D. Codes of Conduct of the Largest U.S. Retailers and Manufacturers of Apparel

1.Survey of U.S. Retailers and Manufacturers of Apparel

In order to gather information on the extent and implementation of U.S. garment importers' codes of conduct containing child labor provisions, the Department of Labor conducted a voluntary survey of the largest U.S. retailers and apparel manufacturers, based on 1995 annual sales figures.⁵⁸ The companies included in the survey were chosen on the basis of public annual sales data obtained from Kurt Salmon Associates (KSA), a consulting firm specializing in retailing, apparel, textiles, and other consumer products.⁵⁹

A questionnaire on import sourcing and child labor policies was sent to the 48 U.S. retailers and manufacturers of apparel listed in Box II-1. (See Appendix B for a copy of the questionnaire.) Survey recipients included the largest companies in the following categories: apparel manufacturers, department stores, mass merchandisers, specialty stores, and non-store direct marketers (mail order and electronic home shopping). This chapter's analysis of codes of conduct is based primarily on information voluntarily provided by the companies surveyed.

(Source: Kurt Salmon Associates, Financial Profile for Fiscal Year 1995, July 1996)

2. Survey Response

Forty-five companies responded to the survey.⁶⁰ Of the 45 responses, 42 were reportable because three companies regard all information provided as confidential.⁶¹

Many respondents indicated that they are significant importers - some importing more than half of the merchandise they sell - while others said that their dependence on imports was much lower, in some cases less than 10 percent. Nearly all respondents are direct importers of apparel, i.e., they purchase apparel directly from abroad for their own account. Most are also indirect importers, i.e., they purchase products domestically that have been manufactured overseas and imported into the U.S. by another party.

a. Manufacturers

Of the 15 manufacturers who responded, all but three (Nike, Inc., Liz Claiborne and Russell Corporation) own or have ownership interest in overseas production facilities. Most of these facilities are in Latin America, Mexico, Canada and the Caribbean, but a few are in Asia (China, Sri Lanka, and the Philippines). Some of the manufacturers (Oxford Industries, Sara Lee Corporation, and VF Corporation) indicated that the majority of their imports come from wholly owned plants. Virtually all of the manufacturers surveyed also contract out at least some of their overseas production to non-company-owned facilities. Some manufacturers have close ties to certain contractors, and account for a large share, if not all, of the merchandise that they manufacture. In other cases, they may use a contractor facility for only a short time, and account for a small share of that manufacturer's production.

Some of the manufacturers referred to the advantages of spreading their production across many countries in order to avail themselves of available import quota. Nike, Inc. ('Nike') for example, stated that it is constantly seeking out new apparel suppliers due to the limited amount of quota available in each country for importing apparel into the United States. Others indicated that they source from only a few countries.

Most of the manufacturers also use local buying agents. Only three (Levi Strauss & Co., Fruit of the Loom, and Nike) specifically stated that they do not use buying agents. A few manufacturers indicated that they mainly use buying agents in countries where they do not have their own production facilities or extensive knowledge of the countries' garment industry.

b. Retailers

None of the retailers responding to the survey indicated that they own or have an ownership interest in overseas production facilities. Many of them import from a very large number of suppliers and contractors in many countries. JCPenney Company, for example, contracts with more than 2,000 suppliers in more than 80 countries. Retailers who sell private-label merchandise often deal directly with overseas contractors, who manufacture merchandise to their specifications. Other retailers, who do not carry private label garments, indicated that they purchase imported goods that are already made from a variety of suppliers in the U.S. or abroad.

Several of the retailers surveyed (Ames Department Stores, Dress Barn, Inc., Home Shopping Network, Inc., Mercantile Stores Company, Ross Stores, Inc., Stage Stores, Inc.,⁶² Venture Stores and Woolworth Corporation) indicated that they purchase all or most imports through one or more buying agents or suppliers located in the U.S. and/or abroad. One retailer (BJ's Wholesale Club, a division of Waban, Inc.) indicated that it only buys imported apparel domestically from wholesalers and distributors.

3. Survey Results

Of the 42 companies that provided reportable responses to the survey, 36 have adopted some form of policy specifically prohibiting the use of child labor in overseas production facilities. Thirty-four have developed their own policies, and two have adopted the policy of their association or buyer. Appendix C contains the current codes, policies and other documents that were provided by survey respondents.⁶³

a. Manufacturers

Questionnaires were sent to 15 garment manufacturers, all of which responded (Box II-2).

• All 15 manufacturers - Fruit of the Loom, Hartmarx Corporation, Jones Apparel Group, Kellwood Company, Levi Strauss & Co., Liz Claiborne, Nike, Inc., Oxford Industries, Phillips-Van Heusen, Russell Corporation, Salant Corporation, Sara Lee Corporation, Tultex Corporation, VF Corporation and Warnaco Group - have adopted some form of policy prohibiting child labor in overseas production facilities.
  • Fourteen of the 15 manufacturers have developed their own policies, most of which are in the form of codes of conduct, statements of principles, vendor requirements, or terms of engagement.
• Hartmarx subscribes to a "Statement of Responsibility" developed by the American Apparel Manufacturers' Association (AAMA), which contains a provision on child labor.
• Two manufacturers - Levi Strauss & Co. ('Levi Strauss') and Warnaco Group ('Warnaco') - also have guidelines for selecting the countries where they produce garments based on political, social and human rights concerns, among others. Levi Strauss, for example, does not do business in Burma.⁶⁴

b. Department Stores

Questionnaires were sent to 10 department stores, eight of which responded (Box II-3).⁶⁵ Seven of the eight responses were reportable.⁶⁶

• Six of the seven department stores that provided reportable responses to the survey - Dillard Department Stores, Federated Department Stores, JCPenney, Mercantile Stores Company, Nordstrom and Sears Roebuck & Co. - have adopted some form of policy statement that specifically addresses child labor in overseas production facilities.
  • All of the seven have developed their own policies on this subject.
• Montgomery Ward said that it does not tolerate the use of child labor in the manufacture of imported goods, but did not provide the Department of Labor with documentation of a formal policy. The Company subscribes to the National Retail Federation's code, which does not specifically mention child labor.

c. Mass Merchandisers

All 10 mass merchandisers who were sent questionnaires responded (Box II-4). Nine of the responses were reportable.⁶⁷

• Six mass merchandisers - Dayton Hudson Corporation, Dollar General Corporation,⁶⁸ Kmart Corporation, Price/Costco, Inc., Venture Stores and Wal-Mart Stores - have adopted policies specifically addressing child labor in overseas production facilities.
  • All of these six have developed their own policies on child labor.
• Three mass merchandisers - Ames Department Stores, Family Dollar Stores and Waban, Inc. - indicated that they do not have a policy specifically addressing child labor in overseas facilities.
  • Ames Department Stores ('Ames') indicated that all purchase orders issued on behalf of Ames or any of its affiliates require compliance with, among other laws, the U.S. Fair Labor Standards Act (FLSA) and the "Federal Child Labor Act."⁶⁹ It is not clear whether Ames' purchase orders contain any language on international production.
  • Family Dollar Stores ('Family Dollar') indicated that its purchase orders include a requirement that vendors comply with all labor laws. The company also indicated that it utilizes the National Retail Federation's (NRF) "Statement of Principles on Supplier Legal Compliance," which does not contain a provision specifically addressing child labor.
  • Waban, Inc. ('Waban') indicated that it does not have a code of conduct regarding labor practices in overseas production, but generally requires that vendors comply with all applicable laws.

d. Specialty Stores

Surveys were sent to ten specialty stores, nine of which responded (Box II-5).⁷⁰ Of the nine responses, eight were reportable.⁷¹

• Six specialty stores - the Dress Barn, Inc., The Gap, The Limited, Stage Stores, The Talbots, Inc. and Woolworth Corporation - indicated that they have adopted policies specifically addressing child labor in overseas production facilities.
  • Of the six, all but Stage Stores have developed their own policy. Stage Stores indicated that it purchases all imported merchandise through the Associated Merchandising Corporation (AMC) and uses AMC's code, which contains a provision on child labor. Stage Stores also stated that it is in the process of developing its own code.
• Two specialty stores - Burlington Coat Factory and Ross Stores, Inc. - do not have a policy specifically addressing child labor in overseas production facilities.
  • Burlington Coat Factory does not have a policy specifically addressing child labor in overseas production facilities, but does have a provision in its purchase orders requiring vendors to comply with all applicable laws, including the Fair Labor Standards Act.
  • Ross Stores has guidelines in its purchase orders that require compliance with all applicable federal, state and local laws and regulations, including the federal child labor law,⁷² but these guidelines do not appear to address international production. Ross Stores is currently reviewing its importing process, however, and considering revising its "Conditions of Contract."

e. Non-Store/Direct Apparel Marketers

All three Non-Store/Direct Apparel Marketers who were surveyed responded (Box II-6).

• Home Shopping Network, Land's End, Inc. and Spiegel all have developed their own policies specifically addressing child labor in overseas production.