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January, 22 2014 |  Download PDF |  Share

Corruption and Greed: Alianza Fashion Sweatshop in Guatemala

Informe en Español / Report in Spanish

 

 

Preface

A Call for Justice

The good news is that Philips-Van Heusen (PVH Corp) will — as a first effort — donate $100,000 to the 800 or so workers who were abandoned when the Alianza Fashion sweatshop imploded under the weight of its own massive corruption in March 2013.

In January, each worker will receive about $125 in aid.  It is a start.

The 59 or so other labels and retailers, including Macy’s, JCPenney, Kohl’s, The Men’s Wearhouse, Nordstrom and Wal-Mart, must also step up to the plate to make these workers whole again.  The workers certainly did not cause the corruption and graft at the Alianza factory, while the labels should have been much more vigilant all along.  

The 59 other labels should follow the lead of PVH.  Each should contribute $100,000 so that the Alianza workers can be paid at least the back wages and benefits they are owed and desperately need.

The goal is to raise a $6 million fund to reimburse the workers who have been robbed of wages, severance, healthcare and pension benefits by Alianza’s owner, Bong Choon Park, and General Manager, Rubén Enrique Rosales Ovalle, abetted by widespread corruption within the Guatemalan Social Security Institute and Ministry of Labor.

Surely the 59 or more major labels and retailers whose garments have been sewn at Alianza over the last 12 ¼ years can afford to reimburse the workers for the wages and benefits stolen from them.

Highly respected and knowledgeable NGOs on the ground in Guatemala, including the Center for Studies and Support for Local Development (CEADEL) and the AFL-CIO’s Solidarity Center, fear that the Guatemalan Ministry of Labor is weakening and in a downward spiral.  The Ministry of Labor is increasingly marginal, refusing to carry out legal mandates or positive initiatives to enforce respect for worker rights.

The Government of Guatemala, with its weak labor laws, is also increasingly open to corrupion.  On the labor front, there has been no progress to implement fundamental worker rights.

The U.S. Government must respond with serious sanctions, especially regarding the corrupt Alianza sweatshop, where over 60 U.S. labels and retailers sewed clothing over the last 12 years, as workers were robbed of over $6 million in wages and benefits.

At least it seems that several high-end labels have had enough and are beginning to question the Guatemalan Government’s lack of will.  It seems the Guatemalan Government has found it impossible to find and seize Alianza owner Bong Choon Park’s assets and wealth, much of it stolen from the workers.  It appears that the Guatemalan Government is not interested in the decades-long fraud perpetrated by Park.

It is over nine months since the Alianza Fashion factory shut down on March 22, 2013.  Surely it is time that the workers received justice.

 

 

 

Executive Summary

Alianza Fashion Sweatshop in Guatemala

  • From 2001 through March 22, 2013, 1,050 to 1,500 workers, mostly indigenous Maya Indian, toiled at the Alianza Fashion factory in Chimaltenango, Guatemala.  
  • Over the last 12 years, the Alianza workers were robbed of over $6 million in wages and benefits due them, most significantly health and pension benefits through the Guatemalan Social Security Institute (IGSS).
  • Over 60 labels and retailers — some of them powerhouses like Macy’s, JCPenney, Kohl’s and Philips-Van Heusen — were produced in the factory.  In 2011 alone, Alianza workers sewed 4.2 million garments, and over the course of 12 years some 52 million garments were exported to the U.S. and Canada.
  • The workers earned a base wage of just $1.05 per hour, which is the lowest wage in Guatemala and well below subsistence levels.
  • Huge mark-ups by the labels:  
    • A Wal-Mart women’s blazer retailed for $21.88, while its total production cost was just $4.25 — for a mark-up of 415 percent.!
    • Calvin Klein jackets and vests for the Burlington Coat Factory cost $9.23 to make, but retail for $59.99 — a mark-up of 550 percent.
  • Lavish 100% tax breaks saved the Alianza factory and major U.S. labels millions of dollars.
  • The Guatemalan Ministry of Labor is dysfunctional and does nothing to implement Guatemala’s labor laws or internationally recognized worker rights standards.
  • For 12 long years, the labels and retailers at Alianza never once sought to guarantee that fundamental worker rights standards would be respected.  Workers had no legal rights whatsoever and every attempt to organize was crushed.
  • Philips-Van Heusen, Nordstrom and others are launching a proactive campaign to reimburse Alianza’s workers what they are owed.
  • “From the very beginning at the Alianza Fashion factory, management’s policy was to plunder the workers in every way possible — robbing the workers of over $6 million in back wages and benefits over the years, in collusion with corrupt Social Security Institute and Ministry of Labor officials who totally failed to defend the rights of the workers,” said Gabriel Zelada, director of Center for Studies and Support for Local Development (CEADEL).
 

 

Index and Links to Production Documents Smuggled out of Alianza Fashion

Download the full report (9.8 MB)

Report in Spanish / Informe en Español

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