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
’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
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
’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
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
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
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
(nikebiz.com) 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.’
HOW TO AVOID A SLAVE LABOR CRISIS
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 &
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