WRC Assessment: Centex (Nicaragua)

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Jessica Champagne
Date:June 5, 2014
Re:WRC Assessment: Centex (Nicaragua)

Please find here a report on violations of freedom of association at Centro Textil (Centex), a garment factory in Chinandega, Nicaragua. The report also assesses the remedial action taken to date and the response of the licensees producing at the factory. Finally, it provides new recommendations. Centex is disclosed by adidas, Champion, Gear for Sports International (GFSI), and Under Armour (UA) as producing collegiate apparel. Both Champion and GFSI are owned by Hanesbrands. Centex is owned by Grupo Beta, a multinational apparel manufacturing company based in Honduras. Grupo Beta also produces collegiate apparel at Industrias de Exportacion, a factory located in Tegucigalpa, Honduras.

The WRC launched an investigation of Centex in response to a complaint filed by 15 workers on June 24, 2013. The WRC found compelling evidence that Centex violated Nicaraguan law, international labor standards, and university codes of conduct by engaging in the following acts: (1) terminating 15 workers in retaliation for forming a union, (2) threatening the remaining workers to dissuade them from exercising their associational rights, and (3) attempting to induce workers, including via offers of financial inducements, to forgo their right to reinstatement.

On August 19, 2013, the WRC alerted the university licensees of the code violations and communicated the urgent need for remediation. The WRC recommended a number of remedial actions, including reinstating the workers with back pay, conducting freedom of association trainings, and disciplining the managers and supervisors who had violated workers’ rights and Nicaraguan law. On October 21, 2013, the union and Centex reached an agreement including reinstatement for the 15 workers dismissed in May, a company statement regarding respect for freedom of association, and a commitment to reach an agreement within the month of November regarding three additional workers who, the union alleged, had been dismissed in retaliation for union activity.

Centex has complied with many of the stipulations in the agreement, including offering reinstatement to the 15 dismissed workers with back pay. However, several actions by the company – most notably, additional terminations – raise real concerns as to Centex’s commitment to respecting freedom of association. The union alleges that three workers were terminated in retaliation for union activity. One worker was terminated shortly after asking questions about unionization in a workplace training. Given the company’s pattern of anti-union terminations, the WRC recommends that these three workers be reinstated with back pay unless Centex can offer compelling evidence that they were terminated for non-retaliatory reasons.  

More broadly, the WRC encourages the university licensees producing at Centex to continue to press the company to fulfill its obligations under university codes of conduct, with specific attention to preventing any further discrimination or retaliation against workers who join the union.

This case reflects a worrisome trend. Often, we see that licensees’ own code of conduct compliance programs fail to prevent serious violations by supplier factories, including retaliatory termination. Then, after the supplier factory has violated the code, workers wait for months for remediation while licensees claim to be engaged in their own investigations or efforts towards remediation.

The WRC is currently assessing this trend, its implications for code compliance, and what action the WRC and universities can take to meaningfully address it. 

In this case, adidas’ refusal to share information contributed to the significant delays in remediation. Even as illegally dismissed workers remained off the job for more than four months and were facing significant pressure from Centex to dissuade them from seeking reinstatement, adidas provided continued assurances to the WRC that Centex was moving towards remediation, while refusing to provide specifics that would enable the WRC to assess this progress. Adidas’ refusal to provide this information constitutes an unacceptable obstacle to our ability to assess progress on behalf of our university affiliates.

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