New WRC Assessment: Pinehurst Manufacturing (Honduras)

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Jessica Champagne
Date:July 13, 2012
Re:New WRC Assessment: Pinehurst Manufacturing (Honduras)

Please find here a new WRC assessment of Pinehurst Manufacturing, a factory in Honduras that produces collegiate licensed apparel for adidas and non-collegiate garments for other firms including Nike, Club 21 USA, Kenneth Cole, and Phillips-Van Heusen. The report covers an initial investigation and remediation process that took place from August 2010 through July 2011 and a second investigation into complaints concerning events in late 2011 and 2012.

The WRC’s initial investigation in this case documented systematic labor rights violations, including retaliatory firings of workers who had complained about labor practices in the factory and the formation by factory management of a company-dominated union, as part of an effort to prevent workers from freely exercising their associational rights. The WRC recommended urgent action by the brands involved to press Pinehurst to reinstate unlawfully fired workers, withdraw recognition from the company union, and recognize the union chosen by the workforce. Adidas and Nike were slow to act, and insisted for some time that the company union should be treated as a legitimate worker body, but they ultimately took the necessary action. This resulted in the reinstatement of the fired workers, the elimination of the company union, the recognition of the workers’ chosen union, and a commitment to bargain with that union.  

Over the past year, however, a disturbing pattern of violations of workers’ associational rights has re-emerged, including a refusal by management to allow union leaders to carry out their representational functions in the factory; multiple expressions of anti-union animus by managers at the same time that substantial numbers of workers were being laid off, giving rise to fear on the part of workers that union members were being targeted for dismissal; and a failure by management to negotiate in good faith.

The events of the past eighteen months show that one of the primary reasons for the factory’s failure to sustain the labor rights progress previously achieved was the lack of economic support from buyers, including adidas and Nike, in the wake of that success. Instead, the factory has faced declining order volumes, exacerbated by sharp fluctuations. By failing to reward Pinehurst economically for the progress achieved, the brands gave the factory little incentive to maintain that progress overtime. Moreover, the economic pressures generated by the brands’ sourcing decisions forced layoffs and created fear of more layoffs and possible closure, leading to tensions that undermined labor–management relations during a crucial time period. Unsurprisingly, factory management has also repeatedly used the lack of buyer support to justify its refusal to make serious economic proposals at the bargaining table. 

While collegiate codes of conduct do not explicitly require that collegiate licensees maintain production in factories that make significant progress towards code compliance, it is unlikely, as a practical matter, that such progress will be sustained in a given case without a commitment by buyers. By failing to reward the progress achieved at Pinehurst in 2011 – and, in fact, doing the opposite – buyers reduced Pinehurst’s incentive to continue to respect workers’ associational rights. Regardless of the reason for these sourcing decisions, the impact is the same. In this case, the brands failed both to support the factory economically and to police the factory’s labor practices effectively after initial progress was achieved. 

Adidas and Nike demonstrated in 2010 that they had the economic clout at Pinehurst to compel major improvements in labor practices. They retain that clout now and should use it to compel Pinehurst to cease its violations of workers’ rights and to get back on a positive labor rights path. We cannot, as a matter of code of conduct compliance, find that the licensee, adidas, is required to increase its production at the factory; however, we believe that if current problems are addressed, the prospect of sustaining progress overtime will depend on the willingness of adidas and other buyers to act responsibly in this regard and provide economic support to the factory and its workforce.

We are continuing to monitor the situation at Pinehurst and related developments at another factory with the same owner, the Augusta plant in Nicaragua, and will update you as developments warrant. As always, please contact us with any questions or thoughts about this report.

Scott Nova 
Worker Rights Consortium 
5 Thomas Circle NW 
Washington DC 20005 
ph 202 387 4884 
fax 202 387 3292 
[email protected]