WRC Factory Investigation

Pinehurst Manufacturing

Factory: Pinehurst Manufacturing

Key Buyers: adidas, Armani Exchange, Calvin Klein, Club 21 USA, Kenneth Cole, Nike, PVH

Last Updated: 2012

Case Summary

The WRC began its investigation at Pinehurst Manufacturing in August 2010. After an initial investigation and remediation process that lasted through July 2011, the WRC launched 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 the 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.

From August 2011 through July 2012, however, a disturbing pattern of violations of workers’ associational rights 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. 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.

In July 2012, the WRC recommended that adidas and Nike compel major improvements in labor practices at Pinehurst. In addition, while codes of conduct do not explicitly require the licensee, adidas, to increase its production at the factory, the WRC stated that the prospect of sustaining progress at Pinehurst over time would 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.

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