Inspectors came and went from a Walmart-certified factory in Guangdong province in China, approving its production of more than $2 million in specialty items that would land on Walmart’s shelves in time for Christmas.
But unknown to the inspectors, none of the playful items — including reindeer suits and Mrs. Claus dresses for dogs that were supplied to Walmart — had been manufactured at the factory.
Chinese workers sewed the goods, which had been ordered by Quaker Pet Group, a company in New Jersey, at a rogue factory that had not gone through the certification process set by Walmart for labor, worker safety, and quality, according to documents and interviews with the officials involved.
To receive approval for shipment to Walmart, a Quaker subcontractor just moved the items over to the approved factory, where they were presented to inspectors as though they had been stitched together there. Soon after the merchandise reached Walmart stores, it began falling apart.
Fifteen hundred miles to the west, the Rosita Knitwear factory in northwestern Bangladesh — it made sweaters for companies across Europe — passed an inspection audit with high grades. Four monitors gave the factory hundreds of approving check marks. In all, 12 major categories, including working hours, compensation, management practices, and health and safety, the factory received the top grade of “good.”
“Working Conditions — No complaints from the workers,” the auditors wrote.
Ten months later, Rosita’s workers rampaged through the factory in February 2012, vandalizing machinery and accusing management of reneging on promised raises, bonuses, and overtime pay. Some claimed they were sexually harassed or beaten by guards.
As Western companies turn to low-wage countries to produce apparel, electronics, and other goods, inspections have become a vital link in the supply chain. An extensive examination by The New York Times reveals how the inspection system intended to protect workers and ensure manufacturing quality is riddled with flaws. Inspections are often so superficial they omit the most fundamental workplace safeguards, such as fire escapes.
Even when inspectors are tough, factory managers find ways to trick them and hide serious violations, like child labor or locked doors. Dangerous conditions cited in audits frequently take months to correct.
Dara O’Rourke, a global supply chain expert at the University of California Berkeley, said little has improved in 20 years of factory monitoring, especially with increased use of the cheaper “check the box” inspections at thousands of factories.
“The auditors are put under greater pressure on speed, and they’re not able to keep up with what’s really going on in the apparel industry,” he said. “We see factories and brands passing audits but failing the factories’ workers.”
Still, major companies, including Walmart, Apple, Gap, and Nike, turn to monitoring not just to check that production is on time and of adequate quality but to project a corporate image designed to assure consumers they do not use Dickensian sweatshops. Moreover, Western companies depend on inspectors to uncover hazardous conditions, like faulty wiring or blocked stairways, that have exposed some corporations to charges of irresponsibility and exploitation after factory disasters that killed hundreds of workers.
The Rana Plaza factory collapse in Bangladesh, which killed 1,129 workers in April, intensified international scrutiny of factory monitoring and pressured the world’s biggest retailers to sign agreements to tighten inspection standards and upgrade safety measures.
While many groups consider the accords a significant advance, some longtime auditors and labor groups voice skepticism that inspection systems alone can ensure a safe workplace. After all, they say, the number of audits at Bangladesh factories has steadily increased as the country has become one of the largest garment exporters, and still 1,800 workers there have died in workplace disasters in the last 10 years.
“We’ve been auditing factories in Bangladesh for 20 years, and I wonder, ‘Why aren’t these things changing? Why aren’t things getting better?’” said Rachelle Jackson, at Arche Advisors, a monitoring group.
Monitoring companies have established a booming business. Each year, they assess more than 50,000 factories that employ millions of workers. Spurred by heightened demand for monitoring, the share prices of three of the biggest publicly traded monitoring companies, SGS, Intertek, and Bureau Veritas, have all increased about 50 percent from two years ago.
The inspections carry enormous weight; factory owners stand to win or lose millions of dollars in orders. With stakes so high, managers have been known to try to trick or cheat auditors. Often notified beforehand about an inspection, they will unlock fire exit, unblock cluttered stairwells, or tell underage laborers not to show up.
Greg Gardner, CEO of Arche Advisors, said retailers seek different levels of audits. Some, like Levi’s and Patagonia, want rigorous — and costly — audits. Others pick inexpensive audits that won’t jeopardize relationships with suppliers.
Auret van Heerden, chief executive of the Fair Labor Association, a nonprofit Apple uses to monitor its Foxconn factories in China, said many inspectors are too rushed. “They’re on a plane and going to a new city the next day. They don’t have much time to think about it or dwell on it.”