Charlotin Odinel lives in the Village de Dieu, Bicentenaire shantytown in Port-au-Prince, Haiti, where his home is a cinder-block shack consisting of two tiny windowless rooms—no running water—that he shares with his wife and three children. To get there, you navigate a warren of makeshift homes, stepping over garbage and mud puddles. Nearby, a canal filled with brackish black water is rimmed by heaps of rotting waste where dogs and pigs run wild and mosquitoes, carrying the threat of malaria and dengue fever, are omnipresent. Says Odinel: "As a human, this is not a good place to live."
Odinel, a slight 34-year-old with a touch of facial hair, has been unemployed since he lost his job last summer at the nearby Premium apparel factory, which makes clothing for Gildan Activewear Inc., the Montreal-based multinational. He'd spent four years there inspecting T-shirts for defects. Never given a reason for his dismissal, Odinel believes it was due to his union activism.
Odinel found his job stressful. Employing more than 1,100 workers, the sweltering Premium plant maintained an intense pace of production. For his efforts, Odinel was paid 500 gourdes a day, about $12—considered high in Haiti's apparel industry, where many workers earn less than half that sum. Today, he's broke and in debt, one of Haiti's millions of unemployed (as much as 40% of the working-age population is jobless). "I can't afford the needs of my family right now," he says simply.
Odinel was a cog in Gildan's vast production network, which stretches from Central America and the Caribbean Basin to Bangladesh, employing about 41,000 people and producing apparel that is sold in more than 30 countries. While the lives of workers like Odinel are grim, Gildan is a success story. It had fiscal 2013 revenues of almost $2.2 billion (U.S.), net earnings of $320 million (U.S.), and a stock that's soared from less than $17 in 2011 to more than $67 as of early November. The company is gaining market share, having more than doubled sales since 2009.
Once merely a manufacturer of "blank" T-shirts and sweatshirts that others put their logos on, Gildan later added fleece, sports shirts, underwear and socks. Lately, it has been stepping up the marketing of its own label, even airing an ad during the 2013 Super Bowl. Analysts are enthusiastic. "I view [Gildan] as one of Canada's best consumer growth stories," says Stephen MacLeod, vice-president of equity research at BMO Capital Markets.
When it's doing so well, does Gildan need to play hardball with workers in impoverished countries?
If Odinel was truly fired for associating with a union—and it's a claim echoed by many others who worked at plants making Gildan clothes—it flies in the face of Gildan's robust corporate social responsibility program and internal code of conduct. Gildan also belongs to the Fair Labor Association (FLA), a Washington, D.C.-based body dedicated to protecting the rights of workers globally, and ascribes to the Worldwide Responsible Accredited Production (WRAP) system of workplace standards. "[CSR] is a staple of the overall business strategy of the company," says Peter Iliopoulos, Gildan's senior vice-president of public and corporate affairs. Iliopoulos says he's surprised to hear there are reports of workers being fired for union activity. Such information should be brought to the company's attention, he adds, "and we will deal with it proactively.…I can assure you this is something we take very seriously."
Gildan was founded in 1984 in a small shop in Montreal by brothers Glenn and Greg Chamandy, whose family has deep roots in the city's garment trade. They bought a knitting mill to supply fabric for their childwear business, Harley Inc.
Gildan later changed its focus to selling cotton T-shirts to wholesalers, which resold them to distributors and Canadian and American screen-printers. The brothers ran the company together until Greg left in 2004. (CEO Glenn Chamandy declined to be interviewed; the company would not permit a visit to any of its factories.)
As a young company, Gildan benefited from being in Canada, receiving government subsidies, and, when it hit a rough patch during the '90s, even borrowing from Quebec's labour-sponsored fund, the Fonds de solidarité FTQ, which invested $3.5 million in Gildan shares starting in 1996 and lent the company up to $30 million in debentures.
As it turned out, making inexpensive clothes in Canada was a dicey proposition. Once heavily unionized and protected by tariffs, the country's apparel manufacturing sector was levelled by trade liberalization and globalization—all quotas on apparel were lifted by 2005. The number of Canadians making clothes fell from 108,400 in 2001 to 36,700 in 2013, while GDP in the sector dropped from $4.3 billion in 2001 to $1.4 billion by 2011. The reason was simple: the cost of labour. Jobs were moving abroad.
The Chamandys soon realized staying in business meant following their competitors overseas. "Competition began to intensify and what you saw was that the average price of a T-shirt dropped by 24% from 1995 to 1998," says Iliopoulos.
Finding cheaper labour was not, however, the only method Gildan used to cut costs—it also chopped its tax bill. In 1999, the company opened a subsidiary in Barbados to manage marketing and sales. Barbados has a treaty with Canada that permits multinationals to repatriate profits they earn abroad without being taxed here. The result: Gildan no longer pays much corporate income tax in Canada.
Indeed, between fiscal 2009 and fiscal 2013, despite earning $1 billion (U.S.) in net profits, the company has paid only $10.5 million (U.S.) in income taxes (or about 1%). If one includes recoveries Gildan received stemming from acquisitions and restructurings, it paid no corporate income tax at all from 2009 to 2013. "To us, it's totally immoral," says Robert Bouvier, president of Teamsters Canada, which once represented Gildan workers. "Immoral in the sense that you start your company in Canada…you benefit from the health system…you benefit from the banks that loan you money. You benefit from everything. And after you've established all of this, then you move out."
Nevertheless, as McGill tax law professor Allison Christians observes, Gildan is simply taking advantage of what the Canadian government has wrought. "That's exactly the system we designed," she says. "We designed the system not to have manufacturing here in Canada, to not have low-wage jobs here. The tax system is built to send manufacturing offshore." Gildan, then, is the ultimate fruit of globalization—the "virtual" company that has no nationality. Just 230 of its employees work in Canada, at the company's Montreal head office.
The search for cheap, pliable labour sent major North American and European clothing manufacturers and retailers to Asia—first to low-wage countries like Korea and China, and then, as costs rose, to nations like Cambodia and Bangladesh, where the infamous collapse of Rana Plaza in Dhaka took the lives of more than 1,100 workers in 2013.
Gildan has demonstrated the same restlessness, but has focused instead on the Caribbean Basin. By 2007, Gildan had shuttered all of its plants in North America and relocated production to Honduras, Nicaragua, Dominican Republic and Haiti (it also produces clothing in Bangladesh).
The company settled on Honduras as its main base of production, opening its first plant there in 1997. Today Gildan employs 26,000 people at half a dozen facilities in the country, making textiles, socks, underwear and activewear.
Complaints about labour conditions have followed the company since the late 1990s. To critics, there's a consistent pattern of foot-dragging and half-measures in Gildan's responses.
Currently the third-largest exporter of apparel and textiles to the U.S., Honduras has been bedevilled by military coups, narco-trafficking and drought. It has the highest murder rate in the world, and is the second-poorest country in Central America. And while unions are legal, trade unionists are regularly murdered: 31 have been assassinated and 200 injured in attacks since 2009, according to the AFL-CIO.
The minimum wage in the country's free-trade zones—set up with special rules to attract investment—is about $283 per month, or about $1.18 an hour, according to the Honduran government. Gildan's Iliopoulos says that "we pay wages that are significantly above the industry minimum wage." But Iliopoulos won't disclose what those wages are, saying it is competitive information.
Honduran trade unions estimate that a Gildan worker earns an average of $351 a month. But the Worker Rights Consortium (WRC), a Washington D.C.-based NGO that monitors the industry on behalf of North American and British colleges and universities (the destination of much screen-printed clothing), estimates that a living wage—that is, sufficient to support a family—in Honduras is $683 a month, far higher than the minimum wage in the free-trade zones. (Iliopoulos won't address whether Gildan pays a living wage, saying it is a "complex issue," with the level varying from country to country, and from NGO to NGO.)
It was in Honduras that Gildan had its first major run-in with non-governmental organizations over pay, working conditions and the treatment of its workforce. In 2001, the Toronto-based Maquila Solidarity Network (MSN), an NGO focused on labour rights, began researching Gildan's record in Central America, with the help of a small grant from the International Development Research Centre (IDRC), a Crown corporation.
Before MSN could complete its report, however, things turned nasty. In 2002, according to MSN, Gildan fired close to 45 workers at its plant in the Honduran city of El Progreso after they began making noises about unionizing. NGOs complained, but Gildan refused to reinstate the workers.
The Fonds de solidarité FTQ did its own investigation and alleged that Gildan had violated the workers' labour rights under Honduran law. Gildan refused to budge, so the Fonds divested its shares and resigned its seat on the board. "Pulling out is a last resort, where there is no indication there'll be an improvement in the practices of our business partner," says Patrick McQuilken, a Fonds spokesperson.
In the summer of 2003, MSN released its report about Gildan, stating that its Honduran workers were receiving less than a living wage: gross average weekly pay of $76.91 for working four 11-hour shifts. The report said intense production pressure at the El Progreso plant led to repetitive strain injuries. As well, employees reported that female workers were dismissed during their probationary periods if compulsory tests indicated they were pregnant. There were reports workers would be fired if they tried to join a union, the MSN found. Iliopoulos notes that this incident happened 10 years ago and "we have evolved tremendously with our corporate social responsibility program [since then]."
But back then, Gildan's response was swift; it threatened to sue MSN. Then Gildan fired another 37 workers in El Progreso, according to MSN. Acting on formal complaints, the Fair Labor Association and the WRC found that the workers' labour rights had been violated. The FLA produced a report in July, 2004, and another in December, 2006, that confirmed the violations of freedom of association, and the WRC produced a report in July, 2004, that also supported the complaints in detail. But by the time the WRC report appeared, Gildan had announced it was closing the plant.
After the FLA reacted by putting Gildan's membership under review, the company relented and began negotiating a remedial plan with the NGOs. The FLA accepted the company back once Gildan had met some conditions. "[Gildan] apologized profusely when it came to light that everything we'd been saying actually was true, that the report was valid and that they had to eat their words," says Kevin Thomas, a former MSN director of advocacy.
Gildan's Iliopoulos admits "we had some issues back then" and "that was a starting point for us to create CSR programs.…Over the last 10 years, we have worked very diligently and placed a significant amount of emphasis on developing a robust corporate social program." The company has an ongoing dialogue with MSN and other NGOs, he adds.
"They respond now, they don't [threaten to] sue people," agrees Lynda Yanz, executive director of MSN. "Some specific problems are resolved. But the fundamental issues of freedom of association and health and safety problems are not resolving." When the WRC did a follow-up on Gildan's compliance with its promised corrective action, it found mixed results.
Complaints in Honduras have continued. In 2012, the FLA was notified of worker unrest at the Star SA factory in El Progreso around the time it was being bought by Gildan; two managers used the changeover to demand concessions and foment dissension among the unionized workforce. Union leaders were threatened by other workers worried about layoffs. Reports by the WRC and the FLA chronicled the upheaval. A wildcat strike ensued. "Gildan was aware of what was happening and did nothing to stop it until it was pressured by outside groups," says Scott Nova, executive director of the WRC, whose investigation was aired in its report. Iliopoulos says, however, "as soon as we completed the acquisition, we communicated with the workforce in respect to freedom of association and to deal with the union in good faith and in a constructive manner. We've respected every provision of the collective bargaining agreement that's in place."
Last year, workers at Gildan's Villanueva plant sought the help of a human rights NGO to improve working conditions. Soon afterward, five workers involved were terminated (although the WRC says the number eventually rose to as high as 19). Gildan said that in fact these workers were among more than 300 who were let go owing to a drop in production. But a WRC report concluded that "Evidence demonstrates beyond any doubt that Gildan terminated the worker leaders because of their outreach [to the NGO]."
Iliopoulos says Gildan has co-operated with a Honduran Labour Ministry investigation into the case. "We've been in regular dialogue with the WRC to address the other employees on the list," he says. This fall, the employees who had approached the NGO were reinstated after the WRC's intervention.
Allegations about problems with freedom of association are not limited to Gildan's Honduran operation. According to an FLA report, complaints arose at the company's Dortex plant in the Dominican Republic in 2010, alleging the company had intimidated and fired workers who had been trying to unionize. When a union was formed, Gildan responded by negotiating a contract with another, less assertive union, according to the FLA. An independent assessor's report in 2011 alleged that Gildan had undermined the first union's efforts and signed a sweetheart collective agreement with the alternative union. Iliopoulos says Gildan has co-operated with all of the investigations, that no collective agreement was put in place owing to wrangling between the two unions, and the company has made the changes the first union wanted. "We fully implemented all of the benefits in terms of that agreement with those employees," he says.
The Dominican Republic also figured in a different sort of controversy for Gildan. In 2010, the company agreed to pay $22.5 million (U.S.) to settle a lawsuit alleging that Glenn Chamandy had taken advantage of inside information. According to the suit, Chamandy cashed in more than $95-million (U.S.) worth of Gildan stock in 2007 after the company's plant in Santo Domingo was hit both by a shutdown owing to managerial bungling and violent protests stemming from the plant's pollution of local waterways. These problems, however, were not revealed to other investors; hence the lawsuit. No wrongdoing was admitted in the settlement.
(Through indirect control of two corporate entities, Chamandy has cashed in an estimated $280 million (U.S.) in stock since 2006, in addition to an estimated $12 million (U.S.) in salary and bonuses; he continues to hold stock options.)
The quest for lower costs eventually brought Gildan to Haiti, the poorest country in the Western Hemisphere. Haiti has a GDP per capita of $1,300 (U.S.) a year, and by some estimates nearly 80% of its 10.3 million citizens live on $2 (U.S.) or less per day. The country has been devastated by colonization, environmental degradation, resource depletion, dictatorships, foreign invasions, hurricanes, coups d'état, an unscrupulous oligarchy, and finally an earthquake that killed 220,000 people in 2010.
In Port-au-Prince, the signs of a society teetering on the brink are glaring: Sidewalks are packed with people out of work, selling anything they can find. Shantytowns teem with people living in tin-roofed shacks. The high unemployment benefits employers, say activists. "It's worse than slavery," maintains Jean Bonald Golinsky Fatal, a union leader. "The slave owners had obligations to feed and clothe the slaves. Here you don't have to do that.…The employer uses the extreme poverty and unemployment in Haiti because they know other workers will take the wage."
Gildan opened three factories in Haiti starting in 2004. By 2009, it had sold them and begun contracting production to suppliers to have sewing assembly done in local factories. A key supplier is the Apaid family, led by André Apaid Jr. The Apaids' factories also contract with Gildan's competitor, Hanes, while the clothing of another rival, Fruit of the Loom, is also produced in Port-au-Prince. At least two Apaid factories—named Premium and Genesis—assemble clothes for Gildan. The family's GMC factory has also done Gildan work.
The Apaid family is controversial due to its support for dictator Jean-Claude (Baby Doc) Duvalier, its opposition to the governments of Jean-Bertrand Aristide, and for lobbying against increases in the minimum wage (the Apaids backed the 2004 coup that removed Aristide from power, at a time when the minimum wage was a pivotal national issue). "They're tough," declares Yannik Etienne, spokesperson for the Haitian workers' federation, ESPM-BO. "They have their own rules and are very authoritarian."
In 2009, the Better Work program, run by the World Bank Group's International Finance Corp. and the International Labour Organization (ILO), began producing surveys on wages and working conditions in Haiti's apparel factories, including those supplying Gildan. In Haiti, the minimum wage has been, until this year, 200 gourdes a day (or $4.92), and 300 gourdes for piecework ($7.48). (The basic rate rose to 225 gourdes, or $5.61, this year.) In contrast, the AFL-CIO Solidarity Center estimates a living wage in Port-au-Prince is about $28 a day. Two Better Work surveys conducted in 2013 revealed that none of the Haitian apparel factories were paying their entire workforces as much as 300 gourdes, even though most employees are doing piecework. "Gildan has been aware of these violations for years," says Scott Nova of the WRC.
Iliopoulos says the minimum wage matter is an "industry-wide issue" and that there is confusion in the language of Haiti's laws about whether companies really have to pay the 300 gourdes. Indeed, in October, 2013, the Haitian government issued a statement that the piecework minimum rate should not be construed as a minimum wage.
Such semantic distinctions aside, the WRC investigated the minimum-wage issue in 2013, producing a report which concluded that nearly one-third of Haitian workers' wages was being "stolen" by garment manufacturers that refused to pay the minimum wage. The report said these poor wages had "devastating effects on workers," including miring them in debt and effectively denying them the necessities of life. The WRC and the AFL-CIO also did their own separate estimates of a living wage in Port-au-Prince, calculating that a family needed at least $850 a month—compared to the estimated $186 that a typical worker in one of the Apaid factories might earn.
The WRC report triggered a firestorm of controversy. Gildan immediately said it would investigate and urge its suppliers to pay the minimum wage. But the WRC says that while negotiations with Gildan did begin, wages haven't changed (the company disagrees). This fall, Gildan helped its suppliers and unions to negotiate a new base piece rate, but it won't disclose what it is. And while one of Gildan's suppliers has signed a contract with the unions, the Apaids have not. "We've since conducted internal audits that the piece rate is being applied and we've agreed to the terms and conditions in writing," says Iliopoulos.
That's not much consolation to people such as 32-year-old Archil Feraire, who used to make Gildan clothes. He lives in Blanchard, Plaine du Cul de Sac, in a three-room cinder-block shack with his wife and two children. Hired at the Premium factory in 2010 as a machine operator, his shift typically went from 6:30 a.m. to 5:30 p.m., Feraire said the salary in the torrid plant was 175 gourdes a day ($4.36) to start, rising gradually to 225 gourdes ($5.61). He said there was no change in his wage after the WRC's revelations in 2013. All told, his monthly salary was $133. "The salary is so low, you can only pay for food," he says.
In April of this year, Feraire was fired. He says it was due to union activism. Feraire fears he's been blacklisted from the industry. "Gildan has a tight relationship with the owners," he says, noting that the company has sent representatives to the factory to gather workers' complaints, "but nothing would change…Gildan wants the product but is not concerned about the situation with the workers." Iliopoulos says Gildan conducts regular audits. "If there are issues with working conditions, I am quite surprised that the unions wouldn't speak directly to us given our rapport with them," he says.
Natacha Saint-Cyril is a quiet 29-year-old single woman with a gap-toothed smile who lives with her brother and his family in Village de la Renaissance, a town built on the outskirts of Port-au-Prince to house people displaced by the 2010 earthquake. She worked at the Premium factory from 2010 until this past August, inspecting and packing Gildan T-shirts. It was not uncommon for her to leave home at 5 a.m. to arrive at the plant in time to start her 10-hour shift, which paid 225 gourdes ($5.61) a day. She estimated her monthly salary ranged from 5,000 gourdes ($124) to 6,000 gourdes per month ($150). "I am used to being hungry," she says. "Gildan should know what is going on in the factory."
Wherever one looks, the workers' living conditions are squalid. We visited the Delmas 33 slum one night to interview a worker employed at the Genesis plant. The shantytown is almost pitch dark because no one can afford electricity; we conduct our interview by the light of an oil lantern. The heat is oppressive, as is the crowding—noise from neighbours is omnipresent.
Many workers are driven into debilitating debt, borrowing from co-workers or street lenders at high interest rates. One former worker at the Genesis plant is 32-year-old Marie-Bénie Clerjo, a mother of three sons who lives in Solino, a slum of tottering shacks and crumbling apartment blocks. Clerjo's home is one small room where she and her children sleep on two beds. There's no kitchen, toilet or sink, and she is two months behind in her rent. "We are not treated like humans, we are treated like animals," she says. "I am living a miserable life."
Before she was laid off in November, Clerjo worked at Genesis six days a week and earned the equivalent of $160 a month. Since she can only afford to eat one meal a day, Clerjo is hungry all the time. To make ends meet, she has to borrow money and is $9,500 in debt.
She saw Gildan's personnel visit Genesis every two to three months. "Gildan is responsible because when they come, they don't talk to workers or inspect the shop floor," Clerjo remarks. Iliopoulos again points to the regular compliance audits that Gildan conducts on its suppliers as evidence it keeps abreast of what is happening in the plants.
Employees of the Apaid factories feel they have good reason to be cautious about what they say: In 2011, four worker leaders at the plants were dismissed, allegedly for union activity. They were eventually rehired, but only after extensive lobbying by NGOs, including a letter-writing campaign and delegations travelling to Montreal to ask Gildan to intervene.
Jean-Robert Louis is a thoughtful 40-year-old former worker who used to work in quality control in a plant that supplied Gildan. Louis says he was fired for taking part in a protest demanding a hike in garment workers' minimum wage to 500 gourdes per day, or about $12 (he earned less than half that). "Haitians are used to fighting against hunger," he says, sitting in the hot sun in a small village on the outskirts of Port-au-Prince. "We survive with only salt and water. But we are not healthy."
Things look different from Gildan's headquarters in Montreal. "From our perspective, we have put a lot of investments in terms of working conditions and the health of our employees," says Iliopoulos, noting the company has 16 employees devoted to CSR, and that it offers environmental and ergonomics programs at its plants. "We have 45 employees overseeing health and safety at all our operating locations. We have standard mandatory rest breaks that employees have to take, and specially designed ergonomic exercises. We have 22 doctors, 37 nurses on staff 24 hours, seven days a week, at our facilities, looking after our employees. Each factory has a health and safety committee and ergonomics committee."
He points out that Gildan was named to the Dow Jones Sustainability World Index for two years in a row—the only North American apparel company to be so honoured. "When they did the whole detailed assessment," he says, "we are ranked in the 95th percentile." Maclean's has had Gildan on its list of Canada's 50 most socially responsible corporations since 2009.
Gildan also passes muster with the giant Caisse de dépôt et placement, which manages the pension fund of Quebec's public employees. The Caisse owns about 9% of Gildan's shares. The fund's policy on responsible investment says that the Caisse likes companies it invests in to "respect workers' rights, to take the necessary measures to guarantee them a safe, healthful working environment and to prohibit any form of abuse." But a Caisse spokesperson said the fund would not comment on its investment in Gildan.
Those critical of CSR programs say they function merely as window-dressing to hide the reality of how companies conduct business. Ronen Shamir, a sociologist and law professor at Tel Aviv University in Israel, says CSR programs are designed to meet certain "indicators" that often have little to do with substantive change on the ground. "I'm not saying it's a sham, but I am saying there is an increasing gap between the indicators corporations use to report on their CSR and the actual efficacy of these systems when it comes to protecting communities, workers and indigenous people," explains Shamir. "The indicators are about corporate risk and not about employee or community risk.… It becomes two different universes."
This rings true with Gildan's most vocal critics, like Scott Nova of the WRC, who characterizes Gildan's record on labour rights as "ruthless." He believes Gildan has "gotten very adept at making promises at moments of real pressure to fend off the prospect of harsher public criticism. But then we've had challenges to get them to fulfill commitments."