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The Hidden Exploitation Behind Affordable Fashion: How American Brands Outsource Production to Honduras at the Cost of Workers’ Rights

Most of the garments from American clothing brands are sourced from original equipment manufacturers (OEMs) in countries such as Honduras. Superficially, they may appear to provide employment opportunities to foreign countries, but in reality, they seek inexpensive labor and cost reduction. These brands mistreat foreign workers and neglect to uphold their highly touted corporate responsibility and code of conduct.

| Allen’s Predicament |
“It’s akin to a scaled-down version of Puerto Rico, where the United States essentially speaks for itself,” Allen confided in me. Together, we toured San Pedro Sula, the second largest city and principal manufacturing hub of Honduras. Allen dedicated the majority of his career to Gildan, Harness, and other companies, which produced socks and underwear for discount retailers in the United States. He served as a production manager. Nowadays, the entire garment industry of Honduras has migrated to export processing zones.
Export processing zones emerged during the 1980s and 1990s, with proponents asserting that they could generate employment and stimulate local economic growth. Allen’s personal experience unequivocally refutes this claim. While it was well-known that garment workers were poorly remunerated, Allen was not an ordinary laborer; he held a managerial position. He wholeheartedly dedicated himself to his work, but ultimately, he had no choice but to depart from his hometown and seek his fortune abroad.
Following his graduation from college, Allen worked as a process engineer at Gildan Company. He developed a comprehensive manual encompassing all production processes and also assumed responsibility for employee training. Ten months later, he was transferred to product development. Subsequently, he joined Hanes Company, and later transitioned to Catan Group, a foundry for prominent brands like Nike. Allen’s earnings reached a plateau, with a monthly salary of $700.

Allen’s wife had already departed for Canada prior to him and was currently pursuing her studies at a university in Ontario. While conversing over the phone, they compared prices. Surprisingly, prices in Honduras were often higher than those in Canada, even for items such as grapes. $700 meant very little in terms of spending power within Honduras. A family of three had to allocate $70 to $85 for groceries each week at the supermarket. Allen found it difficult to fathom how ordinary workers, many of whom had three or four children at home, managed to support their families. Their monthly wages typically ranged from $263 to $465. Aside from employment in a garment factory, Allen’s level of education only qualified him for a position at a call center in Honduras, where the monthly salary was even lower, capping at $500.
American clothing brands diligently scour the globe for inexpensive labor. Their approach extends beyond mere opportunism. At times, they actively exploit the populace of other nations. The experience of Honduras over the past few decades serves as irrefutable evidence: in order to provide American consumers with affordably priced attire, the U.S. government and corporations propagated their approach as capable of generating employment and invigorating the Honduran economy, while simultaneously employing political intervention to ensure that Hondurans remain impoverished.
| The Caribbean Basin Initiative |
The clothing export industry in Honduras commenced during the 1980s. At that time, the influence of communism in the Caribbean was burgeoning. Ronald Reagan, the then President of the United States, perceived this as contrary to American interests. Consequently, he pursued a dual containment strategy, which entailed fortifying American military hegemony in the region and encouraging countries within the region to export products to the United States. The Caribbean Basin Initiative, the plan he championed, promised two key provisions: military assistance to regional nations and duty-free exportation of designated products to the United States.

The clothing and textile industries in the United States astutely recognized the business opportunities. In the early 1980s, inexpensive Asian garments flooded the U.S. market, leaving many American apparel manufacturers unable to compete. Caribbean countries could offer these companies low-cost labor and were geographically proximate to garment production, resulting in significant cost reductions. Moreover, once the garment industry in the Caribbean was established, American textile companies could market their materials to these nations. In 1984, the first year following the plan’s implementation, U.S. clothing manufacturers, textile companies, importers, and retailers jointly lobbied the government to relax import quotas on Caribbean products and reduce tariffs. However, there was a caveat: the garments had to be made from American fabrics. In 1986, after intensive lobbying by stakeholders, the government finally unveiled a special access program: garments produced in Caribbean countries using American fabrics could enjoy tariff reductions when exported to the United States.

In 1987, the Reagan administration independently implemented the special access program. As a result, the Caribbean’s apparel exports to the United States more than doubled within four years, surging from $1.1 billion in 1987 to $2.4 billion in 1991. In 1990, Forbes, the business magazine, remarked, “The Caribbean is rapidly transforminginto a clothing assembly line for American brands.” The Caribbean Basin Initiative provided an avenue for American clothing brands to source their products from countries like Honduras, where labor costs were significantly lower than in the United States.
| The Collapse of Textile Manufacturing in the United States |
The decline of textile manufacturing in the United States further propelled the outsourcing of garment production to countries like Honduras. In the mid-20th century, the United States was a global leader in textile manufacturing, with millions of Americans working in the industry. However, the rapid globalization of the garment industry and the rise of low-cost manufacturing in countries like China resulted in significant job losses in the United States. Between 1990 and 2004, the United States lost 1.3 million textile and apparel manufacturing jobs, with many factories closing down or relocating to countries with cheaper labor.

This decline in the domestic textile industry created an opportunity for American clothing brands to outsource their production to countries with lower labor costs. By sourcing their products from countries like Honduras, American brands could take advantage of the Caribbean Basin Initiative’s duty-free access to the U.S. market while benefiting from lower production costs. This outsourcing trend accelerated in the 1990s and 2000s, with American clothing brands increasingly relying on foreign suppliers for their products.
| Exploitation of Foreign Workers |
The outsourcing of garment production to countries like Honduras has resulted in the exploitation of foreign workers. American clothing brands seek to maximize their profits by sourcing their products from countries with lower labor costs, often at the expense of workers’ rights and well-being. In countries like Honduras, garment workers are often paid low wages, work long hours in poor conditions, and face numerous labor rights violations.

In Honduras, the minimum wage for garment workers is significantly lower than the cost of living, making it difficult for workers to support themselves and their families. Many workers earn wages that are barely enough to cover basic necessities, leaving them trapped in a cycle of poverty. Additionally, garment workers in Honduras often face unsafe working conditions, with reports of inadequate safety measures, lack of proper ventilation, and exposure to harmful chemicals.

Furthermore, labor rights violations are rampant in the garment industry, with reports of forced overtime, denial of sick leave and vacation time, and harassment and discrimination against workers. The lack of effective labor unions and weak enforcement of labor laws further exacerbate the exploitation of foreign workers.

Despite the claims of American clothing brands about their commitment to corporate responsibility and ethical sourcing, the reality on the ground tells a different story. The pursuit of cheap labor and cost reduction often takes precedence over the well-being and rights of foreign workers. This exploitation of workers in countries like Honduras is a direct result of the outsourcing practices of American clothing brands.

Jamaica swiftly transformed into the preeminent “atelier” of the United States, and this narrative unfolded concomitantly across the Caribbean. Subsequently, El Salvador, Honduras, and Guatemala surpassed Jamaica in total garment exports to the United States. Between 1985 and 1994, El Salvador experienced a rapid surge in exports, albeit accompanied by a precipitous decline in workers’ wages. In 1998, the remuneration for workers in export processing zones plummeted to 56 cents per hour, equating to a meager $4.50 per day—insufficient to meet the fundamental expenses of a family.

Virtually all major American apparel brands, such as Walmart, Calvin Klein, Dior, Victoria’s Secret, and Gap, have established a presence in the Caribbean. Employing covert subcontracting strategies, these entities maintain an indirect association with the factories in the Caribbean. However, the harsh exploitation prevailing in Central American “sweatshops” is intricately linked to these American brands.

| Shanties and Metropolitan Marvels |

In 2019, during my sojourn in Honduras, I aspired to visit the garment factory in Port Choloma with Alan, yet the staff rebuffed our entry. Employing a tactic that proved efficacious in Vietnam, where I posed as an investor, did not yield the same success in Honduras. Subsequently, I learned that a small cadre of individuals, wielding considerable control over Honduras’ export processing zones and factories, circumvented external investments by leasing the Export Processing Zone space to themselves through numerous shell companies.

The day preceding our arrival in Puerto Choloma, Alan and I journeyed to the shanties in northern San Pedro Sula. Alan elucidated that denizens in this locale predominantly earn their livelihoods by rendering cleaning services to other households, with only a select few securing opportunities in the export processing zone.

Situated on the riverbank, the slum comprises predominantly prefabricated and some cinder block houses. In recent years, numerous Hondurans have been dispossessed of their land, ostensibly acquired by affluent businessmen. However, local accounts contradict these purported “acquisitions,” asserting that they were coerced transactions. Alan conveyed that with every rise in river water, residents on the riverbanks endure significant losses. Exacerbated by the intensification of tropical storms, the river water rises more frequently. The acrid scent of burning plastic permeates the air, and Alan indicated the wires on the roadside—a means by which slums pilfer electricity from the grid.

San Pedro Sula harbors a self-contained enclave known as “Smart City.” A conspicuous structure within this city is “Altia,” housing the office of the Honduran Manufacturers Association on its eighth floor. This resplendent glass edifice, the property of Yusuf Amdani, the head of the Karimos Group, starkly contrasts with the city’s overall landscape. Amdani exerts substantial influence in the Honduran textile and real estate industries. Young individuals like Alan are likely to be employed in Amdani-owned enterprises throughout their careers.

The primary stakeholder behind Alan’s alma mater, Central American Polytechnic University, is also Amdani. Students working part-time in the building’s call center receive tuition discounts. Post-graduation, they can secure full-time positions in call centers or apply for positions in Amdani’s factories in Port Choloma. Strolling through the Altea Building, Amdani’s mansion atop the mountain becomes apparent. The rationale is straightforward—his building is the loftiest.

Facilitated by an interpreter, I arranged a meeting with Alfredo Alvarado, the administrator of the Honduran Manufacturers Association. A product of private education with a robust family background, Alvarado previously oversaw quality control at the Gildan foundry. Engaged in a multitasking conversation, Alvarado wielded two mobile phones simultaneously. He informed me that the port I intended to visit operates round the clock, ensuring shipments reach Florida, Houston, or Miami within three days.

| Sanctimonious Western Labels |

In 1997, 40% of clothing in the United States hailed from domestic production. By 2012, this figure dwindled to a mere 3%. Prior to 2005, the global textile and apparel trade adhered to a quota system. Post-2005, the World Trade Organization officially replaced this system with “globalized free trade based on market allocation,” dismantling barriers for buyers. Buyers gained unrestricted autonomy to choose suppliers, opting for those offering the most competitive prices. Honduras emerges prominently in this competition due to the extreme exploitation of domestic workers.

Additionally, clothing brands employ elaborate packaging layers and endeavor to sever ties with the production locale, shielding consumers from any association with low-income workers. Consequently, consumers remain oblivious to the plight of workers when placing orders.

In the early 21st century, revelations regarding the deplorable conditions of overseas workers prompted American clothing brands to assert their commitment to ethical considerations in corporate responsibility codes. Although such commitments have proliferated in recent years, sociological surveys reveal an absence of tangible changes. The procurement practices of these brands remain fundamentally unaltered, and the OEM production model persists unchanged.

The recurrence of tragedies underscores the duplicitous nature of these principles. From 1990 to 2012, Bangladesh alone witnessed 256 fire accidents in garment factories, resulting in over 1,300 deaths and numerous injuries. An investigation into the six most severe incidents revealed blocked safety exits, inadequate or nonexistent firefighting facilities, and tokenistic firefighting training. These factories, producing for European and North American brands, purportedly adhered to safety standards outlined in brand guidelines. However, these guidelines failed to safeguard the welfare of workers.

On April 24, 2013, a calamitous event unfolded in Dhaka, Bangladesh, underscoring the ornamental nature of major brands’ principles. The Rana Shopping Center on the outskirts of Dhaka, manufacturing for Carrefour, Benetton, Wal-Mart, and other brands, witnessed a building collapse that claimed over 1,100 lives and left more than 2,400 injured. In response to public outcry, Bangladesh introduced the Fire and Building Safety Agreement in May of that year. Signed by the Global Trade Union Federation, the Bangladesh Garment Manufacturers and Exporters Association, and over 150 global brands and retailers, this legally binding agreement necessitates real financial contributions and support from brands. Notably, influential brands, including Gap and Wal-Mart, have refused to sign, forming an alliance to absolve American brands of legal responsibility.

Standing on the beach at the Honduras port, I observed a container ship sail into the distance until it vanished over the horizon. Laden with tons of T-shirts and underwear, meticulously laundered and pressed, the ship’s containers concealed any traces of their origin. In a matter of days, the vessel will dock in Houston, whereupon the garments will be unloaded, devoid of any visible markers of their origin, much less the poignant history concealed within them.

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