike conducts regular SHAPE
                                                                                                   assessment to                                         inspections at the factory, that
                                                                                                   identify H&S                                          includes identification of H&S
                                                                                                   hazards has been                                      hazards and factory has an internal
                                                                                                   conducted in the                                      ESH (Environment, Safety and
                                                                                                   work place.                                           Health) Committee, integrated by
                                                                                                                                                         employees of the different areas of
                                                                                                                                                         the factory, that also conducts
                                                                                                                                                         inspections regularly.

7. Freedom of Association and Collective Bargaining
Employers will recognize and respect the right of employees to freedom of association and
collective bargaining
Right to Freely Associate                   Workers will have the right to establish and,          Workers are                                           The Mexican Federal law states that 12/17/2004               Factory sent a copy of the Factory has included an explanation on the deduction of the Union        (documentation provided to
                                            subject only to the rules of the organization          automatically                                         all employees from a factory should                          internal handbook.         fee in the internal handbook. This will be explained to new hires from FLA)
                                            concerned, to join organizations of their own          affiliated to the                                     be affiliated to the same Union at the                                                  now on. All the new hires will sign for receiving the handbook with this
                                            choosing without previous authorization. The           Union as they are                                     time of hiring, due to that the                                                         information.
                                            right to freedom of association begins at the time     hired. They get to                                    employees do not have the option to
                                            that a worker seeks employment, and continues          know about it when                                    freely associate or not to associate,
                                            through the course of employment                       they find a                                           neither the factory have the possibility
                                                                                                   deduction for Union                                   of offering that option. However,
                                                                                                   fees from their                                       factory have new hires sign a written
                                                                                                   payment. Auditors                                     notification explaining that upon hire,
                                                                                                   did not find any                                      they will belong to the acknowledged
                                                                                                   written authorization                                 union at Texturerias, and Union fees
                                                                                                   signed by workers                                     will be deducted from their pay.
                                                                                                   accepting to
                                                                                                   become members
                                                                                                   of the Union.

                           Findings                                                                                                                       Remediation
FLA Code/ Compliance issue Legal              FLA Benchmark                                        Monitor's Findings:      Best Practice   PC Internal   PC remediation plan                      Target            Factory Response             Company Follow Up   Documentation
                           Reference                                                               Compliance, Non-                         audit                                                  Completion Date
                                                                                                   compliance,                              findings
                                                                                                   Indicator, Risk or
                                                                                                   Not Applicable
Other                                                                                              Risk.- No written                                      In this particular matter Management
                                                                                                   management                                             is following local labor law as we
                                                                                                   systems or policies                                    explained above where the
                                                                                                   on this matter.                                        employees are affiliated to the
                                                                                                                                                          existing Union.

8. Wages and Benefits
Employers recognize that wages are essential to meeting employees’ basic needs.
Employers will pay employees, as a base, at least the minimum wage required by local law or
the prevailing industry wage, whichever is higher, and will provide legally mandated benefits
Payroll Reporting                             Accurate and reliable payroll reporting, including   Checking the pay                                       Contractor must add the following     12/17/2004           Factory response is that
                                              pay stubs will be provided                           slips it was found                                     information to the wage slips                              the current payroll system
                                                                                                   that no indication of                                  according to the Nike CLS’s: number                        can't be modified to add
                                                                                                   regular hours or                                       of working Hours (regular) & overtime                      this information so they
                                                                                                   overtime hours was                                     hours worked.                                              will be consider a new
                                                                                                   shown. However,                                                                                                   system in the future that
                                                                                                   auditors did not find                                                                                             can include the number of
                                                                                                   evidence of short                                                                                                 hours worked in the wage
                                                                                                   payments.                                                                                                         slip.

9. Hours of Work
Except in extraordinary business circumstances, employees will (i) not be required to work
more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on
regular and overtime hours allowed by the law of the country of manufacture or, where the
laws of such country will not limit the hours of work, the regular work week in such country
plus 12 hours overtime; and (ii) be entitled to at least one day off in every seven day period
Forced overtime                               Under extraordinary business circumstances,          Risk.- Article Nine of                                 Although factory is currently not       12/17/2004
                                              employers will make extensive efforts to secure      Internal Work Rules                                    enforcing this mandate, because
                                              voluntary overtime work prior to mandating           states that workers                                    there is not needed of OT, the
                                              involuntary overtime                                 are obliged to do                                      Internal Work Rules about this matter
                                                                                                   overtime hours                                         will not be modified due to it is not a
                                                                                                   when required by                                       non-compliance and it is written
                                                                                                   management.                                            according to law and also the Nike
                                                                                                   Auditors did not find                                  standard "Hours of Work" consider
                                                                                                   any cases enforcing                                    this possibility, stating that: "If
                                                                                                   this mandate so this                                   overtime is mandatory, each
                                                                                                   is considered a Risk.                                  employee must be informed of this
                                                                                                                                                          policy at the time of hiring. Total
                                                                                                                                                          work hours including overtime must
                                                                                                                                                          not be required in excess of the local
                                                                                                                                                          labor laws or 60 hours per week on a
                                                                                                                                                          regularly scheduled basis, whichever
                                                                                                                                                          is lower". So the factory prefer to
                                                                                                                                                          have this rule written in the case OT
                                                                                                                                                          should be required in the future.

10. Overtime Compensation
In addition to their compensation for regular hours of work, employees will be compensated
for overtime hours at such premium rate as is legally required in the country of manufacture
or, in those countries where such laws will not exist, at a rate at least equal to their regular
hourly compensation rate.
Subcontracting                                                                                     Risk.- Management                                      Nike staff approved the subcontractor
                                                                                                   stated there are no                                    through the corresponding New
                                                                                                   written contracts                                      Source Approval Process, and this
                                                                                                   with subcontractors.                                   subcontractor is part of Nike internal
                                                                                                   This may constitute                                    monitoring program conducting
                                                                                                   a risk of non                                          regular inspections and compliance
                                                                                                   compliance with                                        visits to the facility. Since the
                                                                                                   Code elements.                                         compliance rating of subcontractors
                                                                                                   Manager produced                                       affects directly the rating of the
                                                                                                   a document                                             corresponding contractor, Nike is
                                                                                                   demonstrating that                                     confident that contractors choose
                                                                                                   NIKE is aware of                                       their subcontractors making sure the
                                                                                                   the subcontractor.                                     business relation between them is not
                                                                                                                                                          a perilous one, but a trustworthy one.


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