U.S. corporations responding to the Department of Labor survey described a
variety of ways their codes of conduct were monitored. Several of the
respondents referred to "pre-contract" evaluation of prospective
contractors to identify and screen out potential violators of codes of conduct.
Others referred to active monitoring schemes conducted internally, externally,
and by outside auditors or NGOs. Still other respondents said that monitoring
of their codes of conduct is carried out through contractual arrangements,
whereby the contractor guarantees or certifies (in writing) that the goods have
been produced in accord with the child labor policy of the importing firm.
Information regarding the monitoring of codes of conduct gathered by the
Department of Labor during field visits is reported in this section, clustered
around the following issues:
- Are the labor standards components of the codes of conduct, including child
labor, monitored? How is the monitoring carried out?
- Are foreign plants subject to on-site internal visits (i.e., visits by U.S.
company personnel to subsidiaries and foreign contractors), external visits
(i.e., visits by U.S. importers and foreign buyers/agents to foreign
contractors) or auditor visits (i.e., visits by paid auditors or consultants) to
monitor their production facilities? What is the purpose of such monitoring?
Are monitoring visits announced or unannounced?
- With whom do monitors speak during visits? Do they speak with managerial
personnel only, or do they also speak with workers? If they speak with workers,
where do they do it? Are managers present when monitors speak to workers? Do
monitors speak the native language? Are interpreters used?
1.Monitoring for Quality
Monitoring of foreign producers - including plant visits - by U.S. importers
is a routine procedure in many industries. The garment industry, where the
appearance of a product and timeliness of orders are critical, is well-known for
the close monitoring of foreign producers by importers and their agents.
a. Purpose of Monitoring
All 70 plants exporting garments to the United States visited by Department
of Labor officials confirmed that they are subject to regular visits by their
U.S. customers or their agents to verify product quality and to coordinate
production and delivery schedules. About 90 percent of the companies visited
stated that monitors/inspectors verifying product quality generally also
examined working conditions in the plant, with emphasis on safety and health
issues (climate control, ventilation systems, fire escapes, etc.). Among the
- In the Dominican Republic, Bonahan Apparel and Hingshing Textile
companies, located in Zona Franca Bonao, received visits from their U.S.
customers, including Chaus, Tuxedo Junction, and Jacob Sigel. According to the
companies' administrator, Mr. Chunciob Lim, these visits were only related to
product quality and did not address working conditions.
- In India, Pankaj Enterprises (located in New Delhi) and Chenduran
Textiles, Poppys Knitwear, and Yavraj International (located in Tirupur) stated
that visits from U.S. customers or their agents were focused exclusively on
product quality. Zoro Garments (located in Madras) stated that monitoring dealt
only marginally with working conditions and no checklist was used.
b. Previous Knowledge About Monitoring Visits
Whether monitoring visits are announced or unannounced differs widely from
company to company. In 41 of the companies interviewed (58 percent), monitoring
visits by the U.S. importer or its agent or representatives were announced in
advance, in 13 (18 percent) they were unannounced, and in 16 (23 percent) there
were both announced and unannounced visits.
c. Pre-Contract Inspections
Consistent with the information provided by U.S. garment importers (Chapter
II), foreign producers interviewed that operate as contractors indicated that,
prior to receiving an order from a U.S. corporation, they were subjected to
qualification inspection, which extended to working conditions. For example:
- In Guatemala, Dong Bang, located in Chimaltenango, reported that
JCPenney inspected their facilities - including working conditions - prior to
entry into a contract. Once they became contractors, JCPenney had again
conducted inspections and given them written ratings based on a point system.
- Maquila Cardiz reported that JCPenney inspected its current facility
before it could change locations and made recommendations for the new facility.
- Confecciones Caribe had been subjected to a pre-contract inspection by
JCPenney and received a point rating.
- A similar experience with the JCPenney point rating system was brought up
by management of Undergarment Fashions, a plant located in the Zona Franca San
Pedro de Macorµs in the Dominican Republic.
2.Monitoring for Codes of Conduct
While monitoring for product quality, and even for health and safety
conditions, is customary in the garment industry, the field visits by Department
of Labor officials suggest that monitoring for compliance with provisions of the
codes of conduct of U.S. garment importers dealing with other labor standards -
and child labor in particular - is not. Where it does occur, the degree to
which such monitoring extends to all labor standards addressed by the codes - as
opposed to exclusively safety and health issues - seems to vary widely across
suppliers. Foreign suppliers that are wholly owned by a U.S. corporation, or
contract directly with a U.S. corporation with a presence abroad, seem to be
subject to the most frequent and most thorough monitoring of codes of conduct,
including child labor and other labor standards.
Monitoring for implementation of child labor provisions of codes of conduct
is a very challenging undertaking. As has been discussed in Chapter II, the
garment industry is made up of a complex chain of actors, domestic and foreign.
- On the domestic front, there are apparel manufacturers (which may be
producers or buyers of cloth, contractors or subcontractors, and also retailers
of finished product), apparel merchandisers, buying agents (which may be located
domestically or abroad), and retailers (which may be department stores, mass
merchants, specialty stores, national chains, discount, off-price stores, etc.).
- On the foreign front, there are buying agents, company representatives,
wholly owned subsidiaries of U.S. companies, U.S.- or foreign-owned contractors
that have an established relationship with a U.S. importer ("captive"
contractors), contractors which have relationships with more than one U.S.
importer, and subcontractors.
Implementation of the child labor policies of U.S. apparel importers
involves communication and interaction between many of these actors. The very
long chain of actors and transactions in U.S. importers' procurement of foreign
apparel products is illustrated in Box III-7 with an example drawn from the
field visit by the Department of Labor to the Philippines. In the example, the
procurement/manufacturing process of apparel imported by a U.S. retailer
involved five different actors, each farther removed from the U.S. importer.
Generally, the closer the relationship between a U.S. company importing
garments and the actual producer of the items, the greater the ability of the
U.S. company to influence labor standards, including prohibitions on child
labor, in the production process. Conversely, the longer the chain of
procurement/production (five steps in the above example drawn from the
Philippines), and the more levels of buying agents, contractors, and
subcontractors, the more complex and challenging is the implementation of the
labor standards policies and the less the ability of the U.S. importers to
BOX III -7
Organization of Production and Implementation of Codes of
An Example from the Philippines
U.S. retailer JCPenney has "Foreign Sourcing Requirments" that
apply to all of its suppliers. Among other provisions, the sourcing requirments
state that " JCPenney will not knowingly allow the importation into the
United States of merchandise manufactured with illegal child labor." With
regard to the Philippines:
- JCPenney purchases infant and children's apparel from Renzo, a
U.S.-based importer. Pursuant to its sourcing requirements, JCPenney requires
Renzo to certify that its imports are not made with child labor.
- Renzo imports from its Philippines agent, Robillard Resources.
Renzo communicates to Robillard the JCPenney sourcing requirements and its
obligations and requires Robillard to sign a certificate that its products are
not made with child labor.
- Robillard purchases from a number of contractors in the
Philippines, one of which is Castleberry. Robillard requires Castleberry to
certify that its products are not made with child labor. The owner of Robillard
visits Castleberry from time to time monitoring for quality control, but also
for compliance with the sourcing requirements. Occasionally, a representative
from JCPenney also visits.
- Contractor Castleberry does cutting, finishing, and packing. its
subcontracts sewing to about thirty plants.
- The thirty or so subcontractors who do the sewing do not sign a
certificate stating that no child labor has been used, but are supervised by
Castleberry line supervisors, who are each responsible for several
subcontractors. They spend almost their entire time with the subcontractors.
Occasionally, a production supervisor from Castleberry also visits. Its is
apparent that their primary interest is quality control, but they also monitor
compliance with other standards, including child labor requirements. It is safe
to say, however, that none of these supervisors are familiar with the code of
conduct other than an understanding that they are not supposed to allow child
labor. Embroidery and "smocking" (a form of very small and intricate
pleating, sometimes combined with embroideries) is subcontracted out to home
workers; some is done within the plants as well.
- Homework contracts - piece work contracts - are made with heads of
households. Children may help their parents with some of the simpler embroidery
and smocking and with the trimming. This is not monitored by any company.
a. Monitoring Methods
As discussed in Chapter II, U.S. companies utilize a variety of means to
monitor their codes of conduct or policies on labor standards and child labor.
- Many companies use some form of active monitoring - which might include
site visits and inspections by company staff, buyer agents or other parties - to
verify that suppliers are actually implementing the provisions on labor
standards and child labor.
- Companies may also use contractual monitoring, whereby they rely on the
guarantees made by suppliers, typically through contractual agreements or
certification, that they are respecting the U.S. company's policy and not using
any child labor in production. This latter form may be seen as
- Some companies use a combination of the two forms of monitoring, typically
relying on contractual monitoring backed up with visits and inspections.
All three of these monitoring strategies were found in the field visits.
b. Active Monitoring
A few U.S. corporations - particularly manufacturers - tended to have
structured monitoring of all aspects of their codes of conduct and subjected
their foreign subsidiaries to such disciplines. Based on the plant visits,
instances of active monitoring by U.S. corporations of their foreign
- In the Dominican Republic, Hanes Caribe (Zona Franca Las Amricas)
and Tejidos Flex (Zona Franca Santiago) were subjected to structured monitoring.
- Both companies received periodic visits, sometimes as often as every 2-3
weeks, by upper level managers and occasional visits by Vice Presidents of Sara
- In Honduras, Fruit of the Loom owns five plants (Confecciones Dos
Caminos, 2 plants; Manufacturas Villanueva; El Porvenir; and Productos San Jos).
A Senior Vice President makes monthly monitoring visits.
- In the Philippines, Levi Strauss regularly monitors its
Some U.S. companies (manufacturers or retailers) that contract directly with
foreign suppliers also appear to play an active role in monitoring their codes
of conduct. In some instances, companies interviewed said that the monitoring
activities by the U.S. importer covered all aspects of codes of conduct,
including child labor policies. Responses from others were less categorical,
suggesting that the emphasis of monitoring may have been only on safety and
- In the Dominican Republic, Levi Strauss' contractors received
periodic visits to their facilities to monitor compliance with all aspects of
codes of conduct. Levi Strauss has an office in Santiago which is responsible
for overseeing its Dominican operations.22
- Some companies also received visits by U.S. importers or retailers. The
General Manager of Undergarment Fashions, Inc. (Zona Franca San Pedro de Macorµs)
stated that JCPenney makes periodic monitoring visits to the company.
- EuroModa is a Honduran company producing shirts for Oxford
Industries, Tommy Hilfiger, May Department Stores, Dillard Stores,
JCPenney-Stafford Executive, Polo Boys and Brooks Brothers. Oxford Industries
monitors compliance with its "Contractor Sourcing Policy"; May
Department Stores and JCPenney send their own inspectors for contract
compliance; each label owner will have someone make visits 2 or 3 times per year
for contract compliance.
- Also in Honduras, The Gap has a country representative who makes
weekly unannounced visits to KIMI, a contractor for The Gap, to monitor
compliance with all aspects of the Code of Vendor Conduct.
- However, another Honduran company, Certified Apparel Services, that
produces for Wal-Mart, Sears, Mervyn's (Dayton-Hudson), JCPenney, Target
(Dayton-Hudson), Kmart and other U.S. companies with codes of conduct, stated a
regional representative of JCPenney made one announced visit regarding
compliance with its code of conduct. Wal-Mart also made one announced visit to
determine compliance with its code. According to this company, there is no
systematic verification of compliance with codes of conduct by purchasers.
- In India, the Department of Labor officials found an example of
monitoring of codes of conduct by an outside monitor on behalf of a U.S.
- Triburg Consultants is an Indian company located near New Delhi which
implements the terms of engagement and quality control requirements of U.S.
garment importers. Triburg's clients include The Gap (for the last 12 years),
Liz Claiborne, Banana Republic (The Gap), Polo Jeans, Sun Apparel of Texas, and
- Triburg administers Liz Claiborne's human rights guidelines: it conveys
the guidelines to the supplier company, discusses them with the company, and
confirms that the supplier abides by the guidelines. Triburg also conducts
surprise visits to monitor compliance. Triburg hires a welfare officer to
conduct programs for the children of workers and check on wages, food subsidies,
and medical facilities.
While most monitoring visits by U.S. corporations or their agents appear to
be regularly scheduled or announced in advance, there are some instances of
- In Guatemala, a Department of Labor official was consistently told
that JCPenney conducted unannounced inspections of contractors. Unannounced
monitoring visits of contractors by Kmart personnel were also reported by Dong
Bang, a Korean-owned facility located in Chimaltenango, and Confecciones Caribe,
a U.S.-owned company located in Mixco. According to Dong Bang officials, Kmart
personnel recently completed the second unannounced visit to this plant in three
- In India, Triburg stated that it conducts surprise visits on behalf
of U.S. companies (particularly Liz Claiborne) to monitor code compliance by
- In Honduras, it was reported that the Audits Department of Warnaco
audits contractors three times per year. These audits are unannounced.
- Also in Honduras, weekly visits by the representative of The Gap to
KIMI are unannounced.
- However, in the Dominican Republic, Interamericana Products (Zona
Franca Santiago) stated that they had requested, and Levi Strauss
representatives had agreed, to stop making unannounced visits to monitor
compliance with codes of conduct. Interamericana Products indicated that under
the agreement Levi Strauss would give at least a week's notice prior to any
visits to the plant.
c. Contractual Monitoring
There was also evidence from the field visits of numerous instances of
contractual monitoring of codes of conduct. Contractual monitoring of codes of
conduct is most prevalent in the case of U.S. retailers which do not have a
significant presence abroad.
In these situations, the burden of monitoring compliance with the U.S.
importer's child labor policies rests with the foreign agent, contractor or
subcontractor, typically through a self-certification process. In these
instances, the role of the U.S. importers in monitoring compliance of their
codes of conduct is minimal.23
- In Honduras, Fabena Fashions is required by Macy's and Wal-Mart to
sign a contract which includes a no child labor clause.
- In India, Chenduran Textiles, located in Tirupur, exports about
one-half of its output to the United States. The main U.S. customer is Tropic
Textiles of New York City, a supplier to Wal-Mart. Tropic requires Chenduran to
certify that no slave labor or child labor was used in the production of the
goods through a paragraph in the contract/bill of lading. Tropic accepts
Chenduran's self-certification of the clause and does not have any in-country
monitoring, education, implementation, or enforcement programs.
- Also in India, Pankaj Enterprises, New Delhi, is an exporter of
mid-grade apparel items. Pankaj's U.S. buyers require that no child labor be
used in the manufacture of garments. Pankaj buys fabric and guarantees that no
child labor is used in the production of garments through self-certification;
there is no monitoring from the importer or its agents.
d. Contractual and Active Monitoring
In some instances, U.S. importers use a combination of contractual and
active monitoring, using auditors from the U.S. importer (or its agents) to
- In the Philippines, Liz Claiborne has a policy of monitoring and
supervising its contractors. Contractors must certify that they are in
compliance with the code of conduct. In addition, they are subject to frequent
visits from the Philippines office of Liz Claiborne, which monitors
implementation of the code of conduct as well as quality control.
- Warnaco, which requires that contractors certify that child labor has not
been used, also audits suppliers in Honduras for full compliance with
its child labor policies, including age verification.
- Macy's, Wal-Mart, and The Limited have checked personnel records at Fabena
Fashions to verify the age of workers.
- In India, Zoro Garments supplies 75 percent of its production to
the U.S. market. Zoro's major U.S. customers are Rustic River, Quick Silver,
Blue Print, and JCPenney (Phillips-Van Heusen is a former customer).
- According to Zoro's management, occasionally representatives from the U.S.
customers have visited Zoro's factory to check on quality control. Most of
these visits were walk-throughs with some general questions raised about the use
of child labor, but no checklist of requirements was administered.
- Two or three years ago, Phillips-Van Heusen raised the subject of codes of
conduct with Zoro's management and asked the company to fill out a
questionnaire. When Zoro was producing for Phillips-Van Heusen, there was a
clause in its contract related to child labor.
- In El Salvador, Primo Industries, a contractor for Liz Claiborne,
Land's End, Polo and JCPenney, met with Liz Claiborne several years ago to
discuss and sign the Liz Claiborne code of conduct. The plant manager told
Department of Labor officials that Liz Claiborne is "the toughest on child
labor." He also said that American inspectors visit the plant
approximately twice a month to check on quality control and see whether their
rules and regulations are being implemented.
Closely related to the above issues is how the monitoring of the codes of
conduct is undertaken, specifically whether workers and members of the community
in which plants are located are also approached by the monitors, whether
monitors are able to speak with workers outside the presence of company
officials, the ability of monitors to speak the language of the host country and
workers, and the extent to which monitors are trained to review implementation
of labor standards.
Based on the field visits, it appears that most monitoring conducted by U.S.
corporations primarily covers quality control issues. As such, there seems to
be relatively little interaction between, on the one hand, monitors, and on the
other hand, workers and the local community. It also appears that monitors have
a technical background in production and quality control and are relatively
untrained with regard to implementation of labor standards.
Department of Labor officials found the following exceptions to these
- In the Dominican Republic, managers of plants contracting for Liz
Claiborne (Grupo M) and Levi Strauss (Grupo M, Interamericana Products, and
D'Clase Corporation) stated that monitors routinely speak with workers inside
the plant regarding both product quality and working conditions. Monitors talk
to workers about their ages when appropriate.
- Mr. Roberto Rodrµguez of Hanes Caribe stated that internal auditors
from Sara Lee Corporation often meet with workers in private.
- D'Clase Corporation stated that for a recent contract negotiated with the
Kellwood Corporation, an outside firm had been hired by Kellwood to monitor
compliance with quality and labor standards matters. Monitors would be expected
to talk to the workers to verify age, among other matters.24
- The General Manager of Woo Chang Dominican Industry (Zona Franca Bonao), a
plant which sells to Samsung Corporation, stated that when Samsung
representatives visit the plant, they ask the workers how they are being
- In El Salvador, management of CTM Corporation, a contractor to VF
Corporation, indicated that the U.S. purchaser monitors the facilities
approximately every six months. In the context of these visits, VF personnel
review working conditions in the plant, and check on child labor by looking
around and asking workers; occasionally they conduct private interviews with
- However, some workers at the same plant interviewed by the Department of
Labor officials said that the (foreign) monitors do not speak with workers; they
believe the monitors do not speak Spanish.
- In Honduras, the country-based investigator for The Gap said that
he monitors implementation of the company's code of conduct at different
locations, saying that he talks to workers during plant visits.
- In the Philippines, managers of two plants producing for Nike
(Mactan Apparel and Globalwear Manufacturing, Inc.) as well as a representative
from Nike stated that its auditors talk to workers and inform them about its
corporate code of conduct and Filipino labor law.
- In contrast, workers interviewed outside the Sam Lucas plant in
Chimaltenango, in Guatemala, stated that they had never seen an
inspector talking to a worker. They could not be certain that representatives
from a U.S. corporation had ever visited the plant.