Stop slave labor charges - Sears, Wal-mart and The Gap are among the latest manufacturers to be accused of using slave labor. We ask how companies with Third World operations can avoid becoming the next victims. John Frank investigates

Any company selling products made by Asian laborers could be walking a tightrope. Just ask Sears, Wal-Mart and The Gap. In January, they were among 18 US retailers accused of depriving 15,000 workers on Saipan of basic human rights - using sweatshop labor, in other words.

Any company selling products made by Asian laborers could be walking a tightrope. Just ask Sears, Wal-Mart and The Gap. In January, they were among 18 US retailers accused of depriving 15,000 workers on Saipan of basic human rights - using sweatshop labor, in other words.

Any company selling products made by Asian laborers could be

walking a tightrope. Just ask Sears, Wal-Mart and The Gap. In January,

they were among 18 US retailers accused of depriving 15,000 workers on

Saipan of basic human rights - using sweatshop labor, in other


Nike has had to deal with the same issue repeatedly over the course of a

decade. And as these companies will tell you, it’s no use figuring out a

PR response on the morning you hear that an activist group is suing your

company. The issue of unfair labor practices, whether they involve

sweatshops, child labor or slave wages, is such an emotional touchstone

for the American public that waiting for a charge to surface is a sure

formula for PR disaster.

’You can’t communicate around it,’ warns Kim Kumiega, deputy general

manager for Edelman Public Relations Worldwide’s reputation management


Rather, say crisis management pros, the communications work has to start

long before a company is put under an uncomfortable public spotlight -

and it has to involve more than merely communications. The sweatshop

issue is a case where a company’s PR counsel has to give tough advice on

operational issues and policy, becoming a strategic counselor as well as

corporate communicator.

’Many of these are more operational, human resources issues that

certainly go beyond communications,’ says Jeffrey Caponigro, author of

The Crisis Counselor and head of Caponigro Public Relations


Sweatshop coverage down

Although it’s still a hot issue, press interest in the sweatshop

controversy appears to be receding, says Bob Irvine, who runs the

Institute for Crisis Management (Clarkesville, IN) which tracks press

coverage of various crisis issues. The number of print stories dealing

with illegal and questionable child labor practices declined from 219 in

1997 to 140 last year and a projected 79 this year, Irvine says. The

number of broadcast stories has dropped from 51 in 1997 to 25 last year

and a projected four this year.

But lack of press attention shouldn’t translate into PR inactivity,

warns Vada Manager, director of global issues management with Nike. It

could mean that the media is simply choosing its targets more carefully.

When President Clinton mentions the issue in his state of the union

address and it also surfaces at the United Nations, the question is

still very much on the public’s mind, Manager cautions.

There are a number of policies companies should adopt to avoid getting

caught up in the slave labor issue in the first place: the most obvious

being to monitor suppliers to ensure that they are providing healthy

working conditions (see our guidelines, opposite).

If you’ve done all the groundwork and still find your company accused of

sweatshop issues, many who have been through the firestorm agree that

rapid response is essential. ’If you’re not putting anything out, it’s

an automatic red flag,’ says Brian Delaney, EVP and director of the

crisis center at Clarke & Co (Boston). ’Saying that it’s not our factory

and we don’t have any control - that’s just not believable.’

Howard Rubenstein, president of Howard J. Rubenstein Associates (New

York), worked with Kathy Lee Gifford when accusations of child labor

abuses flew her way several years ago. He counsels companies to become

proactive on the issue once they’re cast in the public spotlight. He

advised Gifford to become an advocate for improving labor conditions and

unmasking sweatshops still being run in this country. Those efforts

turned her from victim to crusader for children’s rights. ’I urged Kathy

Lee Gifford to lead the drive against the sweatshops both here and

abroad,’ Rubenstein says.

He believes companies that could find themselves standing accused should

be asking: ’What can we do to get ahead of the curve?’ He adds: ’You

really have an obligation in every way to deal with it. You don’t ask

first ’what do we say?’ You ask, ’what do we do to be correct and


That’s a question Sears Roebuck & Co. is constantly asking itself, says

Ron Culp, the vice president who runs Sears’ public relations and

communications group.

As a retailer, Sears has to rely on its manufacturing suppliers to

maintain proper working conditions. It requires all suppliers to sign an

agreement about complying with legal requirements in the countries where

they operate.

’We strive to make sure everything is done appropriately,’ says Culp,

adding that the company has ’zero tolerance’ for child abuse or other

scurrilous labor practices.

Sears sends its own people to check accusations aimed at suppliers. ’If

they’re not humane, we simply won’t tolerate it,’ states Culp.

He is also constantly monitoring the press and public opinion. ’We try

to anticipate what’s out there as the issue du jour,’ he says. He

routinely creates a retailing issues list, prioritizing which are the

most important for Sears to address.

When Sears’ name does surface on the labor issue, as it did earlier this

year in the Saipan lawsuit, Culp makes sure someone from Sears gets back

to all press calls within an hour. The company outlines its policy on

the issue, stressing it will investigate the charge, that it takes any

charge seriously and that it will follow-up with the press as it learns

more about the situation.

’We go ballistic when media indicate we were unavailable for comment,’

Culp notes. He claims his PR team can pick up the phone ’24 hours a day,

seven days a week’ and get a comment from the right person within


When a lawsuit is involved, as happened in January, the company still

tries to respond, rather than say it can’t comment because of pending

litigation. ’Plaintiffs’ attorneys have gotten so savvy, they go to the

media first,’ Culp notes.

Sears’ legal counsel knows the company has to say something to counter

such plaintiff tactics, Culp says. In the Saipan lawsuit, Sears said its

suppliers on Saipan should be complying with US laws that apply to that


Culp also uses his Intranet to give employees more details on what the

company is doing. He produces a regular item he calls ’The Rest of the

Story’ to make sure employees, who may be called upon for comments by

the press, know where Sears stands on an issue.

New media as a PR tool

Sears is not the only company to use new media as a PR tool. Nike uses

its Web site to outline not only its policies on this issue, but also

wage scales and working conditions around the world. Vada Manager points

out that in this way, the site brings context to an emotional issue.

Nike first featured in press reports on the sweatshop issue in 1988 and

1989, Manager recalls, with accusations and press coverage reaching a

crescendo during 1996 and 1997. ’Nike had become the embodiment of this

issue,’ he says.

The brand began using its Web site to address the topic in September

1997. By 1998, the issue had become so hot, Nike decided it needed to

take a more proactive position - to do something dramatic that would cut

through what it saw as a mountain of misinformation being fed to the


As a result, Nike CEO Phil Knight delivered an address in May of last

year at Washington’s National Press Club, outlining a new company code

of conduct that included six new standards for Nike suppliers. ’For us,

it was so imperative that we set the record straight and raise the bar

so high that there would be no equivocation,’ Manager recalls.

Nike dumped 10 suppliers to let its 400 or so manufacturing partners

know it was serious about the new code. It set an age limit of 18 for

any worker making footwear and 16 for apparel and equipment workers;

ages that often were higher than the legal work ages in such countries

as Indonesia.

It also formed a Corporate Responsibility Division, which included labor

and community affairs issues.

’It was pretty imperative to communicate that we have a zero tolerance

for child labor,’ Manager explains.

Nike has since embarked on a number of programs designed to increase

perceptions of the company as a caring employer. Last year it introduced

its Nike Village concept in Thailand, in association with the People &

Community Development Association (PDA). The program targets rural

families, seeking to bring jobs to villages and reverse the trend of

migration to the cities. It established micro-loans to help those hit by

lay-offs in urban Indonesia. By the middle of last year, Nike had also

established after-hours education programs at 20 of its 37 Asian

footwear factories.

The company has publicized the fact that tests have confirmed the

factories fully comply with international standards on indoor air

quality and that it has expanded testing to factories in South America

and Europe.

More recently, Nike has joined as a charter member the Global Alliance

for Workers & Communities, a project from the International Youth


This involves assessing and monitoring attitudes to work and life among

local communities. The World Bank, Mattel and the Catherine T. MacArthur

Foundation are also involved.

Full details of Nike’s efforts are available on its Web site

( proving that the company - having been stung once before -

now takes its policy on labor very seriously indeed.

’We’ve learned a lot over time,’ Manager says. ’You need to be

constantly vigilant. Leave no charge unanswered.’

Good advice for any firm involved with labor issues around the


Companies that once said ’let’s circle the wagons and hope it goes

away,’ can’t afford such an attitude today, says Delaney. ’A company has

got to be perceived in the first few minutes, the first few hours (of a

sweatshop crisis) as having the welfare of its workers and its publics

as its highest priority.’

Adds Kumiega: ’There’s no silver bullet for this issue. You need to

constantly review it.’


Treading the labor tightrope?

Crisis communications experts suggest that companies need to:

1. Sign agreements with all suppliers requiring them to adhere to basic

principles of fair working conditions. In some cases, that might mean

asking them to comply with local labor laws. In others, where local laws

are lax relative to US standards, it may mean imposing a company code of

conduct on all suppliers and on their suppliers too.

2. Constantly monitor supplier practices.

For many products, the supply chain can snake through a variety of


’The monitoring is an immense expense,’ says Howard Rubenstein,

president of Howard J. Rubenstein Associates (New York), but vitally

necessary for a company to stay ahead of possible PR disaster.

3. Watch industry trends. If another company announces a higher standard

of conduct than your firm uses, in the public’s mind that will become

the new industry standard and your company needs to quickly react to it,

says Brian Delaney, EVP and director of the crisis center at Clarke &

Co. (Boston).

4. Set up a crisis plan for when the spotlight does descend on your


Include quick response to press calls for comment and use a Web site to

get out your side of the story in detail.

5. Work with unions to explain strategically why your firm is using

foreign labor and the steps taken to ensure that labor is not working

under sweatshop conditions. Sweatshop issues are often raised by labor

unions. ’Build the best case for why the business must change,’ says

Keith Burton, general manager of Golin/Harris International’s Chicago


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