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Guatemala Factory Supplying Walmart and Other US Retailers Stole $6 Million From Workers | The Nation

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Steven Hsieh

Steven Hsieh

Stories that matter. Tips: shsieh@thenation.com.

Guatemala Factory Supplying Walmart and Other US Retailers Stole $6 Million From Workers

American brands

Many of the US labels that produced clothing at the Alianza Fashion sweatshop in Guatemala.

A factory company that made clothes for at least sixty American labels, including Macy’s, JCPenney, Kohl’s and Walmart, allegedly owes Guatemalan workers more than $6 million in back wages and benefits, according to an investigation by the Institute for Global Labour and Human Rights.

Investigators obtained more than 200 internal documents smuggled out of Alianza Fashion factory last spring, including invoices, pay stubs and manufacturing instructions from some of the most well-known brands in the world. The factory, owned by South Korean national Boon Chong Park, went out of business last March.

Here are some of the report’s findings:

  • From 2001 to 2013, Alianza management filed legal pension and healthcare benefits for just sixty-five workers per year. Through those years, Alianza employed between 1,050 and 1,500 workers, adding up to more than $4.7 million in lost benefits.

  • Since the factory shut down last year, Alianza has failed to pay the 548 workers employed until closure $1.2 million in back wages and benefits.

  • American labels mark up their products exorbitantly. Documents reveal a Walmart blazer that retails for $21.88 costs $4.25 to make. A $59.99 Calvin Klein suit and vest sold at the Burlington Coat Factory costs $9.23 to cut and sew.

  • Alianza factory workers made a base wage of $1.05 an hour, adding up to $287.24 per month. The Guatemalan government's National Statistics Institute says the average family needs about $363.43 per month to cover basic food needs.

  • Alianza management illegally fired sixty workers in March 2010 for taking the preliminary steps toward unionization. The workers did not receive their legal severance.

The Institute for Global Labour and Human Rights says its aim “is to raise a $6 million fund to reimburse the workers who have been robbed of wages, severance, healthcare and pension benefits” by Park and Alianza.

Labor groups reached out to some of the major labels implicated by their findings. Phillips-Van Heusen, which produces clothing for Tommy Hilfinger and Calvin Klein, donated $100,000 to a fund for the 548 workers employed until the factory shut down.

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Other brands are distancing themselves from Alianza factory. Per ABC:

ABC News contacted officials with Wal-Mart, JCPenney, Kohl’s and Macy’s, all of which appear in records to have sold clothing produced at Alianza.

JCPenney said it has not sourced clothes to Alianza in more than six years, and officials there thought the payroll problems there had been resolved in 2011.

Authors of the report dispute that, saying documents they collected show that in 2011, the biggest proportion of Alianza’s production was for JCPenney, ordered through a middle-man supplier.

Wal-Mart also said its business with Alianza was conducted through a middle-man supplier.

“Our relationships are with suppliers, and we paid them in full for all merchandise produced in that factory when it was in operation,” said Wal-Mart spokesman Kevin Gardner.” As the world’s largest retailer, we strive to positively influence global supply chain practices by raising our own standards and improving working conditions in the countries from which we source, and we expect our suppliers to adhere to our standards for suppliers and local wage laws. If we learn of a violation, we take appropriate action.”

The report also takes swipes at the Guatemalan government, criticizing it for not seizing Park’s wealth and assets and returning it to his workers. The authors write, “The Government of Guatemala, with its weak labor laws, is also increasingly open to corruption. On the labor front, there has been no progress to implement fundamental worker rights.”

Read Next: how your tax dollars are funding overseas sweatshops.

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