Nike Supplier Closes Unionized Factory, Shifts Work to Vietnam

On February 22, 2007, the unionized BJ&B garment factory in the Dominican Republic suddenly announced that it was closing and would lay off all workers. The owners of the factory are shifting the work to Vietnam, where independent unions are banned, and possibly to Bangladesh, where unions are banned in "export processing zones."

At the time of the announced closure, BJ&B was producing caps (hats) for Nike. Previously the plant also produced for Reebok (now owned by Adidas). The closed factory is owned by a Korean group called Yupoong, one of the biggest manufacturers of caps worldwide. BJ&B workers had a union and was one of the few factories in compliance with corporate codes of conduct. However, Yupoong has diverted orders from BJ&B as part of a strategy to move away from this one unionized facility to other non-unionized factories.

For years, workers at BJ&B endured a range of worker rights violations, including chronic forced overtime, verbal harassment of workers by supervisors, and repeated efforts to coerce and intimidate workers who sought to unionize. In late 2002, when all 20 members of a recently formed union committee were fired, the workers filed a complaint with the US based Worker Rights Consortium.

An international campaign led to the union committee members' reinstatement. In January 2004, the workers negotiated a groundbreaking collective bargaining agreement. This provided for a wage increase of 10% (unprecedented in the Dominican apparel export sector) and educational scholarships for workers and family members, among other benefits. These efforts also led to general improvements in working conditions and the elimination of most code-of-conduct violations.

However, the advances achieved through the workers' efforts and support from the international community proved short-lived. Soon after the major breakthroughs occurred at BJ&B, the company's parent company, Yupoong, began a process of disinvestment from the company, selling off key machinery and conducting mass lay-offs, while the company's major buyers -- Nike and Reebok -- began shifting production to Yupoong's other production sites in Asia. When the workers began organizing in 2001, the factory had more than 2,000 employees and was one of the largest cap manufactures in the Western Hemisphere. By early 2005, the workforce had been reduced to only 350 workers.

Yenny Perez is a union activist and pregnant mother of four children who worked at the factory for six years, starting when she was 25. She operated various machines at the plant, most recently a machine that applies the hats internal labels. Yenny's job at BJ&B provided her family's only income. She earned a base wage of 4127 pesos ($125) a month, or about $0.65 an hour. Some months, she could supplement this income through overtime.

Her base expenses, including only food, electricity, clothing for the children, and their bus rides to school, totaled $127 a month. Yenny Perez told the CCC, "I don't know how to explain how important the union is. When you are by yourself, the boss can tell you to do anything. Many of the employers don't comply with the law. But together in the union, we can make sure that the company complies with the law."Now, with the closing of the plant, she is afraid. "As a pregnant woman, I know I will not be able to find work. On top of that, I am a known trade unionist. They don't hire trade unionists here."

One of the key arguments put forward by the buyers, particularly Nike, as to why they are closing BJ&B has been that it is "impossible for the factory to remain competitive."This suggests that Nike and Adidas are not serious about implementing sourcing practices that support their pledges for "responsible competitiveness."

For the majority of the workers the day of the announcement in February was their last working day, though formally the factory remained open until May. Yupoong apparently violated the law in the Dominican Republic by refusing initially even to pay severance pay. In spite of an international outcry from the Clean Clothes Campaign, the Fair Labor Association, the Worker Rights Consortium, and the International Textile, Garment, and Leather Workers Federation, Yupoong refused to reopen the factory. However, according to the Worker Rights Consortium, in May 2007, under pressure, Yupoong agreed to pay, "for three months' severance pay above what is legally mandated by Dominican law for each worker."Yupoong also agreed to pay the paltry sum of $6100 to the union for "organizing and educational programs."

Letters of protests can be sent to: Fukumi Hauser, Director of Americas Compliance, Nike, Inc., Fukumi.hauser@nike.com; Frank Henke, Director of Social and Environmental Affairs, Adidas, frank.henke@adidas.de; Hyun-Suk Han, Legal Counsel, Yupoong Corporation, Yupoong Head Office, 416-1, Guro-dong, Guro-gu, Seoul, Korea, info@flexfit.com. Please see the Editor's blog on the Peacework website for more on this issue.