Exploring the Unknown

Exploring the Unknown
Representing the 99%!

Sunday, August 14, 2016

Mind The Gap By Emily Voggenreiter

Photo © Marc's Blog
Since 1969, Gap Inc. has been making their iconic jeans and clothing line. This company has integrated and diversified, expanding more and more as the years go by. Gap Inc. is the leading specialty retailer worldwide and has become a multinational corporation. Unfortunately, this company has been accused of human rights violations for over a decade that continue to this day. The Gap Inc. has slipped through the cracks and have kept accusations of human rights abuses at bay despite growing evidence in support of said accusations. The following will focus on two points that largely influence Gap Inc. to continue its practices: matters of geographic placements of their factories and the idea of financial losses and gains.


Filling The Gap


Firstly, factories that have been exposed of these violations are usually located in third-world countries or emerging countries. In this case, Gap Inc. has an enormous amount of sweatshops in these countries. In China, there are 464, in Southeast Asia, 671, in the Indian subcontinent, 592 and in Mexico, Central America and the Caribbean, 298. (Strasburg, 2004). Some of the sweatshops were and still are located in El Salvador, South America. In many of these countries, there are no published laws about human rights, or even for the protection of the environment. Therefore, companies such as Gap Inc. will take advantage of this opportunity by going beyond their limits to be more efficent in their production. Thus, the Gap Inc. has specifically chosen these places for a reason. They locate their factories to these countries to get away from government policies that limit their production objectives. According to Oberkofler (2008), Director of Social Responsibility at Gap Inc.,
 “National and international law have not kept pace with globalization. Because governments in developing countries are often unable and unwilling to enforce their own laws, some companies can get away with ignoring these issues. The fact that consumers are fond of bargain shopping and anaylsts are focused on monthly sales and earnings makes it much difficult to maintain a long-term perspective.” 

Photo © The Korea Times
As stated by Oberkofler (2008), Gap Inc. has opened many factories in different countries of the world to improve their production outcome because the demand was very large. Her statement accuses us, the consumers, for how violations are present in these factories. In a way, her statement strictly does not define why workers are being mistreated, having excessive overtime or non-payment of minimum wages. It defines that companies, such as Gap Inc., have had to find other solutions to meet the demand. Gap Inc. has found a way of productively outsourcing by simply going into another country and committing a crime that won’t be acceptable here but unnoticed over there.

Photo © The Telegraph
However, in 2000, a factory in Cambodia was exposed of child labor. Due to years of war and genocide, documents attesting age of the workers were destroyed. (Smith, Ansett, & Erez, 2011). Another example of child labor would be the incident that happened in India. Back in 2008, BBC exposed footage of children working in a sweatshop in New Delhi. (Hansen, & Harkin, 2008). The children were literally working in unsafe working conditions and getting paid nest to nothing. From the perspective of 10 year old Amitosh, a boy who was working in the sweatshop, Mcdougall (2007) states, “Last week, we spent four days working from dawn until about one o'clock in the morning the following day. I was so tired I felt sick. If any of us cried we were hit with a rubber pipe. Some of the boys had oily cloths stuffed in our mouths as punishment.” This is completely unacceptable and is not a reason to continue production.

Photo © News BBC.co.uk
From this perspective, we can all understand the seriousness Gap Inc. has been ignoring. Children are forced into labor. Again, this success in production that meets the consumer’s demand is mainly why the company is influenced by not caring about how the supply is being met. These violations would not be tolerated and in fact illegal if they were present in a developed country like the United States or Canada. We clearly see Gap Inc. has gone beyond to maintain an objective in outputs. They just want to meet the consumer’s standards which would allow them to make a profit. This is severely not an excuse to let go so easily.

The Wage Gap


Photo © SpotColorado.edu
The Gap Inc. factories are placed in third-world countries or emerging countries. The main motivation for a company to relocate into these countries is because the cost of labor is so cheap. This is caused by globalization. “Due to economies of scale in producing large amounts of clothing, entrants will have extremely hard time producing clothing at cheap enough prices to compete with Gap and its competitors.” (Ahmed, 2014). As demand increases, the production must increase as well or else the company will not make a profit. To be productively efficient, the company had to go beyond certain boundaries, such as cheaper labor. This direct impact is what needs to be changed. Gap Inc. has to stop thinking about its profit margins and start thinking about their employees welfare and standard of living. It’s as if Gap Inc. would rather invest in advertising than in improving their employees’ working conditions. They spend more money in selling and in marketing their brand than in actual production. As the graph illustrates below, we can clearly see how much money Gap Inc. spends on advertising annually.

(Griffon Consulting Group, 2012)

Photo © Gap Inc.
As we can observe, between 2008 and 2009, Gap Inc. spend about 570 million dollars on advertising, which includes campaigns and commercials. I find it ironic that between those two years specifically, Gap Inc. was exposed of child labor in India. Instead of investing into solving this problem, they spent more money on advertising than literally investing in solving this problem. According to a report posted by Charles Kernaghan (2013), the director of the Institute for Global Labour and Human Rights, women were being paid 20 to 24 cents an hour in a Bangladesh factory that manufactured 70% of Gap Inc.’s clothing line. This again is a great influence to make money and not fully concentrate on the problems in the factories.

Photo © Getty
Even if Gap Inc. is a very powerful company, having a market cap worth 18.32 million dollars (Forbes, 2014), another of their reasons to not concentrate so much on these violations and more on their brand is because of competiton. Gap Inc. has some serious competiton in the clothing industry and are struggling to stay in their spot. (Ciasullo, Blauvelt, and Lambert, 2012). According to Rizwan Raheen Ahmed (2014),  and inspired from a study posted by Oxfam UK (n.d.), “Until companies recognize that their own sourcing and purchasing practices are one of the root causes of poor labor standards, they will not resolve the problems in their supply chains.” Ahmed continues by stating, “In addition, improving purchasing practices not only minimizes compliance violations but also saves companies on their total costs of bringing a product to market, moves a product to market faster, improves quality and prevents burn out.” Gap Inc. needs to realize that reducing price in production can be one of the principale causes of violated rights in labor. This is where the impact comes from. Unfortunately, Gap Inc. has chosen profit over human rights.

Final Thoughts


Photo © Gap Inc.
To conclude, Gap Inc. has become one of the most powerful companies in the world, yet their reputation has changed because of their little caution about this problem and have focused more on selling their brand. The company will always be tempted to ignore these problems by saving themselves geographically and financially. Nevertheless, we could all say that they could easily fix these problems, but reality is, it would take a lot of time because most of these occurances are in fact not in the control of the company itself. But, Gap Inc. can put more effort into this especially because it has affected their market value and their sales in general.
 “Indeed, the company was losing market share in the over-30 category and was having difficulty appealing to a younger audience. The Gap had also come under fire for its labor practices in third-world countries. Various labor groups claimed The Gap advocated sweatshop labor overseas. In response, the company created a global monitoring program to supervise factory conditions where its clothes were manufactured.” (International Directory of Company Histories, 2003).
Photo © Gap Inc.
Gap Inc. has taken a lot of consideration about these violations by creating projects and teaming up with organizations to help control child labor and maintain human rights (Gap Inc., 2014), but the fact that this is not in their full control, it is still harmful to their business. Whom they choose to run their operations overseas is and always will be a reflection on them as a whole. Thus, we can only hope that this program is really to make the world a better place and not only to save themselves from global embarrassment.

References


Ahmed, R.R. (2014). Case Study Report: Gap Inc. – Supply Chain Management. International E Publication.

Ciasullo, P., Blauvelt, J., Lambert, J. (2012 April 3). Gap Inc. Griffin Consulting Group.

Forbes. (2014 May). Global 200 Leading Companies: Gap. Forbes.

Gap Inc. (2014). Human Rights. Responsibility.. GapInc.com 

Gregory, S. (2009). Transparency: A Good Fit. Time International (South Pacific Edition), 174(11), 35.

Hansen, M., & Harkin, T. (2008).  Gap's Message on Child Labor. WWD: Women's Wear Daily, 195(124), 18-1N.

International Directory of Company Histories. (2003). Vol. 55. St. James Press.

Kernaghan, C. (2013, October) Gap and Old Navy in Bangladesh: Cheating the Poorest Workers in the World. Institute for Global Labour and Human Rights.

McDougall, D. (2007, October 28) Child Sweatshop shame threatens Gap’s ethical message. The Guardian.

Oberkfler, M. J., (2008). Examining the Role of Companies in the Realization of Human Rights: The Case of Gap Inc., Berkeley Journal of International Law, Vol. 26, Iss. 2

Prayita, D. (2009, August 6). Gap in Saipan. Scribd.

Smith, N., Ansett, S., & Erez, L. (2011). What's at Stake? Stakeholder Engagement Strategy as the Key to Sustainable Growth. INSEAD Working Papers Collection, (25), 2-35.

Strasburg, J. (2004 May 13) Gap finds problems at the thousands of its overseas factories / Openness on work conditions praised. SF Gate.

About The Author


Emily Voggenreiter is presently studying at Champlain College Lennoxville located in Quebec, Canada. Mind The Gap was written as part of an assignment for Consumerism, Leisure and Popular Culture in the Department of Humanities.

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