Gap Lists Plants Abusing Workers

Gap Inc., in a campaign to eliminate labor abuses at overseas factories making the retailer’s clothes, identified hundreds of plants engaged in unsavory practices including excessive overtime, paltry wages and fines for workers who wanted to quit their jobs.

The San Francisco-based company listed the transgressions Wednesday in a report summarizing the findings of 92 inspectors who scrutinized all but a handful of the 2,672 factories approved to manufacture clothes for Gap last year.

Spurred by the most egregious violations, Gap severed ties with 70 factories last year, down from 136 in 2003. The company rejected 15% of the new factories seeking to make its clothes in 2004 compared with 16% in 2003.

But the parent of Gap, Old Navy and Banana Republic stores continued to contract with hundreds of overseas factories that mistreated its workers, according to the company’s second annual social responsibility report -- a document that represents an unusual bit of self-flagellation in corporate America.

The abuses are most prevalent in China, where Gap products are made at 423 factories. As many as 50% of those Chinese companies don’t fully comply with local labor laws, Gap said, and 10% to 25% of them pay below the minimum wage. The company ended its business relationship with 18 Chinese factories last year -- less than 5% of its suppliers in that country.

In the Persian Gulf region, where Gap contracts with 29 factories, more than half the factories inspected imposed workweeks of more than 60 hours.

In Egypt, Morocco and Vietnam, Gap flagged factories that required their workers to pay them if they resigned before a contract ended. Gap required all three factories to stop the practice.

By publicly acknowledging its role in the recurring labor problems at factories often decried as “sweatshops,� Gap hopes to prod its entire industry to embrace reforms and establish more rigorous standards to improve working conditions.

“The more open and honest we can be about conditions and challenges, the more helpful we can be in addressing them,� Gap wrote in the 58-page report.

Since Gap first owned up to the troubles at its overseas factories last year, shoe manufacturer Nike Inc. also has launched a similar social responsibility report examining practices in its overseas factories.

“The good news is that more companies are turning the corner in acknowledging that a problem exists,� said Bob Jeffcott, policy analyst for the Maquila Solidarity Network, a workers’ rights group in Toronto.

The increased attention will probably make it appear as if things are getting worse before they get better, Gap warned, simply because its inspectors are likely to become progressively better at rooting out violations as time goes on.

Gap acknowledged that it had contributed to some of the labor problems by making last-minute production demands that prodded overseas contractors to exploit their workers. The company has vowed to phase out its “inefficient purchasing practices.�

Jeffcott believes that Gap and other retailers that rely on overseas factories could make a huge difference by agreeing to pay more for their products -- a daunting commitment to make because it could erode profit or result in price increases that alienate customers.

Gap shares fell 18 cents Wednesday to $20.85.