‘Designated suppliers’ pilot launched for licensed apparel

December 13, 2005 By John Lucas

UW–Madison will launch a pilot program requiring companies producing officially licensed apparel products to purchase 25 percent of their goods from factories that allow a union, representative body or the right of free association for workers.

The step would make the university among the first in the nation to embrace and act upon the idea of a “designated suppliers program,” proposed by the national activist group United Students Against Sweatshops (USAS) to improve the working conditions of apparel workers around the world.

Beginning in fall 2006, the 18-month UW–Madison pilot would incorporate the best elements of the USAS plan, with modifications to address university concerns about the proposal.

The USAS plan has been endorsed by the university’s Labor Licensing Policy Committee (LLPC) and the Associated Students of Madison. Chancellor John Wiley met with the LLPC this afternoon (Dec. 13) to discuss the issue.

The pilot will apply to all 150 licensees producing UW–Madison logo apparel. Companies will be required to make a good-faith effort to source goods from one or more factories, or designated suppliers, complying with the union or free association requirement and approved by the Workers Rights Consortium (WRC) monitoring organization.

Should a licensee decline to participate, it could face a potential loss of license at the expiration of its current license term. Licensees will be responsible for ensuring that the required amount of goods is manufactured in designated factories. Compliance will be assessed by the WRC through a combination of complaint-based investigations and spot investigations.

To qualify as a designated supplier, a factory must allow the existence of a legitimate labor union, other representative employee body or the unfettered right of free association. As part of the pilot, licensees may also ask that their current factories meeting those standards be certified by the WRC.

“This is an effort to improve the working conditions and wages of the people producing Wisconsin apparel,” says LaMarr Billups, special assistant to Wiley. “We agree, in spirit, with the recommendations of our LLPC and student activists. We see this program as the best way to test the concept of designated suppliers to find out if it is effective and workable.”

The USAS proposal is asking colleges and universities around the country to require licensees to buy at least 25 percent of their goods from union factories after the first year of implementation. The USAS requirement would rise to 50 percent after two years and 75 percent after three years.

USAS also is asking licensees to agree to pay designated supplier factories slightly higher prices for apparel, so workers there may receive a living wage.

Instead of adopting the USAS proposal as written, the UW–Madison approach attempts to incorporate the most promising elements into the pilot, while addressing practical issues about implementation.

The features of the UW–Madison pilot include:

  • The program will be conducted and evaluated with a focus on its benefit to workers, logistical feasibility for licensees and potential anti-trust implications for producers and consumers.
  • At the end of the 18-month period, the program could be expanded to include a higher percentage of goods or discontinued.
  • UW-Madison supports the concept of a living wage but expects that the right to representation should have a similar, beneficial effect on wages without outside interference. Wage issues will be monitored as part of the pilot but will not be a requirement for a designated supplier.
  • The pilot assumes that enough designated supplier production capacity exists to adequately serve licensees.

Billups is also asking the WRC to obtain a review of potential anti-competitive issues in the proposal by outside legal counsel as well as the U.S. Department of Justice. UW–Madison has also sought its own legal review of the program. While an outside review is being conducted, UW–Madison will proceed with the pilot.

“We’re hopeful that launching a pilot will help open the door to a critical mass of colleges and universities participating in a designated suppliers program,” he says.

Other details of the pilot are being finalized, and a dialogue will be initiated with licensees as soon as possible.

In addition to the new effort, UW–Madison has been a national leader in attempting to end sweatshop abuses of workers producing officially licensed collegiate products, Billups says.

During the past six years, UW–Madison and all other major universities adopted a code of conduct that is agreed to by licensees. The code addresses workers’ wages, working hours, overtime compensation, child labor, forced labor, health and safety, nondiscrimination, harassment or abuse, women’s rights, freedom of association, and full public disclosure of factory locations.

When violations occur, the licensee has the opportunity to correct the problem or have its relationship with the university terminated. The university helped found the WRC, a nongovernmental organization to enforce the code of conduct.

The university also has an unprecedented arrangement with adidas-Salomon AG, provider of athletic uniforms and official sideline apparel. As part of its March 2005 contract renewal with UW–Madison, Dawn Crim, a representative of the chancellor’s office, visited the firm’s North American headquarters, examined its books and had the opportunity to present questions about factory monitory and other workers’ rights issues to executives. A follow-up visit is planned for early 2006.

UW–Madison has contracts allowing more than 470 companies to make products bearing the university’s name or logos. The products are made in approximately 3,300 factories in 47 countries worldwide.

The university receives roughly $1.6 million in income from licensing, ranking it among the top 25 programs in the United States. Half of that amount assists student athletes, while the other half goes to a student scholarship fund called “Bucky Grants.”