Monthly Archives: August 2015

August 24, 2015 · 3:18 pm

Henry Ford, Privilege and Gayness

In 1913, Henry Ford started paying his workers $5 per day, a huge amount for the time and a more than 100% raise from what they were previously earning. It’s seen as a milestone in modern capitalism, the moment when employers realized that workers were also consumers, that raising their wages created a generation that would buy as well as work.

Last week in London I randomly read The Greatest Business Decisions of All Time, which has a chapter on Ford’s decision and some of the unsightly details of how he rolled it out.

It came with some strings attached. The headline pay was divided into two parts: wages (about $2.40 per day for an unskilled worker) and “profits” (about $2.60 per day). All workers received wages for their work at Highland Park, but they shared in the profits only if they were deemed worthy. Six months’ service was required to qualify.

Married men were eligible, as were men under the age of 22 who were supporting widowed mothers or brothers and sisters. All women supporting families also qualified. But unmarried women and men who were not supporting dependents were excluded.

Ford made it clear that a “clean, sober, and industrious life” was required to receive the higher pay. An employee had to demonstrate that he did not drink alcohol or abuse his family. Moreover, he had to make regular deposits in a savings account, maintain a clean home, and be of upstanding moral character.

Workers who accepted the new wage would also be subject to company rules about how to conduct themselves during off-hours. As Ford explained it, “The object was simply to better the financial and moral status of the men.”

To enforce his lifestyle dictates, Ford mobilized an army of investigators that at one point numbered 200. They were expected, Lacey writes, “to make at least a dozen house calls every day, checking off information about marital status, religion, citizenship, savings, health, hobbies, life insurance, and countless other questions.” To help them meet their quotas, Ford provided each inspector with a new Model T, a driver, and an interpreter for help in ethnic neighborhoods.

I know this sort of thing isn’t all that surprising, but it really does bum me the fuck out. This is exactly what people mean when they talk about privilege. Here was one of the best jobs, in one of the nation’s most economically dynamic cities, and it was only open to men who were the right religion, the right background, who passed the similarity test by their bosses.

I remember chatting with a retired government worker from Belfast at a conference a few years ago who told me that he had a set of interview questions to determine which candidates were Protestants and which ones were Catholics. What primary school did they attend? What neighborhood did they grow up in? What sort of work did their parents do?

It’s appalling, this, not to mention wasteful, and it makes me wonder the ways we do this now. As a gay person, I always feel a bit guilty about the fact that I’ve never experienced any discrimination directly. I’m pretty invisible; by the time people find out I’m gay I’m usually hired.

We talk a lot in this country about how quickly we’ve all made the turnaround on gay rights, and I wonder how much has to do with gay people’s ability to pass these little tests. We were already in the boardrooms and behind the judicial benches way before it was safe to do. Once it was, we had friends and colleagues who had a financial incentive in keeping us there. Most other marginalized groups never get that chance.

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August 6, 2015 · 3:22 pm

‘I literally saw a naked baby standing in a pool of water’: Eleven observations from a contract manufacturer in China

I know I’m belaboring these now, but I’m learning a lot from all the people writing in to add points and arguments to my Myth of the Ethical Shopper article. Here’s one from Glen, a project manager at a contract manufacturer in Shenzhen:

Awareness is the first step, and this article does an excellent job of pointing out that contract manufacturing will always result in unfair labor practices. The smaller companies are the biggest offenders because their order sizes don’t warrant the attention of “golden factories”. Not that Apple and Wal-Mart are good examples, but their manufacturing is some of the cleanest out there… After working for a contract manufacturer in China for several years, I can give you a quick glimpse of how it looks in China in relation to this article:

1) Wal-Mart gets caught with unfair labor practices > people protest > Policy reform

These reforms are pushed on factories that really want to improve, but mostly they want the business. They reform simply to keep the business.

2) Factories conform to reforms > operation costs at factories go up > Factories lose money

Making these changes and being socially compliant come at a HUGE cost to the factory, but larger customers will not accept the increased costs to reflect in their orders. Suddenly, factories are losing a lot of money, but they can’t lose Wal-Mart as a customer. Most Wal-Mart-contracted factories operate at zero margins just for the business. They’ll use the molds to remake products under other brands to sell in China.

3) Factory finds cheaper factory to do their production

The original factory might do 20% of the order, but they’ll contract “shadow factories” to do the bulk. These are your “sweatshops”, they don’t exist on paper, but they make up easily 95% of the factories out there. Now, the large Wal-Mart orders can once again turn a profit, because costs are reduced by manufacturing at the shadow factories.

4) Factory becomes an audit mill.

Passing an audit is a big deal, especially the strict standards of Wal-Mart compliance. The factory can now make large sums of money fronting for other companies and factories. They will host audits on a regular basis, to give compliance to hundreds of other companies. A company might not even have a factory, but they’ll get compliance to make products. Now they can make products wherever they want, and when it comes time they can set up their front at the fake factory. Most companies do this.

5) No reason for factories to TRULY conform to regulations

Now that these workarounds are in place, it’s quite easy to get certified without even having a factory. So now that most factories are off the map, they have no incentive whatsoever to follow anything close to standards being set in the USA. Everyone is protected by the “golden factories” that are running fake audits and essentially covering for the ones doing real production runs. Foxconn is a golden factory. Their conditions are incredible compared to those of 99.9% of factories in China. In over 4 years working in China I have never set foot in a factory that is as clean and compliant as Foxconn.

6) Audit companies get in the game as well.

For MANY if not MOST inspection companies in China you can’t pass an audit unless you pay a bribe. Usually $1000/inspector is enough. Even if your factory really is perfect, you need to pay off inspectors to get the certification.

7) American companies have no control

US companies might know this is happening, or not…. it really doesn’t make a difference. Companies that are aware will distance themselves intentionally so that they’re not liable or seen as negligent. Companies that aren’t aware really truly believe that they are covering their bases.

8) The danger of trade companies passing an audit.

Our trade company passed the [Shoe Company Inc.] audit on a factory that doesn’t exist (we used the name of our company as the factory and the inspection took place at a factory we contracted specifically for a social compliance audit). Now that the trade company has passed this certification, we can make products ANYWHERE. It’s a step beyond the factory using contract manufacturers. Most trade companies are lying to their customers, so it’s incredibly difficult to know if you’re working with a trade company or a real factory. In my experience it’s almost always a trade company if you don’t have boots in the ground in China.

9) When a company issues a RFP (request for proposal), they are essentially GUARANTEEING that their products will be made in some of the nastiest ways possible.

This is very common for companies in our space, sports accessories. Companies like [Shoe Company Inc.] will essentially say some requirements for a product, and they’ll send that to all of their licensees. Those with licensing rights to the brand will contact their suppliers to have them compete for the best prices. Trade companies are typically the supplier they contact, and those trade companies will contact all of their connections for the best price. RFPs are are designed so that the companies like New Balance will get the best and cheapest deals for the required products they need. It’s a beautiful system for the brand, because they do no sourcing whatsoever, and they hold no responsibility whatsoever on how the product is being made.

10) Trade companies intentionally used as a buffer.

I don’t think this is news to you, but some companies with use trade companies because they understand the process. This will keep them legally exempt from issues and can blame the trade company for hoaxing them on their labor practices. A lot of companies know this and I’ve had several people tell me to just “do what we do” to make sure things work on our end.

11) The yoga mat industry in China is disgusting

Just a comment to add here. I did a sourcing project for a [Shoe Company Inc.] request for yoga mats. The factories I saw we’re disgusting. I literally saw a naked baby standing in a pool of water just yards away from where the finished goods were being stacked. These were all TPE yoga mats, and I found it ridiculous that in the factory they were printing logos that said “eco-friendly”. Anything that is so simple to make is going to eventually make its way to these kind of factories.

I chose not to use that factory and instead went with a better factory (still wouldn’t pass an audit, but who does?) for the proposal. We didn’t get the business, it was beyond their budget. Had I used the prior factory we would have fallen within their price target…

This is the current state of things. There isn’t an easy fix. There aren’t regulations to solve this. All I know is that with more awareness solutions will be worked out in the future. I know a lot of these points were made in the article, but I felt they needed repeating. These are truths that I wish all consumers could know and understand.