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Making a Living Making our Hats

The city of Villa Altagracia, Dominican Republic

Map of Country

Figure 1: map of Dominican Republic from www.worldatlas.com

 

Additional Image 1  

Figure 2: flexfit hat taken from flexfit-headware.com

Introduction

Yupoong is a corporation based in Korea that manufacturers and distributes hats across the world. One of its factories is located in Villa Altagracia, near the southern shoreline of the Dominican Republic. The city of Villa Altagracia has a population of approximately 37,000 (citypopulation.com, 2004), with over 1,600 of these individuals employed at Yupoong's factory (Gonzalez, 2003). One of the main questions I want to ask is if this clothing corporation is a helpful aid in the development of the country or whether it simply exploits cheap labor for greater profits. In this paper I will examine what life is like for the people living in Villa Altagracia: background on the Dominican Republic, information about the individuals living here, and how the Yupoong factory affects their lives.

 

 

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Context of the Dominican Republic

The Dominican Republic is located on the Caribbean island of Hispaniola. Hispaniola is divided with the West side of the island belonging to the nation Haiti, while the East side belongs to the Dominican Republic. The Dominican Republic, situated between the Caribbean Sea and the Atlantic Ocean (see fig.1), is roughly twice the size of New Hampshire, USA. This nation is well-known for its beautiful landscape and tropical climate. There is little variation in temperature throughout the year, though rainfall is very seasonal. There are nearly 800 miles of scenic coastline surrounding the interior mountains and valleys of the Dominican Republic (CIA World Factbook, 2005).

The island of Hispaniola most likely became inhabited at approximately 3500 BC by immigrants from the Yucatan area of Central America. A second wave of immigration coming from Northeast South America brought the Taino Indians to the island. The Taino Indians are a subgroup of the Arawakan Indian tribes of Amazonia; the ancestors of the Taino Indians were the native people that Christopher Columbus encountered when he “discovered” the island of Hispaniola. The Spanish explorers marveled at the beauty of Hispaniola and at the native Taino people who were extremely generous, kind, and peaceful. Columbus and his crew also took note of the gold to be found in the river valleys and the seemingly easy conquest of the inhabitants. In 1493, the first European settlement began on the North coast of what is now the Dominican Republic. The native peoples were either killed or used as servants while the Spanish focused on gold extraction and export (History of the Dominican Republic , 2000).

French rule over the West third of the island (present day Haiti ) was recognized by the Spanish in 1697. The Eastern two-thirds of the island (present day Dominican Republic) declared independence from Haiti in 1844. Currently, the Dominican Republic is an independent representative democracy.

In 1984, the Caribbean Basin Initiative began and free trade was established between the United States and 27 countries in the Caribbean. The Dominican Republic is one of those countries. The hope was to increase jobs and improve quality of living in the Caribbean (Charnovitz, 1984). Through this initiative, the Dominican Republic has had one of the fastest growing economies in the world (CIA World Factbook, 2005). During the 1990s, the economy grew 6%-8% per year. Many large corporations (such as Yupoong) began building subsidiary factories in these free trade zones; in the Dominican Republic specifically, thousands of women began sewing jobs in these factories (Marin, Midgley, & Teitelbaum).

More recently, on January 12, 2004, the Dominican Republic and a number of other Caribbean and Central American countries wrote the Joint Statement on Third Border Initiative. This statement addresses the historical and current significant relationship between the United States and the Caribbean and seeks to further develop this relationship. The “third border” refers to the Caribbean being the “third border,” along with Canada and Mexico, to the United States; the initiative hopes to implement the same diplomatic, economic, environmental, educational, health and security programs with the third border that the U.S. has with the other two borders (Ereli, 2004). Wealth and foreign intervention have been an important part of the Dominican Republic's history and continue to play an important role today. Are the treaties and interventions of today the same as those of the 15th century? Do we still have the same selfish motivation that the Spanish explorers had, or is it in fact a partnership to help both ourselves and the Dominican Republic?

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Brand: Yupoong

Yupoong, Inc. is a headwear manufacturer based in Seoul, Korea . The company was established in 1974. Over the past 30 years Yupoong has grown to become the 2nd largest hat producer in the world, with $100 million in exports to over 60 countries. Currently Yupoong has hat contracts with the NBA, NFL, Nike, Adidas, Reebok, and several US universities (Chernov, 2003). Yupoong is most well-known for its patented flexfit design hats (see fig. 2) – a design involving elastic materials which allow for superior fit and comfort. On its website, Yupoong states a high commitment to growth and innovation, and a vision of its hats being “worn by the world” (Yupoong, Inc., 2002).

On November 20, 1987 Yupoong opened its first subsidiary: BJ&B factory in Villa Altagracia, Dominican Republic. Since then, Yupoong has opened up factories in Bangladesh and Vietnam, as well as a marketing subsidiary in the United States (Yupoong, Inc., 2002). Yupoong has formal labor standards for these subsidiaries available on its website. According to the website, “ Yupoong, Inc. and its subsidiaries ( factories ) recognize the dignity of each employee and respect their rights including the right to free association and collective bargaining. Yupoong consistently works to create better workplace and working conditions for our employees (Yupoong, Inc., 2002).” The statements then go on to say Yupoong will adhere to all local labor laws, including age restrictions, minimum wages, nondiscrimination laws, hours, and benefits. It is clear that Yupoong understands the importance of employee rights and working conditions, but how well does its rhetoric match its record? As I explored this question, I found that the BJ&B factory has been monitored by labor rights organizations and has received both praise and criticism from them.

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People

Villa Altagracia is a town of approximately 37,500 people (citypopulation.com, 2004); about 4% of this population works at the BJ&B factory. Similar factories are plentiful in Central America, with 65%-95% of the employees being women (Prieto, 2004). The average age of a women factory worker in Central America is 23; 55%-70% of these women are unmarried, but many have children (Prieto, 2004). Research has shown that the women working in these new factories have gained more economic independence (Safa, 2002); however, these single working mothers are still quite dependent on their extended families for financial and emotional support (Safa, 2002). The average work week in the Dominican Republic is similar to the United States. The standard according to the Labor Code is 8 hours per day and 44 hours a week. They would normally work Monday through Friday with a half day on Saturday. The Labor Code also requires at least a 36 hour consecutive rest period.

Since the Dominican Republic is in a free trade zone with the United States, some acceptable minimum labor standards were developed by the United States for them. One such labor standard was a minimum wage (Charnovitz, 1984). Since 1997, the minimum monthly wage in the Dominican Republic is $120.75 US. Since 1998, the minimum hourly wage for manufacturing companies in the Dominican Republic is $.68 US. In 1997, the average hourly wage for manufacturing companies in the Dominican Republic was $1.51 US (US Department of Labor, 2005). Comparing these wage earnings with the cost of living in the Dominican Republic shows them to be inadequate.

In 1998, during an interview with a BJ&B factory worker, Bob Herbert asked about her wages. The woman explained she was receiving the minimum wage for a 44 hour week giving her about $28 US to live on. She went on to say this didn't cover half of her living expenses. In 1998, from the $20 price tag on each hat sold in the United States, about $.08 went back to the employee that made the hat, while far greater profits went to the retailers and apparel companies who had contracts with Yupoong (Herbert, 1998). Not only were paychecks just slightly above the low minimum wage limits, but factory working conditions were reported to be demeaning as well. The same interview revealed workers being forced (illegally) to work overtime, being fired for trying to organize labor unions, and being yelled at, degraded, hit, and touched inappropriately by supervisors (Herbert, 1998). Some of the workers took action to make the working conditions better.

Workers and other activists helped spread the word of the working conditions to the universities who sold the hats and companies that had contracts with Yupoong. Once news spread, changes were made and conditions started improving. In 2002, Nike, Adidas, and Reebok complained to the Fair Labor Association after getting word that 20 workers were fired allegedly for attempting to form a labor union. The FLA immediately investigated and made agreements with management to have the workers reinstated and reimbursed (Fair Labor Association, 2002).   Later in 2002, after four years of fighting, a union at BJ&B was finally recognized; it became the largest independent union in a free trade zone (Chernov, 2003). As this union formed, a partnership with United Students Against Sweatshops (USAS) also formed, to help ensure the problems of the past wouldn't continue. The relationship between BJ&B and USAS has been on good terms, showing that Yupoong in fact does enforce the employee rights it states on its website. Change continued to improve and BJ&B became the first free trade zone factory to have wages above the legal required minimum wage (USAS, 2004).

However, improvement must continue for the workers in Villa Altagracia. The union is still not respected by management and collective bargain agreement negations have never been settled. The end of 2004 saw a new campaign by labor rights groups starting due to evidence that BJ&B might close its doors. Recently, Yupoong seems to be shifting more work to its other factories (that aren't unionized) and laying off many workers at BJ&B (USAS, 2004). It looks as if Yupoong didn't like the poor publicity so it “fixed” the problems for the world to see, and as the dust settles, is quietly moving operations to a more cooperative, cost-effective subsidiary.

 

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Process

I was unsuccessful in my attempt to find an email address for the factory in the Dominican Republic. I did email Yupoong, Inc. and asked for any information or contacts they could give me for the BJ&B factory. I have heard no reply in the weeks since. When silence is the response, it's difficult to interpret whether Yupoong is just too busy and doesn't care, or whether it consciously discourages and hinders investigation of its production process.

The most beneficial research I have done has been on the Internet, mostly through labor activist sites such as www.fairlabor.org and www.campaignforlaborrights.org. These were the only sources that I found which dealt directly with the Yupoong subsidiary. To my surprise these did compliment the factory on things it had done well, as well as raise the issues it needed improvement on. Many of my peer-reviewed references examined many of the export factories of the Dominican Republic collectively. The correspondence between the two different types of sources seemed to suggest that the same types of conditions and circumstances were common throughout the country.

The thought that most intrigued me from my searching was that Yupoong agreed to use the labor laws in place by the local government. This sounds nice, but certainly there are local government laws that are oppressive (or oppression that goes unchecked by local law). Yupoong seemed to shift the burden of rights to the local government, as I would guess most corporations do. However, in our growing global economy, some corporations are becoming exponentially more powerful than a local government. I believe corporations, such as Yupoong, should recognize this great power and accept the responsibility that accompanies it. It may be easier to say, “That isn't our role; we're designed for other purposes.” However, with the growing power that globalization brings to economic entities, we may need to shift our view of what a corporations role and purpose is. Rather than overlooking labor issues and shifting the burden to local government, why not focus on the interest of its employees and set standards appropriate for their lives?

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Conclusion

The theme of my research seemed to be the same one common to so many globalization debates today. Is globalization good for everyone or is it just good for the elite class with all the power? The Yupoong factory in Villa Altagracia seems to suggest a little of both. This town in the Dominican Republic is better off with the BJ&B factory supplying them with many jobs and a good wage. The factory, when run fairly and with the interests of the people in mind, is a great asset to the community. However, the power still resides with management and the elite, and the rules are only as good as the people who enforce them. This relationship isn't the exploitation that Columbus and his countrymen brought, but it isn't an ideal, equal partnership either. Yupoong and management at BJ&B can (and do) have great policies on paper, but there is evidence that they can (and do) get around these rules. I get the sense that the people of Villa Altagracia have made a lucrative business partner but don't really trust this partner as a friend. Perhaps they are sleeping more comfortably, but sleeping nonetheless with one eye open.

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Internet References Cited

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Peer-Reviewed References Cited

  • Martin, Philip; Midgley, Elizabeth ; Teitelbaum, Michael S.
    "Migration and Development: Whither the Dominican Republic and Haiti." International Migration Review. Summer 2002. Volume 36, Issue 2. p 570-592

     

    Prieto, Marina
    “Never the Twain Shall Meet? Women's Organizations and Trade Unions in the Maquila Industry in Central America .” Development in Practice. February 2004. Volume 14, Issue 1/2. p 149-157

     

    Ereli, J. Adam
    “Joint Statement on Third Border Initiative.” DISAM Journal of International Security Assistance Management . Winter 2003/2004. Volume 26, Issue 2. p 56-58

     

    Safa, Helen I.
    “Questioning Globalization: Gender and Export Processing in the Dominican Republic .” Journal of Developing Societies. April 2002. Volume 18, Issue 2/3. p 11-31

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