I’ve been visiting sweatshops for a long time, first as research director of MIT’s global motor vehicle programs in the 1980s, and then as co-founder of the Lean Global Network of nonprofit organizations, which teach the “lean” enterprise methods we learned from Toyota to the 15 countries involved.
I remember clearly my first visit to what could fairly be called a sweatshop, with its dangerous working conditions and punitive management practices; it was in China in the early 1980s. But by “sweatshop,” I don’t just mean a factory that uses under-aged workers, requires long hours with wages arbitrarily adjusted by management through bonus systems, and lacks the most rudimentary safety precautions, such as ventilation and adequate fire doors that are never locked.
I also mean the much larger number of low-wage factories that squander their workers’ labor by making no effort to improve productivity (except by urging workers to work harder to get a bonus); by paying no attention to ergonomics; and, above all, by showing no respect to the people who are actually creating the value by asking them to participate in designing and improving the work.
The world mostly focuses on the former attributes of sweatshops, because they are visible and periodically lead to horrific incidents like factory fires. But the latter attributes often lead to the former. Poor work design, work conditions that guarantee mistakes and rework, and a lack of involvement of the workforce in improving the work make it tempting for owners and managers to squeeze wages and skimp on safety in the face of chronically low productivity.
In recent years, protests from Western advocacy groups have shone a light on the bad practices of sweatshop contractors used by multinational producers of consumer goods—garments in particular. Surely some good has come of this. But I fear that the box-checking, “compliance” focus of these efforts has driven bad practices further underground, as contractors in highly competitive industries see a business need to employ bad practices to make money.
I was therefore delighted some years ago when Nike approached some of my colleagues and asked how it could apply lean principles to its contractors. The idea was simple: Help contractors deploy lean practices to improve the way work is done in its 700 contractor factories around the world—factories that employ a total of one million workers. The ongoing goal is to substantially improve productivity and lower costs so that Nike can demand that its contractors treat workers fairly and provide safe buildings—all while maintaining its competitive position against companies that don’t do any of the right things with their contractors. You might think of this as “benevolent selfishness”—Nike’s objective is to protect its bottom line and its image through this approach, which it calls “sustainability.” Nevertheless, I’ll take it if it means making work better for millions of people.
Recently I’ve been working with one of Nike’s contractors in Central America as a way to support Common Hope, a Guatemala-based NGO. The contractor has taken the lead in organizing an annual lean conference, with the proceeds going to Common Hope’s efforts to keep rural kids in school and create rural schools worthy of keeping their students. I donate a bit of my time to the contractor as an advisor on lean production and management methods as a payback for their help with the conference.
The first thing Nike did in adding this contractor to its global network was to require that it use no subcontractors (which increases wage costs for the contractor) and that the contractor do all of the work in one building with good sight lines. This eliminates one of the most common causes of worker abuse: contractors operate nice facilities to inspect and ship goods that multinationals like Nike audit, while the real work is done by subcontractors running sweatshops somewhere nearby.
Nike’s second action was to demonstrate lean principles to its contractor: re-organize production in cells rather than in long assembly lines. Eliminate defects at the source rather than re-working at final inspection. Make items in much smaller batches with rapid changeovers between products to dramatically shrink inventories and lead times. Involve workers in periodic exercises to redesign and improve their work.
I’m impressed with these efforts, even though the journey will be long. But my objective here is not to praise Nike. It’s to ask a simple question: Doesn’t every consumer goods company have an obligation to respect the work of its contractors’ workers, by demanding that their labor be used productively through application of management best-practices that go far beyond health and safety? Doesn’t every worker in contractor enterprises have a right to participate in the design of their work so that they can do it safely and productively?
Note that, if done correctly, these measures cost multinationals practically nothing—they get paid back with competitive product pricing from more-productive, safer contractor factories that show respect for workers. And multinationals can advertise this fact to their customers. (Why Nike doesn’t do so is a bit of a mystery.)
So I’m hopeful that a few innovators like Nike, as pushed along by advocacy groups, can gradually reduce the number of sweatshops in the world. But progress would certainly be faster if those advocating for better practices broadened their concept of what consumer goods companies need to do to be socially responsible.
It should no longer be good enough for their contractors to stop using child labor and provide a safe working environment. Multinationals need to assist their contractors in applying best management practices and demand that they use them. In other words, social responsibility on the part of consumer goods companies should require that they show respect for low-wage workers by designing good work for them to do and by tapping the brains of the workforce, not just their muscles.