Grupo MGrupo M

• $123 million sales, 12000 employees, 22 plants in DR• Biggest apparel producer in Caribbean• $20 million corporate financing for DR operations and

export zone in Haiti• Haiti now in operation/1000 employees/potentially 1000’s

more . . .• Grupo M Socially Progressive in community/treats

employees well• Initially IFC not focused on labor issues/Reassured by Code

of Conduct

Labor IssuesLabor Issues

NGO/Unions Advocate Inclusion of Core Labor Standards in Investment Agreement

Concern re Haiti Given Lax Enforcement/Textiles/FTZ

IFC Reassured by Grupo M treatment of employees/Codes of Conduct

Precluded from Including CLS in Investment Agreement Given Lack of Policy

September 2003: September 2003: And then this…And then this… Zacarias Gonzales and Genaro Rodriguez,

Dominican Republic Violent attacks, abductions, unfair dismissals… Zacarias and Genario tell us about the intimidation and repression faced by workers at the FMI (Grupo M) textile factory in Santiago. And all the while their employer, Grupo M, the largest clothing producer in the Caribbean/Central America region, is planning to extend its activities to Haiti, with financial assistance from the World Bank...

External Pressure IntensifiesExternal Pressure Intensifies

Union letter to CEO of Levis: “ . . .clear evidence of serious violations of workers rights” by Grupo M

Letters sent to Board by ICFTU, etc. Board date one month away Client denies wrongdoing Serious Charges = Third Party Investigation No $ Until Results Are In

December 2003: The OutcomeDecember 2003: The Outcome

Findings– Workers were illegally fired – Workers beaten but no management role – Evidence of union discrimination– Evidence of union corruption– Recent Grupo M/union relations improving

Remedial Action Plan Remedial Action Plan

• ILO standards via Code of Conduct (IA Mandated)• Labor-focused Mgmt Capacity in HR (Social

Compliance Officer)• Training for Supervisors then Others• More Frequent Audits• Better Record-keeping and Communication of

Performance• Ombudsman

And then Haiti EruptsAnd then Haiti Erupts

Codevi in Operation for 4 months when:– Political Meltdown/Chaos/Rebel Justice– 25 Workers Fired then Reinstated– Allegations of anti-FoA; beatings; DR army presence;

aborted pregnancies; anything goes– Small group=arbitrary work stoppages; intimidation– Batay vs. GM Management = No Love– International Campaign

Over Before It Began ?Over Before It Began ?

CODEVI Looks Dead But Keep Trying– In the midst of recriminations productivity

declines and the losses mount– Independent Observers (IFC/WRC/Levis)– 50% RIF and one factory shuts down– IFC Persuades GM to Stay Open w/ $ to cover

losses; mediation; labor advisor & fear of Biz Implications

– Communicate w/ Customers and WRGs

At Last the BreakthroughAt Last the Breakthrough

Mediation Bought into by All Former MoL Joins GM 6 Months to Agree on 2 Mediators 3 days to Reach an Agreement

– Recognized Union– Reinstatement– Labor-Management Dialogue and Grievance Mech.– Commitment to Produce

Set the Stage for CBA in Dec. 2005

IFC Labor FirstsIFC Labor Firsts

Formal Labor Investigation (IFC absorbed cost) Remedial Action Plan FoA included in IA via Code of Conduct Explicit Collaborations w/Workers Rights Groups

and Levis Factory Observers TA $ Support for Labor Mediation $ Support for Labor Advisor/Negotiator

OBSERVATIONS/ISSUESOBSERVATIONS/ISSUES

How to Assess Labor Performance/Recognize Problems Upfront/Vet the Client

Client Capacity is Key—Former MoL was Difference-maker

Objectively defining respect for FoA is Tough For Textiles CLS are a Business Issue IFI’s Can Help Turn a Liability into Competitive

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