"Foster said the company found 'minor' overtime violations, and it compensated the affected workers. 'All...the records showed that the plant was within compliance with our code of conduct... The facility is still on our approved list of facilities and it could be used for other Disney products."
Boston Globe
October 20, 2002

In fact, Disney claims it is even encouraging its licensees to return to the Shah Makhdum factory.:

"We have encouraged licensees to use it."
Boston Globe
October 20, 2002

4. So what is the problem? According to Disney spokespeople- including Mark Spears- the Shah Makhdum factory surpasses the two conditions listed by Mr. Spears on page 2 of his October 2 letter to Tom Hayden.

In his letter, Spears says Disney is now limiting its production in Bangladesh to factories that are in the "process of remediation" to bring them into compliance with Disney's code of conduct, and to new factories that "have demonstrated full compliance" with Disney's code prior to placing contracts there.

Clearly, Shah Makhdum far surpasses both of these conditions in that- according to Disney- the factory has a long, seven-to-eight-year history of complying with Disney's code of conduct, proven again and again by Disney's own "rigorous" audits.

Disney the helpless Transnational: In his October 2 letter, Mark Spears reiterates that "Shah Makhdum is currently an eligible factory for Disney licensees and vendors." Mark Spears, as already pointed out, went so far as to tell the media that Disney is "encouraging people to continue manufacturing in Bangladesh, including at Shah Makhdum."

Nonetheless, according to Disney, the fate of Shah Makhdum and its workers is solely in the hands of its licensees, since Disney "does not mandate which factories third party licensees and vendors utilize." Mark Spears fails, however, to point out that many of the vendors and licensees he is talking about are less than one-hundredth of Disney's size.

So, Disney, with $25.3 billion in revenues in 2001, and spending $1.8 billion a year in advertising ($4.9 million a day) does not have the power to influence its licensees. (By the way, Disney is 4 and a half times larger than the government of Bangladesh. Total government revenues in 2002 came to just $5.61 billion- to service 140 million of some of the poorest people in the world.)

Disney's official line is that it does have the power legally to demand that a contractor or licensee leave a particular factory, but it does not have the legal power to demand that a contractor use a particular factory.

But this is disingenuous.

5. The truth is that Disney uses 7,800 contractors and tens of thousands of factories around the world to make its goods-yet, Disney claims it cannot find a single contactor willing to return to the Shah Makhdum factory, despite Disney's encouragement. This is simply not believable!

Disney does not own a single factory. Rather Disney uses at least 7,800 contractors (3,800 independent licensees; 2,000 manufacturers who subcontract with licensees and another 2,000 manufacturers working under direct contract with Disney) to produce its goods. Each of these licensees and contractors in turn use several factories. For example, Disney licensee Jerry Leigh of California explains that it "has a vast network of sourcing capabilities in North and South America and Asia." And these Disney figures are from five years ago. So we are talking about tens of thousands of factories around the world producing Disney goods. A conservative estimate would be 50,000 to 60,000 factories.

6. If Disney really did want to do the right thing, and return its work to the much-improved Shah Makhdum factory, do you think Disney's contractors would listen?

Of course they would want to please Disney-which is one of the most powerful corporations in the world.

What licensee or contractor in their right mind would go out of their way to get on the wrong side of Disney? What sense would that make, since they are dependent upon Disney for their contracts, and their very survival?

Take the Jerry Leigh company, which is a very large corporation in its own right, and may well be the largest company with which Disney has a licensing agreement. In 2002, Jerry Leigh of California had $4.7 billion in sales. This is huge. Still, Disney's annual sales of $25.3 billion make Disney 5.4 times as large as Jerry Leigh. Look at it this way: If you weighed 180 pounds, would you want to fight someone who weighed 969 pounds? It would appear a crazy thing to do.

7. Jerry Leigh of California, Inc.-Disney's licensee

Jerry Leigh and Disney pulled their work out of the Shah Makhdum factory after the young women in Bangladesh asked that their basic rights be respected. Jerry Leigh is a private company.

When questioned by religious leaders, representatives of the Jerry Leigh company claimed they pulled out of the Shah Makhdum factory due to "certain quality control problems." However, this makes absolutely no sense. Jerry Leigh had been using the Shah Makhdum factory for the last eight years to sew Disney garments. The so-called quality control problems just happened to emerge suddenly, by mere coincidence, after the young women workers at the factory asked publicly that their fundamental rights be respected.

If Jerry Leigh wants us to actually buy this line, then it means that Jerry Leigh and Disney were producing substandard garments for the last eight years, which they still sold to the American people for premium prices. Either way, they look pretty bad.

Jerry Leigh Entertainment AP
7860 Nelson Road
Van Nuys, CA 91402-6044

CEO: Jerry Leigh
President: Andrew Leigh

Phone: (818) 909-6200
Fax: (818) 909-7855 Email: gcano@jerryleigh.com

Sales: $4.7 billion in 2002

Jerry Leigh has licensing agreements with:

The company also produces private label goods for:

According to their website:

"The company has a vast network of sourcing capabilities in North and South America and Asia." Furthermore, "All factories used must meet a strict standard of quality and social compliance requirements."

However, the U.S. Department of Labor cited the Jerry Leigh Company at least three times between 1996 and 1998 for minimum wage violations in California. Two of the factories were in El Monte (Golden Boy and THT Fashions) and the other one (Golden City Fashions, Inc.) was in Alhambra, California.

8. Shah Makhdum is a win-win situation, and it would not cost Disney a nickel to do the Right Thing.

Here we have one of those very rare situations. - Disney claims that its dozen-or-so rigorous audits show Shah Makhdum to be in compliance with its code of conduct and therefore a factory eligible for Disney work. Disney says it would like to see its work back in the Shah Makhdum factory and is even encouraging its licensees to return there. What makes this so rare is that the 352 workers at the Shah Makhdum factory agree. They report that working conditions at the factory are far better than they have ever been before, that Shah Makhdum has instituted so many significant improvements that it is now much better than the average factory and, in fact, is well on its way to becoming a model operation. The women workers report that they like working at the factory now that their rights are respected and they are treated with dignity. Shah Makhdum's owner is willing- if Disney returns- to continue on this path, and even to lock in these improvements by opening his facility to independent verification by a very respected local women's and human rights NGO, the Bangladesh Center for Worker Solidarity.

This will be the first factory opened to independent monitoring in all of Bangladesh! It could establish a new human rights precedent for all 3,800 garment export factories in Bangladesh, potentially improving the lives of 1.8 million garment workers and their families.

Recent improvements at the Shah Makhdum factory:

The workers and factory owner in Bangladesh have done their part. According to the workers and to local, independent human, labor, religious and women's rights organizations on the ground, Shah Makhdum is now well on its way to becoming a model factory, which could set a new human rights standard in Bangladesh. The only party missing is Disney. If Disney does not return its work, this rare opportunity will be lost.

9. What is really going on?

Simply put, Disney does not want to set a precedent that it will respond to international solidarity campaigns. This is a calculated decision that this is a path they do not want to go down.

10. Disney has a history of cutting and running- pulling its work in response to worker demands that their basic rights be respected.

Chillingly, word for word, under the exact same scenario, Disney pulled its work out of Haiti in September 1997, throwing hundreds of desperately poor workers out in the street. After the workers publicly denounced factory violations and asked that their fundamental legal rights be respected, Disney responded by pulling its work out of Classic Apparel and at least two other Haitian factories.

Employing the exact same language and cover-up then as they are now, Disney stated:

"First, you should know that Disney does not employ any workers in Haiti. Two U.S. licensees work regularly with three factories near Port au Prince. Our intensive and ongoing oversight of their operations, which included a recent on-site inspection of the factories, has found that they are adhering to all applicable laws and policies."

So, there were no violations. Next,

"Spokesperson Chuck Champlin said Disney has not requested contractors to exit Haiti"...rather, "it's been our position that jobs in Haiti are good for Haiti..."

Once again, nothing was wrong. There were no violations and Disney did not ask its contractors to pull out. Yet, after nine years of producing Disney goods at the Classic Apparel factory in Haiti, Disney's licensee, H.H. Cutler Inc., just happened to pull out, and just as with the Jerry Leigh company, the timing had nothing to do with the workers asking for their rights, nor with the international solidarity campaign to support them.

A spokeswoman for the H.H. Cutler/VF Corporation, Cindy Knoebel, stated:

"I can categorically deny that our actions in Haiti had anything to do with either Charlie Kernaghan or the National Labor Committee publicity efforts in Haiti. It was unfortunate timing that that particular political issue came to light at the same time that we were losing a significant piece of business... We lost a substantial piece of business, and that's why we had to pull out."

The end result was exactly the same, the workers asked for their rights, Disney's work was pulled, the workers lost their jobs, and there was nothing Disney could do about it. A subsequent check of company revenues showed no decrease in H.H. Cutler's sales in that period as compared with prior years. H.H. Cutler was lying, just as Jerry Leigh is doing now. It is all part of the cover-up, and Disney knows exactly what is going on.

The real message Disney and its licensee left behind in Haiti was that if you asked for your rights, you too will be left without a job, dumped out in the street penniless. The message was not lost on the workers, and the struggle to defend human and worker rights in Haiti was seriously set back. Even today, five years later, the workers are still threatened and terrified of U.S. corporations cutting and running. Disney has left its mark on Haiti, and it is a very negative one.

11. Disney also pulled out of China

McDonald's and Disney have a 10-year joint marketing venture. Disney toys are given away as part of McDonald's Happy Meals in the 20,000 McDonald's restaurants across the country.

After the Hong Kong Christian Industrial Committee exposed the use of child labor, gross worker rights violations and unsafe working conditions at factories in China producing toys for McDonald's/Disney, the response was the same. McDonald's and Disney pulled out in August 2000, terminating their contract with City Toys' four plants in Shenzhen, causing tens of thousands of workers to be laid off.

12.Disney linked to young toy workers in China who are worked to death

On Monday, May 13, 2002, the Washington Post carried a powerful front page article, "Worked Till They Drop," which focused on a 19 year-old woman, Li Chunmei, who was literally worked to death in a toy factory in the south of China. Li Chunmei died exhausted after being forced to work 16 to 19 hours a day, from 8:00 a.m. to midnight or 3:00 a.m., seven days a week in 90-degree temperatures. During the busy season, the workers could go more than two months without receiving a single day off. Li Chunmei earned just 12 cents an hour, but her take-home pay was less due to deductions for room and board in a crowded dorm. She worked and died at the Bainan Toy Factory, whose managers refused to tell Washington Post reporter Philip Pan which U.S. companies they were producing for.

However, on a follow-up visit, China Labor Watch was able to confirm that Disney toys were being produced at the factory. The workers reported this, and were very clear about producing Mickey Mouse stuffed toys. The workers, who had to produce 40 stuffed toys each a day, were paid less than ten cents for each toy they made.

13. How thorough is Disney's monitoring- even in the U.S.? Disney sweatshop garments seized by California Commission of Labor in 1998

The Walt Disney Company knows very well how difficult it is to monitor factory conditions, even in its own backyard- like Los Angeles- let alone in Bangladesh, Haiti or China.

In September 1998, California?s Commission of Labor seized 17,000 Disney garments that were sewn at the Trinity Knitworks factory in Los Angeles because 184 workers were owed $213,000 in back wages. Moreover, Disney inspectors and corporate monitors working under contract with Disney had given Trinity Knitworks a clean bill of health in July 1998, at the very moment that inspectors from the California Department of Labor were citing Trinity for serious minimum wage violations. The workers? paychecks at Trinity had been bouncing since May.

According to the Los Angeles Times (December 1, 1998) "...as representatives of Disney and other firms kept close watch over production details, such as placement of inseams, hemlines and zippers, monitors hired by the companies failed to notice Trinity workers were not being paid.? In the face of such obviously inadequate monitoring efforts, California?s Labor Commissioner, Mr. Jose Millan, was forced to conclude, ?What Disney...and these other large companies are really interested in is the quality of the product- not the quality of the work lives of the workers who are actually producing the product."

14. A Little History- In 1996, Disney did not even keep a list of the factories around the world which made Disney products. How did they monitor those factories? Also- Disney forgot to include the right to organize in its code of conduct....Why?

In response to the NLC's 1996 Haiti campaign and pressure from religious investors, Disney had to admit that they did not even possess a comprehensive list of all the tens of thousands of factories their licensees and contractors used around the world to produce Disney goods. An obvious question arises- then, how did Disney monitor those factories for compliance with its code of conduct? At the same time, Disney also had to admit that it had forgotten to include the right to organize in its code of conduct. How could Disney have simply overlooked the most fundamental of the UN/ILO's internationally recognized worker rights standards- the rights to freedom of association, to organize a union and bargain collectively?

Also, in 1996, the National Labor Committee exposed the fact that Disney garments were being produced in Burma in a joint venture with the vicious military dictators. The workers were paid just 6 cents an hour. Disney was forced to pull out of Burma.

Disney reforms itself- and hires PriceWaterhouseCoopers!
According to Disney, "During fiscal year 1996, the company took further steps to strengthen its efforts in reviewing the performance of licensees and manufacturers and monitoring their compliance with the company's standards."

Disney organized an in-house International Labor Standards Group, which in turn decided to retain PriceWaterhouseCoopers LLD as their leading authority and consultant. Disney vowed it would increase its third party monitoring to guarantee compliance.

It is interesting to note that Disney's third party monitors have not fared so well. PriceWaterhouseCoopers' Social Compliance or monitoring division collapsed under scandals and numerous shoddy monitoring reports. (See BusinessWeek cover article, October 2, 2000 re PWC's stunning lack of success as a monitor for human and worker rights.)

Another of Disney's favorite monitors, Cal-Safety Compliance Corporation is now the subject of a law suit by its own employees alleging serious wage and forced overtime violations.

However, in 1998, Disney did give a nod of approval- albeit a rather weak one- to the concept of independent monitoring. Chuck Champlin, then Disney's director of communications, wrote:

"With respect to so-called 'independent monitoring' we continue to believe that there may be a role for such organizations in special circumstances."

This would bring us full circle to the Shah Makhdum case. Not only have factory conditions been vastly improved, but the owner has committed to taking the unprecedented step- for Bangladesh- of opening his factory to independent monitoring by the highly respected local human, women's and worker rights NGO, the Bangladesh Center for Worker Solidarity (BCWS). Surely this case must fit Disney's definition of "special circumstances" where independent monitoring may have a role to play, and the best part for Disney is that it would not cost them a single cent.

Disney's prior monitoring efforts at the Shah Makhdum factory were seriously flawed. Visits were announced in advance, and all worker interviews took place within earshot of management. Every worker knew that they would be fired immediately if they ever dared speak the truth.

In fact, Disney has a history of abuses in Bangladesh. (See the 2001 report of violations at the Lenny Fashions factory in the Dhaka EPZ, where Disney's Winnie the Pooh garments were also sewn.)

15. Michael Eisner's $750 million in stock options!

In the 1990s, Michael Eisner cashed in $750 million in stock options. For example, in 1993-1995, Eisner paid himself $228 million- $202 million in stock options, $24 million in bonuses and two million (a million a year) in salary.

Note- Stocks fall again. Eisner takes $5 million bonus: Disney's stocks fell again in 2002, losing another 34 percent of their value, which did not stop Michael Eisner from paying himself a $5 million bonus.

16. Disney Board members also do well:

Each member of Disney's Board of Directors receives:

17. Are Disney licensees a group of outstanding human beings? ...Hardly. A rare inside glimpse.

Take the H.H. Cutler Company, for example, which along with Disney pulled out of Haiti after the workers there asked that their basic rights be protected.

In 1997, a reporter called H.H. Cutler headquarters in Grand Rapids, Michigan and a new secretary with no experience and fresh on the job naively put the reporter straight through to H.H. Cutler's president, Tom Austin. The reporter asked Tom Austin what he thought about the 28-cent-an-hour wages H.H. Cutler had been paying in Haiti. Clearly, she said, the workers were living in utter misery, in tiny, broken-down huts that we would never even put our lawn furniture in. Tom Austin wasn't moved. He went straight to the point, stating: "I'm not in a position to change the wages around the world or decide the fairness, and I wouldn't if I could." According to Austin, "Individual people make individual bargains about what their labor is worth."

What a simple world Austin must live in. A young, desperately poor single mother in Haiti, surrounded by massive unemployment, has the right as an "individual"- since H.H. Cutler and all of its contractors saw to it that all union organizing drives were broken through illegal mass firings- to bargain with the $25.3 billion Disney Corporation to establish her worth. It does not matter that she has never even heard of the Disney Corporation, has no idea of its sales and profits, does not know what Michael Eisner earns, or even what the clothing she makes sells for in the U.S. Tom Austin even went on the offensive declaring, "It is a living wage,"- in reference to the 28-cent-an-hour wages Disney, H.H. Cutler and its contractors paid the Haitian workers. "While it's not a wage that you or I or anyone else would want to live on, there's a whole bunch of people who are unemployed and those people are living."- So, if the worker is alive, it must be a living wage. And furthermore, Tom Austin, H.H. Cutler and Disney have no responsibility here, since... "we live in a market economy and the market determines what the wages are." Case closed. Never mind that the human rights of the workers are routinely and systematically denied, and that it is kept that way because if the workers ever dared to stand up to ask that their most fundamental human rights be respected, companies like Disney will cut and run, pulling their work from the factory and dumping the workers in the street with nothing, penniless. (See Maryann Sabo, Newhouse News Service, February 16, 1997) This is one of the structures of violence in the global economy.