The Facts about Russell Athletic in Honduras
The Other Side of the Story
Recently, Russell Athletic has come under attack by student activist groups on a number of campuses led by United Students Against Sweatshops (USAS), an organization funded and directed by the AFL-CIO and other labor unions. The USAS misinformation campaign claims, among other things, that Russell mistreats workers, operates “sweatshops” and engages in anti-union activity. This attack, intended to alarm and intimidate college administrators into ending their merchandising and licensing contracts with Russell, is not only hurting our business and reputation, but also threatens the livelihoods of the very people in Honduras that USAS purports to be so concerned about. • It was the only facility with a lease that permitted us to vacate immediately, thus avoiding cost of over $2 million. • Cahn’s analysis concluded “continuing to operate an underutilized factory is cost prohibitive.” Consider the Motives On Feb. 27, USAS head Rod Palmquist met with Tony Pelaski, Russell’s senior vice president, human resources and Stan Blankenship, Director of Social Compliance. The purpose of the meeting was to hear Mr. Palmquist’s rationale for waging the destructive campaign, and to hear his “conditions” for ending it. The conversation was recorded with Mr. Palmquist’s knowledge and approval. His words illuminate the situation: “If you look at all the garment industry, the amount of factories with an independent union, is incredibly small. Less than 1%. This [the closed JDH] factory is one of the few factories that you have where workers have exercised their right to do this. It sends a signal to everyone else in Honduras and the region and it is very important to our organization and a growing number of other organizations as well and stakeholders in Washington, D.C.” It is widely recognized that the situation in Honduras and most of Central America is frustrating for labor unions. Unionization is unpopular among workers, and the closure of a single unionized plant is viewed as a major setback by the unions — the loss of a critical toehold. For that, Russell is being punished.
Does this look like a sweatshop?
Business Conditions Dictated Decision Weakening global economic conditions in early 2008 caused a dramatic decline of the apparel market, ultimately forcing us to close a total of eight manufacturing plants. All told, 25 Honduran facilities closed in 2008, according to a report commissioned by the Fair Labor Association (FLA) and conducted by A.L.G.I., a group of labor compliance experts. This wasn’t just Russell, and it wasn’t a decision targeting just one plant. This is how all businesses are trying to cope with the worst economy in decades. Of the eight plants we closed, seven were non-union. The one unionized plant we closed, the Jerzees de Honduras (JDH) plant, is the focus of the USAS campaign. Independent reports commissioned by the FLA and performed by The Cahn Group, a corporate responsibility consulting firm, agreed it was necessary to reduce production in Honduras. The FLA said, “the decision to close JDH was principally a business matter,” and The Cahn Group also confirmed the clear business reasons why closing JDH was “imperative”: • Demand for the products made at JDH was lower than any of our other factories in Honduras, and the A.L.G.I. report confirmed excess inventory.
We are the largest single employer in Honduras.
Russell Recognized the Union It’s ironic we are accused of anti-union activity. We recognized the unionization of JDH even before the global slowdown, on Oct. 3, 2007 — more than a year before announcing we’d have to close the plant. As the FLA noted: “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.”
To be sure, there had been some problems surrounding union recognition earlier in 2007. We acknowledged some local managers had acted improperly at times, and we rehired workers and paid back wages. Subsequently, verification visits at two of our Honduran plants including JDH credited us with making the necessary changes and correcting the situation. In fact, the investigative team — which had reported the initial violations — found in February 2008 that we had fixed the problems in a manner that was “most proactive” and also that “policies and procedures currently adhere to the highest standards for prevention of harassment, abuse and discrimination policies. Measures adopted appear to be sustainable and efficient on a long-term basis.”
More than 1,800 of our employees in Central America, including 521 in Honduras, have worked with us for at least 10 years. People only remain loyal to a company that respects and treats them fairly. The average take-home pay of our employees in Honduras is 26 percent above the country’s minimum requirement. Many employees earn performance bonuses that raise their income significantly higher. We also provide our people with important benefits and initiatives that help improve both living and working conditions, such as medical care, employee health fairs, prenatal care, paid holidays and paid vacations. All our plants provide cafeterias offering healthy lifestyle menus. Russell is Acting Responsibly Closing JDH and our other plants was painful, but these were painful business decisions. We are in an extremely competitive business, and these decisions will hopefully protect the remaining jobs in our company. Every JDH employee was paid all salary, benefits and severance they were owed. Allegations to the contrary are untrue. These facts were verified by the Honduran Department of Labor. We’ve also taken steps to help those employees find new jobs, which the A.L.G.I. report confirmed. We allowed employees paid time off to interview for jobs and gave them letters of recommendation. We’ve gathered information about jobs in the surrounding area, posted that information for our employees to see and even made arrangements for some of those businesses to contact our workers. As recently as Feb. 20, at our request, we met with the CGT Union representative, the Jerzees de Honduras Union Board and a representative from Fundahrse (a local foundation for corporate social responsibility), specifically to discuss how to further assist the displaced employees by providing them with additional skills training and job search assistance. We take our responsibility as a good corporate citizen seriously. Russell Athletic already has policies in place that meet or exceed most employer codes of conduct for agreed-upon sound workplace principles. These are outlined on our Web site: www.russellsocialresponsibility.com. Those who are taking deliberate and unjustified actions to hurt Russell’s business and reputation cannot be acting in the best interests of the thousands of Honduran people and their families who depend on Russell for their livelihood. The potential loss of business caused by such misinformation at a time when all apparel companies face an extremely challenging economic climate unfairly places jobs at our Honduran — and all our other manufacturing facilities — at risk. Thank you for taking the time to read this information and for becoming better informed about Russell Athletic’s respect for our employees.
Workers taking a prenatal class, one of the many benefits/initiatives Russell provides.
Scott Nova of the Workers Rights Coalition wrote a January 2008 memo praising us for making “very substantial progress.” At one point, he pointed out that Russell’s efforts to fix the problems had been “unusually successful” and that, “This was accomplished as a result of effective cooperation between management and the union.” That type of cooperation continued. The A.L.G.I. reviewed minutes of monthly meetings between management and union leaders and found no evidence of anti-union activity. Investigators asked the union president for any kind of additional documentation, and he responded there was nothing available. The investigators noted that union representatives “did not provide any evidence to identify allegations of harassment.” A.L.G.I. also found the minutes of the monthly meetings show the tone between union and management was “respectful” and that, “Even when (collective bargaining) negotiations arrived at what was perceived as an impasse and it was decided to resort to arbitration (mediation), the parties still had a cooperative rapport. It was only when Jerzees de Honduras management communicated that the facility was going to close down that the problems seemed to start.” Do these describe sweatshop conditions? Given that every one of our Honduran and Central American factories is clean, modern and air-conditioned, it’s also ironic USAS decided to accuse us of operating sweatshops. USAS head Palmquist has never been to Honduras, much less visited one of our plants. We know because we invited him to accompany us any time he wishes.