2008-2010 US Brands on the Spot over Factory Closure in Cambodia

The PDC garment factory located in Phnom Penh, Cambodia failed to adequately notify its employees when it closed down unexpectedly in 2008. The factory left nearly 600 employees jobless as they waited for payment of their last month’s salary and wondering whether they would ever receive their severance packages as stipulated by Cambodian law.

Time: 2008–2010

Country: Cambodia

Factory: PDC

Brands: Abercrombie & Fitch, Gap and Target

Issue

The PDC garment factory located in Phnom Penh, Cambodia failed to adequately notify its employees when it closed down unexpectedly in 2008. The factory left nearly 600 employees jobless as they waited for payment of their last month’s salary and wondering whether they would ever receive their severance packages as stipulated by Cambodian law.

Background

Retail giant Target and PDC’s other major clients, apparel and lifestyle brands Abercrombie & Fitch (A&F) and Gap have all been major, long-standing PDC clients over the years. The three brands each have codes of conduct ensuring basic labour rights in their supply chains. This implies that, when others fail, these brands have an undeniable corporate social responsibility towards the workers.

In terms of corporate social responsibility, A&F is one of the most conservative among Western fashion brands. The trendy brand has no public code of conduct governing relations with the factories where they outsource their production, and generally lacks transparency when it comes to social supply-chain policies. The firm regularly refuses to enter into any dialogue with the CCC on matters relating to corporate social responsibility.

A&F is keen to enjoy the benefits of producing in low-income countries without any sense of responsibility for working conditions and how this callousness reflect on their own public image. A&F prefer to let the weakest in the production chain pay the price of their negligence.

Action

The CCC took up the workers’ case in 2009, and initiated a dialogue with A&F, Gap, and Target.

In July 2010, the CCC orchestrated a letter-writing campaign in support of the dismissed garment workers and to demand that A&F and Target take responsibility and insist that the factory pay the workers what they were entitled to. Cambodian trade unions ensured the CCC that the salary arrears were eventually paid out as part of the bankruptcy procedures involving the selling off of factory equipment. However, their legally mandated severance packages were never recovered. Some of the employees, most of them women, had been working at the factory for over ten years.

Efforts to recover unpaid compensation from the factory’s owners or to involve the Cambodian Ministries of Labour and of Social Affairs in this effort ultimately proved unsuccessful. The owners, in fact, disappeared without a trace, and the Ministries never followed up, which shows that, besides the union, no one, and especially not the brands, was at all concerned about the workers’ basic labour rights.

In July 2010, the Maquila Solidarity Network joined the CCC in urging supporters to write A&F and Target to demand that they initiate reasonable negotiations and ensure that the dismissed PDC employees received the benefits to and severance compensation to which they were entitled under Cambodian law and that they do their utmost to ensure that the rights of the people in your supply chains are respected. A&F has steadfastly refused to cooperate on all levels. Target admitted some responsibility in line with it’s own Standards of Vendor Engagement and your Vendor Conduct Guide, but refused to work together with the CCC to ensure that the workers receive their just due.

Outcome

The workers CCC, and the union finally ended their struggle in late 2010, with only a partial success to show for their efforts: While Gap acknowledged its responsibility and acted proactively, it seems that other brands were less so and so many workers had to wait an excessively long time for their already measly severance compensation packages.

Meanwhile, Target ultimately acknowledged some responsibility but then offered a disrespectful sum of only US$5.00 per worker in severance compensation, an offer that the workers turned down. A&F steadfastly refused to cooperate on all levels, breaking off all communications with the CCC and never committed to any kind of compensation plan.

After more than two years of struggle the workers and their families were forced to again focus on their daily survival.

The CCC will continue to monitor the behaviour of these two companies and will continue to demand that they accept responsibility for compensating the workers and seriously address violations of workers rights.