San Francisco Bay Guardian June 10, 1998

Sweatshop blues

By Daniel Zoll

WORKERS AT the Sandrafine factory in Tangerang, Indonesia, make less than 50¢ a day -- below that country's minimum wage -- sewing Dockers khakis for Levi Strauss. Overtime work is compulsory. Three thousand employees share 10 toilets, and workers found using the bathroom more than three times a day have their pay docked.

Employees who have been absent, even for medical reasons, have been made to wear signs reading "I won't be absent again."

These accounts, compiled by a Jakarta-based nonprofit, are included in a report released last month by the Brussels-based Clean Clothes Campaign, an international coalition of nonprofits and trade unions. The report describes other violations of Levi Strauss's own guidelines in factories in the Philippines, Mauritius, and Bangladesh.

"The cases ... provide clear examples of the inconsistencies that currently exist between Levi's stated set of standards ... and the actual situation found in Levi's manufacturing facilities," the report states.

It's unlikely the workers at Sandrafine have heard of Levi Strauss's Global Sourcing and Operating Guidelines, which the company adopted with great fanfare in 1992. If they had been familiar with that code of conduct, they would have known that Levi's supposedly guarantees that employees of its contractors will make no less than the minimum wage, will not be forced to work overtime, will work in a safe and healthy environment, and will not be subject to physical or mental coercion.

The San Francisco-based company says its code of conduct and internal monitoring procedures are the most stringent in the industry. But Levi's refuses to allow independent human rights monitors into its plants to see for themselves.

Complaints about conditions in Levi's foreign plants carry particular weight at a time when the company is shifting more and more jobs abroad. On Nov. 3, 1997, Levi's announced plans to close 11 U.S. plants, putting 6,395 employees -- one third of its total manufacturing workforce in North America -- out of work. Five months later the company said it would resume manufacturing in China, reversing a 1993 decision to shut down operations there because of human rights concerns.

Levi's sent the Bay Guardian a written statement saying it "takes the allegations of the Clean Clothes Campaign very seriously and ... is currently reviewing the report."

Levi Strauss is not the first company to move production abroad to take advantage of low wages and less stringent labor regulations. In fact, it was one of the last firms in the garment industry to do so.

But unlike many of its competitors, Levi's aggressively promotes itself as a business that puts people before profits. On its Web site Levi's describes itself as a company for which "a commitment to corporate social responsibility is a given." By cultivating such an image, Levi's invites a higher level of scrutiny.

"We have told our people around the world what we value, and they will hold us accountable," Levi's president Peter Jacobi told Fortune in May 1997. "Once you do that, it's like letting the genie out of the bottle: you can't go back."

Now that international human rights activists have started exposing conditions in Levi's factories, the company may wish it had never opened the bottle in the first place.

On Nov. 3, the same day Levi's announced it was laying off a third of its North American workers, chair and CEO Robert Haas accepted an award from the United Nations for improving the lives of his employees.

Despite years of layoffs and labor problems, the company has maintained a Teflon image, especially in its hometown. Levi's was founded here in 1853, and its history is tightly woven with the city's. The local media acts as a second P.R. department for the jeans maker; government officials, usually quick to point out human rights abuses abroad, give Levi's a free ride.

Levi's helps maintain its benevolent image by handing out more than $20 million a year in charitable donations to community organizations in nearly 40 countries. The Levi Strauss Foundation gets behind issues other major corporations won't touch, including AIDS education, gay and lesbian rights, social justice, and poverty. And the five charities affiliated with the Haas family, which owns the company, give hundreds of millions more.

But the company's largesse may not be a case of simple corporate munificence. Activists are naturally afraid to bite the hand that feeds them; as a result, hefty donations serve to insulate Levi's from criticism of its labor practices. In at least one case, Levi's has asked a local beneficiary to refrain from publicly criticizing the company (see "In Their Pocket," page 25).

And Levi Strauss's status as a privately held firm allows it to escape the shareholder activism that has led to reform at some publicly held companies.

To be sure, the company treats its San Francisco-based employees well. Those white-collar workers -- other than the 1,000 who were laid off last year -- wear casual dress to work and take Friday afternoons off. Levi's is known for promoting diversity in its local workforce; it was the first Fortune 500 company to offer benefits to the domestic partners of gay and lesbian employees.

But for an increasing number of local activists, the squeaky-clean image no longer holds up.

"They can't have their cake and eat it too," says Miriam Ching Louie, a Bay Area activist who has worked with laid-off Levi's workers in Texas. "They pretend they have these scruples, but how can you get a corporate leadership award after you lay off 6,400 people?"

The homegrown campaign against Levi's might start to erode the company's image. It is led by Global Exchange, the Mission District-based group that helped put Nike's worker abuses on front pages across the country. Last month, under pressure from consumers, Nike CEO Phil Knight pledged to allow outsiders from labor and human rights groups to inspect its Asian factories and to interview its workers there.

Global Exchange director Medea Benjamin says the problems in Levi's plants are similar to those facing workers who make Air Jordans. The company's reputation as a good employer, she says, reflects the treatment of the workers in its San Francisco headquarters, not those in its manufacturing plants in the United States or abroad.

"They've been saying to us, 'Hey, we're the good guys. We've got our own internal monitoring system; trust us,' " Benjamin told the Bay Guardian. "If their internal monitoring system is as good as they claim it is, they should have no reason to fear outside scrutiny."

On April 23 an international coalition of more than 50 prominent human rights groups, including Global Exchange, sent a letter to Robert Haas blasting the company's decision to return to China (see "A Riveting Announcement," page 11).

"Evidence shows that the human rights climate, the reason you gave for pulling out [of China] in 1993, has not improved," the letter states. "In fact, human rights abuses in China are worse than ever."

The letter called on Levi's to make public a list of its subcontractor factories, allow independent monitoring of its code of conduct, pay workers a living wage (as opposed to merely the minimum wage), and work to improve human rights in China.

So far the company has not agreed to any of the coalition's demands. In a written response to Bay Guardian questions, Levi's spokesperson Clarence Grebey acknowledged that "human rights continue to be a legitimate concern in China" and stated that the company maintains it can now do business in China in a socially responsible manner and that its code of conduct will protect workers in China.

But American factories there only make the problem worse, according to a recent study of U.S. companies in China by the New York-based National Labor Committee.

"American companies are acting in ways that are actually lowering standards in China -- slashing wages, eliminating benefits, imposing excessive forced overtime, denying legal work contracts, and tolerating widespread arbitrary firings," the report states.

In Grebey's statement, he suggested the firm would be willing to work with human rights groups.

"The company is open to working with objective organizations concerned with workplace standards and is exploring a variety of innovative options for improving [them]," he wrote.

Grebey also denied any connection between the company's decision to close plants in the United States and its decision to expand business in China. "No production was shifted offshore as a result of these [1997] plant closings."

Activists are also looking for support from Rep. Nancy Pelosi (D-S.F.), Congress's leading critic of human rights violations in China and of the Clinton administration's promotion of U.S. corporate interests there. But rather than take Levi's to task for reentering China, Pelosi seems to have nothing but praise for the company.

On May 20, just two months after the company's China decision, she celebrated Levi's in a speech on the House floor. "On this, the 125th anniversary of the invention of Levi's, please join me in acknowledging the spirit of freedom and limitless possibilities that they symbolize," she said. Pelosi called the company's blue jeans a "global icon for independence," and "the uniform of individuality."

Pelosi didn't respond to our requests for comment on Levi Strauss's decision to return to China. But on March 18 -- just two months before she praised Levi's on the House floor -- she dismissed the notion that corporate codes of conduct can be implemented in China.

"Although some American companies attempt to monitor factory conditions in China, factories operate behind a veil of secrecy and are part of a growing network of subcontractors," she wrote in a press release. "Many U.S. companies may not even be aware of where their garments are being produced, or whether human rights are being violated."

Levi's adopted its code of conduct in 1993, after the company was discovered buying clothes from factories in Saipan, a small island 7,000 miles from the California coast that is a territory of the United States. The company's local workers lived in padlocked barracks and worked in slavelike conditions. The U.S. Department of Labor investigated and later filed a lawsuit against Levi's contractor in Saipan. Levi's no longer contracts in Saipan.

According to the Clean Clothes Campaign report, similar conditions persist in a Levi's-contracted factory in Mauritius, an island off the east coast of Africa. The report states that more than 5,000 Chinese women workers have been imported through brokers to work under contract for two to three years. The women work seven days a week. On weekdays they work from 7:30 a.m. until 11:30 p.m.

Esther de Haan, who works in the Amsterdam office of the Clean Clothes Campaign, visited Mauritius in August 1997. She told us she found the living and working conditions in the factory appalling.

"It is very difficult for the Chinese workers to improve their conditions in Mauritius," de Haan told us. "They don't speak the language, and they are working seven days a week."

At the Noveca Industries factory near Manila, a factory that produces exclusively for Levi's, interviewers from Development and Peace, the official international development agency of the Catholic Church in Canada, in 1996 found numerous violations of the company's code of conduct. Workers put in more than 60 hours a week, overtime was mandatory, employees did not receive the stipulated one day off in every seven, and union leaders said they had been threatened for organizing.

Grebey said Levi's may not do business with some of the factories cited in the Clean Clothes Campaign report, but he would not identify those factories by press time.

As a result of Development and Peace's two-year campaign against Levi's, CEO Haas received more than 100,000 postcards calling for the company to allow for independent monitoring.

When Development and Peace staffer Jacques Bertrand decided to launch the Levi's campaign two years ago, he recalls, a fellow activist warned him Levi's would be "the toughest nut to crack" because of its holier-than-thou attitude.

"They feel that they are a special company -- they are not interested in outside 'intervention,' " he told us. "But we've looked at many factories and found plenty of problems. This is six years after Levi's adopted their code of conduct. As it turns out, maybe they are the toughest nut to crack."

Meanwhile, Levi's factory workers in this country are still picking up the pieces in the wake of the company's layoffs.

The company was quick to put a positive spin on the November cutbacks, touting the generous severance package it offered laid-off workers. But many employees wondered why they were losing their jobs the same year the company was paying a record $105.8 million in accumulated stock options to Thomas Tusher, who was retiring as president and chief operating officer. Levi's also gave Tusher a $21.5 million "gross tax offset bonus" to help defray taxes on the option income, according to the San Francisco Chronicle.

Viola Casares, who was laid off in 1990 when the company closed the Zarzamora Street Dockers Plant in San Antonio, Texas, didn't receive such a golden parachute.

"It took less than 15 minutes for them to destroy our lives, our futures," Casares told us. "The thing that I remember are those words that they said: 'In order for the company to be more competitive we are forced to shut down.' "

Casares is co-coordinator of Fuerza Unida, a community group that emerged from the 1990 layoffs. In 1994 the group conducted a 21-day hunger strike at Levi Strauss's San Francisco headquarters to protest injustices at the factories. Now, in response to the November layoffs, Fuerza Unida has renewed its call to consumers to join its eight-year boycott of the company's brands, including Dockers and Slates.

The 1990 Zarzamora plant closing was the largest in San Antonio history. Of the 1,150 workers laid off, the vast majority were Latino women. The closure came just a few years after the plant had received a "Miracle Worker" trophy from the company for exceeding production goals, Casares said.

Levi's moved production to Costa Rica, where workers earn in a day what the average San Antonio seamster made in half an hour.

Perhaps in response to the bad press generated by Fuerza Unida, Levi's has taken great pains to provide workers laid off in November 1997 with a generous severance package.

The San Antonio workers are not benefiting from the company's new generosity. Fuerza Unida is demanding that Levi's offer its members a severance package comparable to the one it gave in November.

Levi's maintains that employees of the Zarzamora Street plant were given extended health care benefits and more notice than required by law, and that it invested more than $1 million in services such as education, training, and job placement.

"Given these efforts to assist our former employees, the company does not believe that the current severance program should be applied retroactively," Grebey wrote us.

Fuerza Unida disputes Levi's claims, saying the education-training process was sorely inadequate. According to the Fuerza Unida newsletter, laid-off workers waited as long as six months to be certified for dislocated-worker benefits and retraining. Because most of the workers were native Spanish speakers, they were tracked into English as a Second Language classes and never got job retraining.

For many of the workers who still have jobs in Levi Strauss's U.S. factories, conditions are becoming increasingly bleak. In September a Texas jury awarded $10.6 million to five El Paso garment workers who said Levi's retaliated when they complained of work-related illnesses.

In a May 20 report in the Wall Street Journal, Ralph King exposed the company's attempts to squeeze greater productivity out of its U.S. plants.

In 1992, King reported, Levi's directed its U.S. plants to abandon the old piecework system, under which workers repeatedly performed single, specialized tasks (such as sewing zippers or attaching belt loops) and were paid according to the amount of work they completed. Under the new system, groups of 10 to 35 workers shared the tasks and were paid according to the number of pieces of clothes the group completed.

Levi's said at the time that the change to a team-based system would reduce stress and make the factories more productive. "Instead, it led to a quagmire in which skilled workers ... found themselves pitted against slower colleagues, damaging morale and triggering corrosive infighting," King wrote. "Threats and insults became more common. Longtime friendships dissolved as faster workers tried to banish slower ones."

Haas defended the new system to the Journal, saying it allowed the company to keep more plants in the United States.

Some former employees are not convinced.

"It's just not the same company anymore," Herb Etheridge, a former regional production manager, told the Journal. "The perceived value of the individual and concern for people just is not there."

Maria Perez (not her real name), who works the night shift at Levi's factory number 614 in San Antonio, agrees. Perez sews labels on Dockers and 501s, and she has already been laid off once by the company, from the Zarzamora Street plant in 1990. In recent months, she said, she has again noticed the warning signs of impending plant closure: changes in production, apathetic managers, lengthy and seemingly pointless staff meetings.

"Everybody's upset because they don't let us know if the plant's going to stay open or close," Perez told us. "Almost everybody wishes they would close already and get it over with."

Eight years ago, she said, the company moved her job to Costa Rica. This time, rumors have it, it's going to China.

San Francisco Bay Guardian June 10, 1998

In their pocket

By Daniel Zoll

IT WOULD BE a tall order to find a Bay Area nonprofit that hasn't received some kind of grant from a Levi Strauss-related charity. Between the company's own Levi Strauss Foundation, which gives away 2.5 percent of the company's pretax profits every year, and the five funds run by members of the Haas family, which owns the company, almost everyone in town is on the clothing giant's payroll.

So it may be no coincidence that, at a time when Levi Strauss is under fire by activists in other countries for its labor practices, the local activist community has been all but silent.

"Nobody is going to be caught dead criticizing the Haas family, because we all get funds from them -- or hope to," one charity official told the Chronicle of Philanthropy in a May 21 article on the family's largesse. The Haases rank 12th on Forbes's list of the world's wealthiest families, with an estimated worth of $12.3 billion.

In at least one instance the Levi Strauss Foundation's gag order was explicit. In 1996 the foundation donated $50,000 to the Northern California Coalition for Immigrant Rights to carry out a public information campaign on citizenship and civic participation aimed at immigrants. Soon after the company made the donation, according to NCCIR associate director Eric Mar, a foundation representative asked NCCIR executive director RenŽe Saucedo to agree not to publicly criticize Levi's.

"Although [Levi's] didn't say, 'We'll pull your funding if you don't do this,' that was the implication," Mar told us.

Saucedo was unavailable for comment. According to Mar, she originally agreed to abide by the company's demand. But Levi's couldn't buy her silence for long. A few months ago San Antonio-based Fuerza Unida, which represents laid-off Levi's workers, approached Bay Area groups, including NCCIR, for support at an April 15 protest against Levi's.

After some internal debate Saucedo, Mar, and other staffers decided to support Fuerza Unida, against Levi's wishes. The group participated in the protest.

Mar anticipates that the group's decision will affect its Levi Strauss funding.

"We know it's likely to jeopardize different funding for the future, but we decided to make that political decision," he said.

Merle Lawrence, community affairs manager for the Levi Strauss Foundation, confirmed that a representative of the foundation had asked Saucedo to refrain from criticizing the company. She said the request had been made by a consultant to the foundation -- and that it was inappropriate and inconsistent with the foundation's policies.

"It is clearly not our policy to ask or request grantees to control what they say about the company publicly," Lawrence told us. "And it has not affected our funding to the coalition in any way."

The foundation is giving NCCIR a grant this week, a $55,000 gift to be split among four groups, Lawrence said. She said the coalition had not yet been informed of the grant.

Fuerza Unida's spring 1998 newsletter points to contradictions inherent in some of the company's donations -- particularly those aimed at promoting social justice.

"Ironically, the foundation's Project Change funds antiracist diversity initiatives in communities like Albuquerque, El Paso, and Knoxville, where Levi's plant closures will now disproportionately hit workers of color and women," the newsletter states.

Miriam Ching Louie, a longtime Bay Area activist working with Fuerza Unida, says Levi's charitable donations do not absolve the company of responsibility to the workers who produce its wealth.

"It's great that they give money to community groups -- that's what corporations should do," Louie told us. "But first of all they have to remember their workers."