Conditions in Wal-Mart Supplier Factories Remain “A Challenge”

Wal-Mart’s ethical sourcing report, released yesterday, maintains that the company has been inspecting greater numbers of supplier factories - you remember, those factories that abuse workers and produce dangerous products? Lee Scott says, “Improvement of factory working conditions in our supply chain remains a challenge.” We say, that’s an understatement.

Labor violations by suppliers lessen, Wal-Mart reports [Arkansas Democrat-Gazette]

Inspections at factories supplying products to Wal-Mart Stores Inc. turned up fewer serious labor violations in 2006 than in 2005, the company said in a report released Wednesday.

Wal-Mart Watch, one of the company’s chief critics, charged that the report glosses over serious flaws in the supply chain of the world’s largest retailer.

Most of the factories inspected were in foreign countries.

According to the report, Wal-Mart or contract auditors found serious violations, such as failure to pay overtime, in 40. 3 percent of the 8, 873 factories inspected. That figure is down from 52. 3 percent in last year’s report.

Wal-Mart, based in Bentonville, said 26 percent of the audits were unannounced, up 6 percent from the previous year.

“Even with these efforts, improvement of factory working conditions in our supply chain remains a challenge,” H. Lee Scott, Wal-Mart’s president and chief executive officer, said in introductory comments accompanying the report.

The report said such medium-risk violations as failure to document pay slips for workers rose to 51. 6 percent from 37 percent. Low-risk violations dropped to 5. 4 percent from 9. 6 percent.

David Nassar, executive director of Wal-Mart Watch, said Wal-Mart is responsible for labor violations at suppliers’ factories.

“In light of recent toy recalls, it is not a stretch to draw a connection between the pressure Wal-Mart puts on it suppliers for low-cost merchandise, the problems at these factories and the safety issues of the products,” he said in a statement.

Wal-Mart Watch gets most of its funding from the Service Employees International Union.

The most recent recall affects 18. 2 million Chinesemade toys in which lead paint was used.

Over the past two years, 24 toy recalls affected Chinesemade products, according to The Associated Press.

Wal-Mart Watch also cited reports of worker abuse at Wal-Mart supplier factories around the world.

Last year, Wal-Mart said, it had more than 200 employees from its Ethical Standards Team assigned to Southeast Asia, the Indian subcontinent, the Far East, the Americas, the Middle East, Africa and Europe.

The team monitors factories to head off violations of Wal-Mart’s supplier code, the company said.

Also, Wal-Mart is providing education and community initiatives to help factories ethically meet production goals, spokesman Kevin Gardner said.

“We’re trying to go beyond monitoring,” he said. A pilot project begun in June aims at prequalifying factories, both domestic and foreign, that provide such direct-sourced goods as privatelabel products, he said. Wal-Mart said it also expanded environmental components of its factory evaluations aimed at reducing waste and air and water pollution.