6-99, Comments on the Independent Audit Report of Formosa Evergreen, El Salvador by Verite.

David Husselbee

The report raises some important issues, most of which have already been discussed, by adidas Salomon with Formosa Evergreen and action plans agreed. The report is being used by the factory to focus on key issues for its own internal monitoring of labour, health, safety and environment issues.

Recommendations:

1.
a. Supervisors are being trained to use appropriate management techniques, which do not involve harassment. Workers report an improvement in the behaviour of the supervisors.

b. Agreed

c. Communication between management and workers has improved. Complaints through the suggestion box system led to the dismissal of a quality controller.

d. Some training has already been done supported by Nike.

2.

a. Agree that a system combining production bonuses and overtime payments should be developed.

b. Overtime work is not needed on a regular basis at present and management have agreed with adidas that no more than one hour per day overtime should be worked. However management should confirm that workers are not penalised for failing to meet their quota or refusing to work overtime. adidas Salomon understands that workers who do not achieve the target within the one hour are paid the overtime rate for that hour.

c. Training of supervisors is important.

3.

a. Procedure for use of warnings should be written.

4.

a. The factory clinic should be functioning as soon as possible to provide a good service to workers, so that they do not need to use the social security clinic. It is disappointing to adidas Salomon that the clinic is not functioning, even though the management said it would be working by May.

b. The controls on the use of the bathrooms are not a problem when both factories are in use. At the time of the audit all production had been moved to Evergreen and there were too many workers per bathroom.

c. Bathrooms should be open if workers are on the premises.

d. The temperature in the factory was well below 33 degrees centigrade in April when I visited, so the average temperature quoted is probably right. Nonetheless further ventilation would help.

e. The misters have improved air quality sufficiently.

f. Exits are sufficient, if the factory is working at the usual capacity. While the factory has extra workers an extra exit should be unblocked.

g. Agreed

5.

a. Workers should be informed when they are being trained about the codes of conduct from customer companies.

b. Many workers do not wish to join a union because they are not fairly represented by unions in El Salvador. Nonetheless workers should have the right to freedom of association and to join a union without being punished. adidas Salomon Standards of Engagement require this.

6.

a. The factory has guaranteed to adidas that pregnancy testing is no longer required.

7.

a. Agreed.

8.

a. Agreed.

9 a and b agreed

10. a. agreed. Already requested by adidas Salomon.

Page 5. The first draft of the report said that workers acknowledged that harassment had decreased. This should remain in the final report for balance.

The low level of orders in the factory at present does not make working ahead necessary at present. If it is done workers should be paid.

Page 6 the management's figure and the payroll seem to confirm each other's figures for the numbers of workers achieving quota.

Page 8: adidas Salomon have requested details of the alleged dismissal of 20 workers, from the management.

The fact that the termination of 200 workers is not documented is being checked. It this is correct it suggests the need for rapid and significant improvements in the Human Resources Department.

Page 9: Wages rates quoted do not include bonuses for overtime.