Reports

November 4, 2004  |  Share

Puma Workers in China

Puma's Workers in China Facing an Olympian Struggle to Survive

Enduring Grueling Hours, Pitifully Low Wages, Exploitation, Abuse and Denial of their Rights

A Joint Report of The National Labor Committee and China Labor Watch

By Charles Kernaghan
Director, National Labor Committee

Front Page Graphic


 Table of Contents

Introduction

Executive Summary

A Day in My Life

Hours

Forced to Exercise and Shout Company Slogans

Wages

An Eyewitness Account

Repression, Fear and Abuse

Breakdown of PUMA's Labor Cost

Where does all the money go?

What PUMA Likes to Say About Itself

Customs Documentation Shows PUMA mark-ups from 494 to 1,284 percent

PUMA at a Glance

Action Alert


  
Introduction

Puma sponsors Olympic teams and star athletes around the world. But it is unlikely that even these finely conditioned athletes could keep pace with Puma's workers in China, forced to work up to 16 ½ hours a day, from 7:30 a.m. to midnight, six or seven days a week, for wages of just 31 cents an hour. How many athletes could endure the constant production line speed-ups, the relentless numbing repetitive motions, being yelled and screamed at, humiliated, only to return home exhausted to a crowded dorm room shared by 12 workers, without hot water and forced to eat food resembling "pig slop." How many athletes could stand to be stripped of their most basic rights, knowing that if they ever dared to speak the truth, they would be fired immediately. Yet Puma workers in China endure just this, day in and day out, year after year

In a very direct sense, these workers in China are toiling for the Puma Corporation, for the athletes Puma sponsors, and for us—for the consumers who purchase their products.

In fact, the workers in China are carrying Puma on their backs. Puma is making a net profit of $12.24 per hour on each worker in China making their sneakers. Annually, Puma is reaping a profit of $38,189 on each worker. In a single factory, Puma's profit from the workers can reach over $92 million a year. It is the workers in China who are actually paying all of Puma's bills, including the $206 million a year Puma spends on advertising. Puma spends $6.78 to advertise a $70 pair of sneakers—almost six times the $1.16 that they pay the workers to make those sneakers.

Puma's Code of Conduct and their "Perspective Sustainability Report" reads well. Puma even quotes Lao-tzu, a 6th Century B.C. Chinese philosopher, and the great Russian novelist Fyodor Dostoyevsky. However, Puma should worry less about the sustainability of its rhetoric and more about the real lives of the people who make their products. There is a great disconnect between what Puma says and what Puma does.

A major part of this disconnect is that we never hear from the workers. In the United States, the American people purchase two billion pairs of shoes made in China each year, which amounts to seven pairs of shoes for every man, woman and child in the country. But we have never heard from any of these workers, not even once. Advertising is, of course, meant to brand us. But now it is time to also hear from the workers who make the products we purchase.

Puma is certainly not the worst company. Far from it. Puma is pretty much like the rest, if not even a little better.

So what should Puma do? Certainly the workers are not asking Puma to pull out of Pou Yuen Plant F. On the contrary, they desperately need those jobs, or they would not put up with the abuse and repression. It is better to be exploited than to have no job at all. The Puma workers in China do not want a boycott, but they do want to be treated like human beings.

Nor is anyone saying that Puma should not make a profit. The real question is: why can't healthy profits co-exist with sustainable wages? A worker in China makes enough Puma sneakers in the first five days and two hours of work—before the first week of the year is over— to pay his or her entire year's wages. Suppose Puma did something utterly remarkable and said that the company would increase the base wage of its Chinese workers by just 20 cents an hour. This would increase the workers' wages by 46 1/2 percent, allowing them to climb out of misery and at least into poverty.

This 20-cent-an-hour increase would have an enormous positive impact on the lives of the workers. If Puma did this, it would now take the workers seven and a half days to make enough sneakers to pay their salaries for the year. In other words: It is very do-able, especially given that Puma's gross profit on every pair of $70 sneakers is $34.09!

If the workers' wages were raised by 20 cents an hour, it would add 54 cents to the cost of the sneakers. If Puma could not handle this alone, suppose concerned citizens offered to split the difference. We could pay 27 cents more, and so would Puma.

No matter how nice corporate Codes of Conduct and company monitoring reports sound, if a worker is earning below subsistence-level wages, the factory is still a sweatshop. And, Freedom of Association is either respected, or it is not. The Puma workers in China definitely do not have the right to Freedom of Association or to organize.

Puma should seriously address these human rights issues: the right to earn at least subsistence level wages, freedom of association, and the right to organize—but should do so in reality, with concrete actions and not just words.

The National Labor Committee, China Labor Watch and many other human rights organizations are ready to meet with Puma on these issues anytime, anywhere.

Ultimately though, if the Puma workers and others across the developing world are to win respect for their human and worker rights and fair wages, much will depend upon the engagement, awareness and demands of consumers in the U.S. and elsewhere in the developed world. Only when this happens will a brake be put on the race to the bottom in the global sweatshop economy.

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Picture of Factory from Outside 

 


 

Pou Yuen Plant F

De Yong District
Gaobu Town
Dongguan, China
Taiwanese-owned, by the PouChen Group

Pou Yuen Plant F is just one shoe factory among at least seven others that together employ some 30,000 workers in a large industrial park owned by the PouChen Group.

The vast majority of Plant F's production is for PUMA, which has increased its production
throughout 2003 and 2004. Currently, Plant F has approximately 3,000 employees, with over 2,400 workers involved in direct and indirect production. The rest are management employees. The median age of the workers is 20 to 22 years. It is rare to see a worker over 40.

The research in this report focuses primarily on Pou Yuen Plant F. However, conditions in Pou Yuen Plant D, which has 2,700 workers producing sneakers for PUMA and And1, are extremely similar if not exactly the same.

 


 

Executive Summary

Abusive Working Conditions at Pou Yuen, producing for PUMA in China

Forced Overtime:

  • Mandatory 13½ to 16½ hour daily shifts, from 7:30 a.m. to 9:00 p.m., 11:00 p.m. or midnight.
  • Workers receive one, three, or four days off a month. Depending upon production demands, workers are at the factory 76½ to 100½ hours a week.
  • Workers receive just 10 holidays off a year.
  • The grueling hours are exhausting and workers try to nap during their lunch and supper breaks.
  • On the rare holidays, most workers remain in the dorm to sleep.

Below-subsistence wages:

  • Base wage is just 31 cents an hour, $2.48 a day, and $12.56 a week.
  • Even including all overtime and production bonuses, the average take-home wage is still just 35 cents an hour and $20.93 for a 60-hour workweek.
  • Workers are routinely cheated of the legal overtime wage due them. Sometimes management withholds up to 20 percent of the workers' wages as punishment for failing to meet production goals.

PUMA thrives on its exploited and abused workers in China:

  • From beginning to end, the total cost of labor to make a pair of PUMA sneakers in China comes to just $1.16. The workers' wages amount to just 1.66 percent of the sneakers' $70 retail price. It takes 2.69 hours to make a pair of sneakers.
  • PUMA's gross profit on a pair of $70 sneakers is $34.09.
  • PUMA's hourly profit on each pair of sneakers is more than 28 times greater than the wages the workers received to make the sneaker.
  • PUMA is making a net profit of $12.24 an hour on every production worker in China, which comes to an annual profit of $38,188.80 per worker. For Pou Yuen Plant F alone, PUMA's net profit gained from the workers exceeds $92 million.
  • Even after accounting for all corporate expenditures involved in running its business—which the workers in China are ultimately paying for—PUMA's net profit on each $70 pair of sneakers is still $7.42, or 6.4 times more than the workers are paid to make the sneaker.
  • In the first five days and two hours of the year—before the first week is even over—the workers in China have made enough PUMA sneakers to pay their entire year's salary.
  • If PUMA did something quite remarkable, but very affordable, and raised the base wage of the workers by just 20 cents an hour, which would allow the workers to climb out of misery and would have an enormously positive impact on their lives, it would then take a worker in China 7 1/2 days to make enough sneakers to pay for their entire year's salary. This is very do-able.

Repression, Fear and Abuse:

  • Workers describe factory management as "militaristic." Workers report that after forced calisthenics, they march to their positions chanting company slogans.
  • Twelve workers share a crowded dorm room, and 100 workers share each bathroom. Even during the cold winter months the dorm often lacks hot water.
  • Workers eat food described as "pig slop." The meat is unsafe and sickeningly greasy.
  • Anyone daring to speak the truth will be fired. Anyone talking back to a supervisor will be fired. Anyone even suggesting improvements in factory conditions will be fired. The workers are in a trap, stripped of their rights.
  • Supervisors routinely shout and yell at the workers for working too slowly. The workers have no choice but to bow their heads and accept the constant humiliation in silence.
  • Talking is prohibited.
  • No one can leave the factory without first receiving permission and a special pass. Company security guards search the workers' dorm rooms, and anyone found with contraband goods, such as cigarettes, will be immediately fired.
  • Anyone arriving five minutes late to work will be fined three hours' wages.
  • Workers handle toxic chemicals that can cause skin and eye irritation, headache, dizziness, vomiting, breathing difficulties, drowsiness, and with prolonged exposure, nervous breakdown.
  • The hands of workers on the stock-fitting line gradually change shape over time due to the repetitive, rapid and precise movements they must make day in and day out. The workers' thumbs are thin at the base and thick at the top, with prominent nails. Thin veins stand out. Their hands are blistered and sore, causing the workers difficulties sleeping.
  • PUMA's Code of Conduct is meaningless. Pou Yuen functions as a well-run prison, one that manufactures massive profits for PUMA, on the backs of its exploited and abused workers.

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people walking in front of the factory

Workers Entering Pou Yuen Plant "F" 

 



We asked a worker to describe his day. This is what he wrote:

A Day in My Life

Below I will write in a continuous style to show what my day is like.

Workers are held under very militaristic management. At 6:30 in the morning, very sleepy workers must get up, they clean their shoes, they have 10 minutes to wash their faces and get dressed.

Tides of people flow into the cafeteria, everyone tries to be the first. Everyone is upset by the poor quality of the food. Because people try to cut in line, there are often arguments with the cafeteria managers, often during the normal process people are often written up for little things, each of these little infractions is 30 RMB. People use cafeteria tickets, however they just get one ticket with which they can only buy 2 twisted bread sticks or 2 steamed buns, many workers are still hungry and use invalid tickets to buy breakfast. Workers who are discovered by the cafeteria managers have their lunch box thrown away. With this type of emotion, only after you see it and experience it can you truly understand how unbearable this is. After 7 am workers rush to punch their cards because tardiness results in a deduction in wages. After 7 am, the workers line up behind the section foreman, each line slowly moves forward while the workers ceaselessly recite that they will diligently and faithfully provide service. If it is too quiet, everyone is punished equally after it ends. All physical exercises must be done according to the regulations. After entering the workshop, you will notice all the workers working with a high degree of physical effort and under very stressful, energy demanding conditions. Any little error will bring the supervisor's reprimand. The sound of their scolding is louder than the machines. Because the line supervisors are always scolding, their voices change to sound like birds screeching. This is true.

Workers must take this without resistance, anyone implicated in resistance must leave the factory. These workers all come here from remote villages. They come here to earn money, inside their heart they shed tears. Silently they endure scolding, and continue working.

On the shaping line, you can see workers gluing soles. You can tell by their hands how long they have been working here. Change in shape is very pronounced. It makes people who see it frightened. These workers just glue soles, they don't have any other skills. When the factory is busy, besides eating all they do is work. They have no time to learn other skills, like other jobs on the assembly line. What I regret, a boy in his 20s begins to look like he's in his 30s, becomes numb. Through this, he just hopes the factory doesn't dismiss him. He will work for his whole life, he has no choice.

In the morning the stars are still in the sky when they must go to the factory to work, the sky turns dark, and it is only after the stars come back out that the workers are allowed to quit working.

We work from 7:00 in the morning until 11 at night. Under our conditions, it appears that over half the workers are starving. After stopping work they go to the cafeteria. They serve 4 dishes (one soup, meat and vegetables). The meat is just a meat broth. I have a friend who works in a poultry shop, she kills the chickens and delivers them to the cafeteria. She says these chickens were cleaned very sloppily and it appears that these chickens were also sick. It is this type of meat that is given to the workers to eat, the workers have no choice because they have to go back to work in the afternoon.

PUMA orders have increased, workers only get half an hour to eat dinner and then must start working again.

The Taiwanese investigate whether our work stations are cleaned, and if everything isn't clean and it is discovered by the company, the worker is cross-examined. Company security guards will go through the workers' clothes and look through their pockets, taking cigarettes. If they are found the worker will be dismissed. There was one Taiwanese person who remained to attend a meeting, during the meeting, he saw a worker spit on the floor, he intimidated the workers because if the worker was discovered he would be fired.

In terms of living, many workers don't have hot water in the winter, especially during new year. The company absolutely does not provide hot water, this situation continues without stop.

 

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Hours: Forced Overtime
  • Routine 13.5 to 16.5 hour shifts from 7:30 to 9:00 p.m. to 11:00 p.m. or midnight;
  • Workers receive one, three, or four days off a month;
  • Depending upon production demands, workers are at the factory for between 76 1/2 and 100 1/2 hours each week;
  • Workers' time cards are punched out at 8:00 p.m. or 9:00 p.m. at the latest, despite the fact that they are kept working to 11:00 p.m. or 12:00 midnight;
  • Besides the sporadic Sundays off, workers receive just ten holidays off in a full year.

The legal workweek in China is 40 hours, with eight-hour shifts Monday through Friday, with Saturday and Sunday off. By law, all overtime is supposed to be voluntary and is not to exceed three hours a day, nine hours a week or 36 hours a month (Labor Code, Article 41).

However, at the moment the obligatory shift at Pou Yuen Plants F and D stretches from 7:30 a.m. to 11:00 p.m. or midnight. Newer workers appear to get just one day off a month, while more experienced workers receive three or four Sundays off each month. During the peak season, which stretches from May through December, everyone is required to work the last Sunday of the month if production deadlines demand it. All overtime work is strictly mandatory. The routine daily shift stretches 15 1/2 to 16 1/2 hours Monday through Friday, with a minimum nine-hour shift required on Saturday. Under this schedule, workers are at the factory 86 1/2 to 91 1/2 hours, while being "paid" for 73 to 78 hours.

We say "paid" because workers report being routinely cheated of the overtime pay legally due them. First, their time cards are punched out every night at 8:00 p.m., and never later than 9:00 p.m., despite the fact that they will be kept working until 11:00 p.m. or midnight. Pou Yuen does this so their records will indicate they are complying with China's labor laws, which prohibit more than three hours of overtime a day. Also, Pou Yuen simply punishes the workers by arbitrarily cutting wages. For example, management recently informed the workers that they will receive only 80 percent of their June salary because they failed to meet that month's production goals. Manipulating the workers' time cards is meant to satisfy PUMA's and And1's gullible monitors. However, this is a very shallow pretense, since PUMA, because of its huge production in Plant F, often has company representatives on the ground, stationed full-time at the plant. Surely PUMA knows exactly what is going on. We will return to this later.

The routine daily shift would be as follows:

  • 7:30 a.m. — 11:30 a.m. (Work / 4 hours)
  • 11:30 a.m. — 12:30 p.m. (Lunch / 1 hour)
  • 12:30 p.m. — 4:30 p.m. (Work / 4 hours)
  • 4:30 p.m. — 6:00 p.m. (Supper / 1 1/2 hours)
  • 6:00 p.m. — 11:00 p.m. or 12 midnight (Overtime / 5 or 6 hours)

Under this schedule, the workers are at the plant 15 1/2 to 16 1/2 hours a day, while working 13 to 14 hours. If they are lucky, on Saturday the workers are kept from 7:30 a.m. to just 4:30 p.m., putting in only a nine-hour shift, while working eight. Currently, the workers are at the factory 86 1/2 to 91 1/2 hours a week, while actually working an exhausting 73 to 78 hours.

On the final week of each month, when production demands require it, Sunday work is also mandatory. In this case, the workers will be at the factory anywhere from 95 ½ to 100 1/2 hours a week, working 81 to 86 hours.

However, it can get even worse. When it is really busy, the workers report that they may be required to skip half of their lunch hour and supper break in order to race back to work. This can add another hour to their workday.

When production "slows down," the Pou Yuen factory operates on a 13 1/2 hour schedule, Monday through Friday from 7:30 a.m. to 9:00 p.m., with Saturday shifts remaining the same, from 7:30 a.m. to 4:30 p.m. Under this "lighter" schedule, the workers are at the factory 76 1/2 hours and working 63 hours a week. The "slow" season is typically from January through April.

In addition to the occasional Sunday off, the Pou Yuen workers receive just 10 holiday vacation days off in the entire year:

  • New Years: one day off;
  • May 1 (Labor Day): three days off;
  • National Day: three days off;
  • Spring Festival: three days off;

Since the majority of the workers are migrants from the countryside, one of their major
complaints is that most of them have not been able to travel home to see their families for the last three, four or even up to seven years. They simply do not have enough time off to make the trip. Many would not have enough money either, since their wages are very low and the holidays are the most expensive time of the year to travel.

The hours are grueling, the days off few, the pace of work relentless and the speed-ups constant. It is not surprising then, that the PUMA workers live in a state of exhaustion. Workers race to catch a nap during their lunch and supper periods, and on their rare days off about two-thirds of the workers do not leave their dorms, using their precious day off to sleep. To get an idea of just how grueling and exhausting these workers' schedules are, consider that they are receiving, at most, 57 days off in the entire year—three or four days off a month and ten national holidays (assuming that the workers are required to work just five Sundays a year, which would be a very low estimate). This means that they are working 308 days a year, and a minimum of 2,464 hours (assuming an eight-hour day), but more likely, assuming 11-hour days,
some 3,388 hours a year.
Let's do a comparison with Germany, where PUMA is headquartered:

PUMA Workers in China German Workers

Work 6.67 days a week

Work 5 days a week

8 to 11 hours a day 7.7 hours a day
63.4 hours per week, average 38.5 hours a week
No annual vacation 30 days vacation
10 national holidays 13 paid holidays
57 days off per year 147 days off a year
Work 2,464 - 3,388 hours per year Work 1,557 hours per year


PUMA workers in China are actually being forced to work up to 2.2 times more hours a year than their counterparts in Germany.

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A pair of Puma's H. Street shoes

These shoes are being sold for $70.00. Customs documents show that they cost from $3.41 to $7.13 to make -- including all materials, accessories, direct and indorect labor costs, overhead, profit to the Pou Yuen factory in China and shipping costs. 

 


 

Mandatory Exercise and Marching to Work Shouting Company Slogans:

As if their workday were not long enough, many workers report having to jump up at 6:30 a.m. to be at the factory for a group meeting from 6:50 to 7:00 a.m. followed by a half hour of mandatory calisthenics. All the workers describe the Taiwanese management as very "militaristic." The workers have to do their exercises together according to strict regulations. Afterward, the workers line up behind their section foreman and march to work shouting again and again that they will work diligently and faithfully to provide good service, and so on. If they do not recite these company slogans loudly enough and in unison, they will be punished. When they arrive at their workstations, the production line is already in motion, and the grueling pace begins with constant pressure to work faster.

Some workers report that the exercises are being cut back, but one can still hear the company chants loud and strong, especially coming from the inspection department.


Wages:
  • Below subsistence levels
  • Base wage is just $0.31 an hour, $2.48 a day, and $12.56 a week
  • Even including all overtime and production bonuses, the average take-home wage is still just $0.35 an hour and $20.93 for a 60-hour workweek.

The base wage at Pou Yuen Plants F and D is 450 RMB per month or $54.41, which meets the legal minimum wage in Dongguan City. There are 8.27 RMB to one U.S. dollar.

PUMA/Pou Yuen Base Wage
(450 RMB per month)

  • $0.31 an hour
  • $2.48 a day (8 hours)
  • $12.56 a week (40 hours)
  • $54.41 a month
  • $652.96 a year

However, the workers lose over 40 percent of their base wages due to deductions by
management to cover dorm, food, and other expenses. We will return to this later, but 12 workers must share a primitive room in the company dorm, and the food is basically inedible. At a minimum, the company deducts 135 RMB a month ($16.32) for dorm expenses and 45 RMB ($5.44) a month for food. Even just these two deductions result in lowering the workers' take home wage to 19 cents an hour, and $7.53 for the entire week. A review of Pou Yuen pay stubs also shows a monthly deduction of 15 RMB ($1.81) for health insurance and another 16 RMB for miscellaneous expenses. These deductions would further lower the workers' take-home wage. The health insurance allows the worker to consult only with the factory doctor and does not cover medications.

Such below-subsistence level wages are, of course, very useful for management as a tool to prod its employees both to work faster and to work longer hours in order to earn additional production bonuses and overtime premiums. However, having said that, the workers have little real choice. All overtime work is strictly mandatory and anyone failing to meet the production goal will first be punished, and then fired.

The workers report that with their production bonus, contingent upon reaching their goal or quota, they can earn a regular wage of 500 to 550 RMB, or $60.46 to $66.51 a month.

Regular Wage with Production Bonus

500 RMB per month 550 RMB per month
$0.35 per hour $0.38 per hour
$2.80 a day (8 hours) $3.04 a day (8 hours)
$13.95 a week (40 hours) $15.35 a week (40 hours)
$60.46 a month $66.51 a month
$725.51 a year $798.07 a year

However, after deductions for room and board, the average regular take-home wage, including the production bonus, is still just 24 cents an hour.

Average Regular Take-Home Wage including Production Bonus

(525 RMB - 180 RMB deductions = 345 RMB)

  • $0.24 an hour
  • $1.92 a day (8 hours)
  • $9.63 a week (40 hours)
  • $41.72 a month
  • $500.60 a year

The workers report that with overtime, for example working until 9:00 p.m. every night, they can take home between 700 to 800 RMB a month, or $84.64 to $96.74, after deductions.

Their work schedule would be as follows:

  • 7:30 a.m. to 11:30 a.m. (4 hours work)
  • 11:30 a.m. to 12:30 p.m. (1 hour lunch)
  • 12:30 p.m. to 4:30 p.m. (4 hours work)
  • 4:30 p.m. to 6:00 p.m. (1 1/2 hours supper)
  • 6:00 p.m. to 9:00 p.m. (3 hours OT)

This would put the worker at the factory 13 ½ hours a day, Monday through Thursday, while being paid for 11 hours. With real luck, the workers would only have to put in nine-hour shifts on Friday and Saturday, working from 7:30 a.m. to 4:30 p.m., while being paid for eight hours. At a minimum then they would be at the factory 72 hours a week, while being paid for 60 hours.

So, even including the production bonus and 12 hours of mandatory overtime, the average takehome wage at the Pou Yuen factory is still just 35 cents an hour and $20.93 a week.

Average PUMA/Pou Yuen Take-Home Wage

(including the base wage, production incentive and all overtime premium)
(750 RMB per month)

  • $0.35 an hour
  • $3.50 a day (10 hours)
  • $20.93 a week (6 days, 60 hours)
  • $90.69 a month
  • $1,088.27 a year

As low as this take-home wage appears, this is really a very liberal estimate, given that it is very likely that the workers were kept working more than 60 hours a week, which would, of course, lower the actual hourly rate even more.

Further, as was pointed out earlier, it is common for the workers to be required to punch their time cards out at 8:00 or 9:00 p.m., despite the fact that they will actually be kept working until 11:00 or midnight. Also, as management is currently doing this month, up to 20 percent of the wages legally owed the workers may be withheld as a form of punishment for failing to reach their excessive production goals. Routine cheating on legal overtime wages may result in real average take-home wages considerably lower than the 35-cent-an-hour figure we are using.

The workers also complain that the factory withholds at least 20 days' back wages owed them. For example, a new worker starting in June will receive just 10 days' wages when she is paid in July. This is another tool the company uses to discipline the workers, for if a worker decides to quit or is fired, she will have to leave without the 20 days' wages owed them.

Another common complaint is that along with the scarcity of holidays off, the salary the workers earn is too little to allow them to travel back to their home villages to visit with their families. Some workers have not been home in three, four, or even seven years. It is not difficult to understand their pain and anguish.

The workers report spending anywhere from one to two thirds of their pay on food and some form of distraction or entertainment outside of working hours. First, the food in the company cafeteria is inedible, and secondly, this is the one avenue the workers have to try to deal with the relentless stress they face on the job each day.

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Comparison of PUMA's profits vs. workers' wages  


One of our researchers described conditions faced by the PUMA workers in these words:

 An Eyewitness Account

Pou Yuen Shoe Factory, China

In a series of sharp calls, the workers are roughly woken from their dreams at 6:30
a.m. After they wash and dress they must quickly run to the factory and line up. Each
worker's face shows their apathy. They can't say how many years it has been that they
have had these problems. They have already adapted to this lifestyle. They will bow
their heads and silently accept reprimands, even to the extent that their character is
insulted. They all consider the money they are earning, and so ignore the criticism. The
morning meeting is finished around 7:00 a.m.

The workers directly enter the workshop where the supervisors have already started the assembly line process and in that short, five-minute period, the pressure to work fast has already started.

Eighty percent of the workers on the shaping lines stand while working. In their eyes, it
gives them more energy. Workers who perform poorly are scolded. If they do not finish
within the allotted time, they are also reprimanded and blamed, to the extent that they
may be fined. As you can judge from this situation, any direct impressions on visitors is
serious and recorded.

PUMA uses the Olympics to target customers and to boost its brand profile.

"Important sports events in 2004 in the industry will be the Olympic Games in Greece and the European Soccer Championship in Portugal. At these mega-sports events, PUMA will approach customers with a targeted brand presentation and unique product combination of sports, lifestyle and fashion that will contribute to support and boost its brand profile."

PUMA's "Financial Annual Report 2003," page 3

Their hands never stop moving, for many years every day is the same process, the same thing. Their hands early on change shape. Every movement they make must be perfectly standard and this environment to a high degree contributes to the changes in shape.

Before the lunch period arrives, the workers' stomachs are rumbling. They enter the
cafeteria in groups of 20 and eat food that looks like pig slop. They have no choice.
They must eat because in the afternoon they have to go back to work. In their short
lunch break, they will also sleep. It is very valuable. All the workers want to sleep.
Every time a holiday arrives, two thirds of the workers will go to the dormitories to
sleep. In the afternoon they work continuously.

Salaries are extremely low. But workers who want to leave don't have enough money to
go and must continue numbly working here. For example, Mr. "W" has worked in the
factory for seven years. He says he has no other choice, because he has to feed his
family, and where else can he go to work? Without any other options, he can stand being scolded. He says he will return to work five more years. This is one plan. However, after five years, he doesn't know what he will do. This small amount of speech describes many workers' thoughts.

From very early until late, they are pressured to work quickly. Without overtime pay,
they work until 9:00 p.m. With overtime pay, they work until 10:00 or 11:00 p.m. or to
midnight. If there are visitors, the workers wait until after they leave to start working
overtime.

According to the factory fine system, rejected work past the allowed limit is recorded as
an offense. If a worker gets in an argument with the discipline department, they will also be punished. Supervisors do not hear out workers' explanations and do not reason with workers. If workers have three offenses or one big offense, they will be fired without pay.

During the slack season, supervisors put out even more stringent demands, reprimanding workers whose work is not good enough, decreasing their salaries and finally firing them.

When foreign businessmen come to investigate, first the workers will receive a notice.
They make the workers clean and sanitize, mopping the floor. The supervisors are very
strict and picky.

The labor union [All China Trade Union Federation] organizes a few activities, but they
don't really address the workers plight. Workers do not place much hope in the union.
In 2003, there was a strike which was organized by the workers. It is very rare that the
factory enforces the labor laws.

Late at night, when little spots creep up into their vision, the workers finally get to leave the factory. Exhausted, they return to the dormitories.

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 "GV Special" Puma sneakers

These shoes are being sold for $70.00. Customs documents show that they cost from $3.41 to $7.13 to make -- including all materials, accessories, direct and indorect labor costs, overhead, profit to the Pou Yuen factory in China and shipping costs. 

 


 

Working Conditions at PUMA/Pou Yuen: Repression, Fear and Abuse. Workers describe management as "militaristic."
  • Factory Rules are Excessively Harsh.

Anyone arriving even five minutes late to their work stations will be given a warning the first time and fined 5 RMB (60 cents) the second time. Sixty cents might not sound like a lot of money, but for the PUMA workers it actually amounts to the loss of more than three hours base take-home wage.

Talking in the factory during working hours is strictly prohibited. Talking back to a
supervisor is not tolerated, and any worker attempting to do so will be punished, even if the worker is simply trying to explain something. No such discussions are allowed.

Workers spending "too much" time in the bathroom will be interrogated and chastised.

No one can leave the factory during working hours without permission and a "special pass."

Rejected work is recorded. After three "offenses," a worker can be fired without receiving their back pay.

Supervisors routinely scream and yell at the workers, scolding them for working too slowly, or for any perceived mistakes. Workers have no choice but to "bow their heads" and silently take the abuse. To act otherwise will result in immediate firing.

From the moment the assembly line is switched on, the workers report facing constant pressure to work faster and harder. The pace is relentless. Company security guards search the dorm rooms while the workers are at the factory, going through their clothing and other possessions. Anyone discovered to have contraband items,
such as cigarettes, will be fired.

Workers are afraid and feel they are in a trap. In private, workers discuss factory conditions and what needs to be improved, but no worker feels that she could ever speak the truth publicly without being fired.

  • Dangerous Chemicals

Among the chemicals the workers handle are at least two toxic primers. One is IIIPD, which contains methyl ethyl ketone, dimethyl sulfoxide and resin. The other, a primer used on synthetic leather and mesh, is IIIYNN, which contains methyl ethyl ketone, acetone and tetrahydrofuran.

Both chemicals can cause eye and skin irritations, headaches, dizziness, vomiting,
drowsiness, and breathing difficulties. Chronic effects in case of unsafe levels of exposure include nervous breakdown.

There is no specific antidote for chronic unsafe exposure, and physicians are advised "to treat symptomatically and supportively."

  • Primitive Dorm Conditions

Workers describe their dorm rooms as primitive, lacking even electrical outlets, furnished solely with their beds. Twelve workers share each room. There are just four bathrooms for 400 workers. Often the dorms lack hot water, even during the winter months.

  • Cafeteria Food Resembles "Pig Slop."

Workers describe the cafeteria food as "pig slop." Eight workers share a table, and four dishes are served. However, no one dares eat the meat dishes because the meat is of very poor quality and extremely greasy. Most workers choose to go out to eat, despite the fact that 45 RMB is automatically deducted from their wages each month for the cafeteria food. According to the workers, many of the Pou Yuen employees look "half fed."

  • Misshapen Hands

The workers say that you can tell how long someone has been working on the shaping line by just looking at their hands, which change shape to meet the work. There are about 170 workers who do stock fitting, gluing the soles of the sneakers. Every movement they make must be perfectly standard. Hour after hour, day in and day out, year after year, they perform the exact same motions. Over time, their hands gradually and subtly change shape. These workers' thumbs are thin at the base and thick and swollen at the top, with prominent nails. Extremely noticeable blue veins also stand out. Their hands are very callused. They are sore with open blisters and unhealed wounds. These workers have trouble sleeping because of the pain.

One worker described the change in the hands' shape as "very pronounced." Also, "it makes people who see it frightened."

  • Workers live in fear and repression.
     

Every worker feels that if they ever spoke the truth openly about factory conditions, they would be fired. If they demanded improvement, they would be fired. In fact, for daring to even make suggestions, they may be terminated. So the workers live in fear, resigned to the abuse, and trapped. If they are to keep their jobs, which they desperately need, they must bow their heads in silence and accept conditions as they are.

There is a "union" at the factory, but the union is the All China Trade Union Federation,
which everyone—even PUMA—knows is controlled by the government and functions more to promote foreign investment and protect companies than to address the real needs of the workers. Not surprisingly, the workers "do not place much hope in the union." When there was a wildcat strike in 2003, it was organized by the workers, not the union.

In fact, the union is so meaningless that Pou Yuen management has set up a committee, controlled by themselves, to address human rights concerns and any issues arising from daily life at the factory. Of course the workers have no trust in such a management committee. After one worker tried to commit suicide—in despair over her conditions—rather than trying to assist her, the company fired the worker.

It is unclear, but it appears that new workers entering the Pou Yuen factory must pay a 100 RMB ($12.09) fee, or a week's wages, to a "labor office" which may very well be the All China Trade Union Federation.

  • PUMA's Code of Conduct looks and sounds good, but is completely meaningless.

Factory monitoring visits are known in advance, and the plant is cleaned and prepared. As has been pointed out a number of times, every single worker knows that if they dared speak the truth, they would be immediately fired and sent packing without so much as their back wages.
 

In such a climate of fear, PUMA is monitoring a well-run prison and nothing more.

 

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A workers' pay stubPou Yuen 3 Pay Stub, April 2004

This Pou Yuen pay stub shows 43.5 overtime hours in the month of April, or approximately 11 overtime hours a week. Her base wage was 31 cents an hour. However, with the overtime premium and production bonus - which could reach 16 cents an hour - this woman earned a take home wage of 42 cents an hour, which is higher than the average 35 cents an hour. After deductions amounting to 180 RMB ($21.77) for room, food, health insurance and miscellaneous, out of her gross April pay of 860 RMB ($103.99) she was left with 680 RMB ($82.22). We cannot be 100 percent certain of these figures because the workers report they are frequently forced to labor off the clock, after having punched their time cards out. If this were the case, of course her average hourly wage would be considerably lower.

  

 

 

 

 


PUMA's Labor Costs: Just $1.16 per pair of sneakers

From beginning to end, the total cost of labor involved in making a pair of PUMA sneakers in China amounts to just $1.16. This includes all direct and indirect labor, as well as downtime. Direct labor costs include 11 cents to form the soles, and 83 cents to assemble the pair of sneakers. Indirect labor adds another 23 percent to overall time and cost, or 22 cents, for a total labor cost of $1.16 (94 cents in direct and 22 cents in indirect labor). The PUMA workers would, at most, take home 94 cents.

In terms of time, it takes 2.69 hours of labor to complete a pair of sneakers. PUMA workers in China earn 35 cents an hour in take-home wages ($0.94 ÷ $2.69 = $0.349).

A review of internal company documents has allowed us to put together the following chart analyzing the steps, time, and cost in making a pair of PUMA sneakers. We believe this may be the first time that the public has access to such precise production data.

Making a PUMA sneaker in China: Operations involved/Time/Labor cost

Assembly Line

Units (pair of
sneakers) per hour
Time in minutes Average wage per hour including production bonus
and overtime
Labor cost per operation
Cutting 4.3 per hour 14 minutes $0.43 per hour $0.10
Sewing 0.9 per hour 67 minutes $0.43 per hour $0.473
Formation 2.3 per hour 26 minutes $0.43 per hour $0.187
Stock Fitting 6.6 per hour 9 minutes $0.43 per hour $0.065

Assembly time: 116 minutes per 1.933 hours

Labor cost/Assembly: $0.83

Sole making
 
Spray paint
150 per hour
0.44 minutes
$0.43 per hour
$0.00287
Gluing 7.7 per hour 7.8 minutes $0.43 per hour $0.0558
Formation 15.6 per hour 3.85 minutes $0.43 per hour $0.0276
Modeling 20.8 per hour 2.88 minutes $0.43 per hour $0.0206
 
Sole making time: 15 minutes (14.93)
 
Labor cost/Soles: $0.11 (0.10687)
 

 

Direct Labor:
Total time to
complete pair of
sneakers:
131 minutes
(2.183 hours)
Total labor cost: $0.94
Indirect Labor: Adds 23% to
time
30.13 minutes Indirect labor cost: $0.22
Total time to make a pair of PUMA sneakers:   161.13 minutes
(2.69 hours)
Total direct and indirect labor cost: $1.16


Indirect labor (excluding managerial staff) includes packing, maintenance, mechanics, cleaning, etc., and along with downtime, such as bathroom breaks, could add another 23 percent to the time and cost involved in completing a pair of sneakers. This would increase the time to 161.13 minutes (2.69 hours), and the cost to $1.16. The total cost then to assemble the sneaker, including all direct and indirect labor and downtime is $1.16. Even accounting for all overtime premiums and production bonuses, the take-home wage after deductions for room and board that the workers would earn per pair of sneakers is 94 cents. (Sixty percent of the workers are involved in direct production, while 23 percent are involved in indirect production. Management staff totals 17 percent.)

PUMA thrives on its exploited and abused workers in China.

The Pou Yuen factory in China is not just a well-run prison, it is also a manufacturer of
enormous, even staggering, profits for PUMA. PUMA is making a profit of $12.24 an hour on every production worker in Pou Yuen Plant F. Annually, PUMA is making a profit of $38,188.80 on each worker. In the course of a year, PUMA's profits off the backs of its Chinese workers in just a single plant, Pou Yuen Plant F, exceed $92 million.

PUMA's profits per worker in China

  • $12.24 an hour
  • $122.40 a day (10 hours)
  • $734.40 a week (6 days)
  • $3,182.40 a month
  • $38,188.80 a year

PUMA's net profits based on 2,422 production workers

  • $29,645.28 an hour
  • $296,452.80 a day (10 hours)
  • $1,778,716.80 a week (6 days)
  • $7,707,772.70 a month
  • $92,493,273.60 a year
In light of the above, the grueling hours at the Pou Yuen factory, the pitifully low wages, the abuse and humiliations, and lack of basic human rights seem even crueler.

The fact that PUMA could be making such enormous profits off the backs of workers in China who earn a take-home wage of just 35 cents an hour may seem unbelievable.

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It May Seem Impossible, But This Is How It works:

 

I. PUMA sneakers retail at $65 to $110.
Ninety percent
of all PUMA sneakers are made in Asia, the vast majority in China. PUMA sneakers retail online for anywhere between $65 to $110, with the median price being $75.

II. Total labor cost to make a pair of sneakers is $1.16. Workers' wages amount to just 1.66 percent of PUMA's retail price.

III. PUMA actually makes a gross profit of $34.09 on every pair of $70 sneakers it sells.

The insignificance of PUMA's labor costs in China become even more shockingly clear in light of PUMA's "2003 Annual Financial Report," announcing that PUMA's gross profit
margin on sales reached a full 48.7 percent! This means that even on a low-end $70
sneaker, PUMA's gross profit is $34.09! ($70 × 0.487 = $34.09)

PUMA's gross profit on each pair of sneakers exceeds by 29 times the pitifully low wages the workers in China earn to make the sneaker ($34.09 ÷ $1.16 = 29.39).

Some popular Puma brand models made in China
(median price $75)

  • Mostro garment $110
  • Mostro Perf $100
  • 400 m Trainer $95
  • Complete Heras $90
  • Complete Tenos $90
  • Complete Phasis $85
  • Repli Cat Mid $80
  • Sprint PF $80
  • Taper $75
  • Del Mundo $75
  • H. Street $70
  • H. Street Azzurri $70
  • Speed Cat $70
  • Repli Cat Low $70
  • AN Jan $65
  • GV Special $65
  • Diamond Stratejist $65


IV. PUMA is earning a profit of $12.24 an hour on each of its workers in China!

Since it takes 2.69 hours to make a pair of sneakers, PUMA's gross profit of $34.09 per pair, translates into a gross profit of $12.67 per hour per production worker ($34.09 ÷ 2.69 hours = $12.67). We can then arrive at PUMA's net profit per worker by subtracting the average wage at the Pou Yuen plant, which is 43 cents an hour, including all overtime premiums and production bonuses. This leaves PUMA with a stunning net profit of $12.24 an hour per worker ($12.67 - $0.43 = $12.24).

PUMA's net profit of $12.24 per hour is 28 times greater than the pitifully low $0.43-
an-hour wages the workers are paid to make the sneaker.
($12.24 ÷ $0.43 = 28.5)
PUMA is sucking enormous profits out of China, off the backs of its exploited and abused Pou Yuen workers.

On each of its workers in China, PUMA is clearing a profit of $38,188.80. Just for the
Pou Yuen Plant F alone, PUMA's annual profits exceed $92 million!

V. PUMA's net profit per sneaker, even after accounting for all corporate expenditures, is still $7.42, which is more than 6.4 times greater than what the workers in China are paid to make the sneakers.

Any way you look at it, PUMA's profits are everywhere.

In its annual report, PUMA declared that its net profit for 2003 was $225,864,210 on sales of $2.13 billion. This puts PUMA's net profit margins at 10.6 percent of sales.

So even after accounting for all corporate expenditure including advertising, selling, general and administrative costs, personnel, product design and development, etc., PUMA still clears a net profit of $7.42 on every sneaker they make in China. ($70 × 0.106 = $7.42)

PUMA's net profit is more than six times greater than what their workers in China were paid to make the sneakers. ($7.42 net profit per pair of sneakers ÷ $1.16 paid to worker per pair = 6.4)

Pou Yuen Plant F

PUMA production/massive profits made on the backs of the workers in China

Production
(units = pairs of sneakers produced by 2,422 workers)
Total Retail Value of PUMA sneakers
(based on $70 low-end sneakers)
PUMA's Total Gross Profit*
PUMA's Net Profit Total*
 1,077 pairs per hour $75,390 per hour $36,715 per hour  $7,991 per hour
 10,772 pairs per day
(10 hours)
 $754,040 per day
(10 hours)
 $367,217 per day (10 hours)  $79,928 per day
(10 hours)
 64,629 per week (6 days)  $4,524,030 per week (6 days)  $2,203,203 per week (6 days)  $479,547 per week (6 days)
280,060 per month  $19,604,200 per month  $9,547,245 per month  $2,078,045 per month
3,360,720 per year  $235,250,400 per year $114,566,945 per year $24,936,542 per year

* Note: PUMA's gross profits are based on its reported 48.7% gross profit margin, which amounts to $34.09 per $70 sneaker. PUMA's net profit (10.6%) is calculated after accounting for all corporate expenses including advertising, selling, general and administrative costs, personal expenses, product development design, etc. Production data is based on a 60-hour workweek.

VI. Even PUMA's advertising costs come to almost six times more than what it pays the workers in China to make the sneaker.

In 2003, PUMA spent $206,428,299 on advertising, or 9.688 percent of its total sales. This means that PUMA spends $6.78 to advertise the $70 pair of sneakers that they paid the workers in China $1.16 to make. ($70 × 0.0968 = $6.78 to advertise)

So PUMA spends 5.8 times more to advertise the sneaker than it pays the workers to
make it.
($6.78 to advertise ÷ $1.16 to worker = 5.84)

Diagram Labor Cost vs. Total Cost

  • PUMA's gross profit is 29.3 times greater than what the workers in China are paid to make the sneaker.
  • PUMA's net profit, after accounting for all possible corporate expenditures, is still 6.4 times greater than the workers earn to make the sneaker.
  • Even PUMA's advertising costs per sneaker are 5.8 times greater than what the workers earn.

PUMA's corporate engine rides on the backs of its workers in China.

As things stand now, it is clear that PUMA's entire corporate engine is riding on the backs of its poorly paid workers in China. The workers in China, who may be taking home just 35 cents an hour, are the ones ultimately paying all of PUMA's bills, which are not inconsiderable, including $206 million in advertising, $475 million in operating expenses, $38 million on product development and design, not to mention CEO salaries, and so on.

No one is suggesting that PUMA should not make a profit, but when is enough enough? Why does the exploitation have to be so great? Could there not be room for some compromise?

We have seen that PUMA's profit per worker in China is $12.24 an hour and $38,188.80 for the year. Just for Pou Yuen Plant F with its 2,422 production-line workers, this amounts to a staggering $92 million plus a year in profits for PUMA, a virtual gold mine.

 Puma's Profits Soar 41 Percent to Over One Million Dollars a Day!

Especially now, PUMA can easily revisit the issue of the pitifully low wages earned by PUMA workers in China with an eye toward paying at least basic, subsistence level wages.

In its second quarter results, which appeared in the New York Times on Wednesday July 28, 2004, PUMA's net profit soared 41 percent to $95.1 million on sales of $428 million (which rose 17.1 percent).

PUMA is making $31.7 million a month in profit and more than one million dollars a day!

 

Just how great this exploitation really is can be demonstrated by the fact that with just 19.3 pairs of sneakers, PUMA can pay the worker their entire year's wages. This means that just within the first five days and two hours of work, before the first week is out, a worker in China has already produced enough $70-PUMA sneakers to pay for his or her entire year's wages, including all production bonuses and overtime premiums!

The average production line wage at Pou Yuen Plant F in China is 43 cents an hour, and $1,341.60 a year. This includes 20 hours of overtime a week and all production bonuses.

Average production line wage at Pou Yuen
including all overtime and production bonuses
(930 RMB per month)
  • $0.43 an hour
  • $4.30 a day (10 hours)
  • $25.80 a week (6 days)
  • $111.80 a month
  • $1,341.60 a year

 

On the other hand, we know it takes 2.69 hours, including all direct and indirect labor, to complete a pair of PUMA sneakers. In effect then, in a 10-hour shift, each worker would make 3.72 pairs of sneakers (10 hours ÷ 2.69 hours/pair = 3.72 pairs of sneakers). Each production line worker in the plant produces:

  • 3.72 pairs of sneakers a day;
  • 22.32 pairs of sneakers a week;
  • 96.72 pairs of sneakers a month; and
  • 1,160.64 pairs of sneakers a year.

Given that even low-end PUMA sneakers retail for $70, this means that producing just 19.3 pairs of sneakers is sufficient to cover a worker's entire year's wage of $1,341.60. It takes a worker just a little more than five days—5.188 days to be exact—to complete these 19.3 sneakers, which means within the first week, the worker produces enough sneakers to pay for his or her wages for the entire year.

China Exports 2 Billion Pairs of Shoes Each Year to the U.S.

In 2002, China exported 2.05 billion pairs of shoes to the United States, which amounts to a surprising seven pairs of shoes for every man, woman, and child in the country.

Of China's worldwide export of 3.96 billion pairs of shoes, 52 percent are bound for the U.S. According to China's footwear industry, the shoes have an average unit price of just $2.44.

China's 7,200 shoe factories produce six billion pairs of shoes a year, 60 percent for export with the remaining 40 percent for the domestic market.

Overall, China's leather industry is made up of 16,000 factories with over two million workers.

There are 2,300 tanneries, more than 7,200 shoe factories, 1,700 leather garment manufacturers, and over 1,200 fur product manufacturers.

Certainly, there is plenty of room to pay at least a subsistence-level wage so the workers could climb out of misery and into poverty.

What would happen if PUMA decided to do something quite remarkable, yet so easily
affordable, and gave its workers in China a mere 20-cent-an-hour increase in their base wages
? Would the sky fall in on PUMA's profits? Would the company have to fold and go under?

Hardly. In fact, giving a wage increase of 20 cents an hour to its workers in China would only mean that it would now take 7.5 days of work to pay for their entire year's salary, up from 5.133 days.

A 20-cent-an-hour increase in the worker's base wage would bring their gross wage to 63 cents an hour, or a 46.5-percent increase over the current 43 cents an hour.

This new wage, which would vastly improve the quality of life for all the workers in the plant, would come to:

  • $0.63 an hour;
  • $6.30 a day;
  • $37.80 a week;
  • $163.80 a month; and
  • $1,965.60 a year.

It would now take 28 pairs of sneakers to cover the cost of a worker's entire year's wages, something that would still take just 7.5 days to accomplish.
($1,965.60 ÷ $70/1 sneaker pair = 28 pairs of sneakers)
(28 pairs of sneakers ÷ 3.72 pairs of sneakers per day = 7.5 days)

Surely, this proposal of a twenty-cent-an-hour increase is reasonable, or at least within bounds to start the discussion. By the way, this desperately needed twenty-cent-an-hour wage increase would add 54 cents to the cost of the sneaker. Suppose the PUMA Corporation and concerned consumers decided to split the difference, it would cost us just 27 cents each, but the impact for the workers in China would be enormous.

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PUMA Sponsors World Class Athletes

2004 Jamaican Olympic Team

2004 Zambian Olympic Team

Italian National Football Team

Canadian Football League

Gold Medalist sprinter Konstantinos Kenteris (Greece) and mid-distance runner Noah Ngeny (Kenya).

Arsenal Footballer Robert Pires and Juventus goalkeeper Gianluigi Buffon

Formula One Racing Teams — BMW Williams F1

World Champion Motor-cross Racer Travis Pastrana

U.S. Professional Athletes:
Serena Williams (2002)
Barry Zito (Oakland A's 2002 Cy Young Award winning pitcher)
Tim Hudson (Oakland A's)
Johnny Damon (Boston Red Sox)

 


 


 The Good Things PUMA Says About Itself

Whose version do you think is more accurate,
PUMA's or the workers in China?

  • "PUMA recognizes its responsibility towards the creation of humane working conditions for all employees working directly or indirectly for us."
  • "Only with self-belief will individuals have the confidence to make things happen, take the tough decisions and realize their ambitions for themselves and, ultimately, for the business."
  • "With the jumping PUMA on our logo, we understand that the protection of the environment, both product- and production-related, as well as the fair treatment of our suppliers and their employees are necessities for our way to sustainability."
  • "Every supplier is legally bound to follow the strict social and environmental standards detailed on our S.A.F.E. manual." (PUMA's Social Accountability and Fundamental Environmental Standards.)
  • "These standards guarantee that employees engaged in the production of PUMA goods are motivated by working in an atmosphere of mutual respect and understanding."
  • "Such goals cannot, and must not, be realized on the grounds of exploitative activities such as child labor, forced overtime, or unhealthy and unsafe working conditions."
  • "The social standards that have been laid down in our Code of Conduct contain the most important social principles and are based on the conventions of the International Labor Organization (ILO)". For all employees involved in the production of PUMA goods, existing rules and regulations, conventions and laws have to be strictly followed, for example, the ILO Core Conventions 87 (freedom of association), 98 (right to organize), 29 and 105 (forced labor), 100 (equal remuneration, 111 (discrimination) and 138 and 182 (child labor)."
  • "By rigorously enforcing the principles listed above, PUMA is able to ensure that labor is not exploited and that production methods are continuously reviewed."
  • "We are ecologically and socially accountable to the environment, our suppliers, manufacturers, employees and customers—especially—the generations to come."
  • "By carrying out audits at all our direct suppliers, as well as documenting the audit results, we hold our manufacturers accountable for their social performance and at the same time evaluate the social footprint of PUMA."
The above quotes are drawn from PUMA's
2003 "Perspective Sustainability Report."


 

Note: In the "Sustainability Report," PUMA not only quotes the 6th century BC Chinese Philosopher Lao-Tzo, but also the great Russian novelist Fyodor Dostoyevsky who said: "Everyone is responsible to everyone for everything." However, it is unfortunate that PUMA did not go on to lift quotes from Dostoyevsky's White Nights, a tale of his imprisonment in Siberia for attempting to exercise political freedom. This would have been much more appropriate for the workers in China.)

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Shipping documents show PUMA mark-ups from 494 to 1286 percent!

A review of U.S. Customs based documents for April and May 2004, shows at least 14
shipments containing 198,611 pairs of sneakers originating from Pou Yuen in China being exported to PUMA North America. The cargo entered through the port of Los Angeles.

The declared Customs values of the PUMA sneakers ranged from a low of $3.41 to a high of $7.13, with the average declared value being $5.41 per pair. Something is wrong here. Landed customs values are supposed to represent the entire cost of production, including all materials, accessories, and direct and indirect labor, overhead, profit to the Pou Yuen factory in China, as well as shipping costs. PUMA's declared customs values appear far too low. We estimate that the real landed customs value of PUMA's sneakers should range from approximately $10.94 for a $65 pair of sneakers, to $18.51 for a $110 pair.

Perhaps PUMA is exploiting some corporate tax loophole which permits it to declare only a partial value, thereby lowering its tariff charges. Only PUMA can answer this question. (Samples of the shipping documents are attached).

Either way, at a minimum, PUMA is marking up the price of its sneakers by at least 494
percent.
For example, a low-end $70 PUMA sneaker would enter the U.S. with a landed
customs value of approximately $11.86. This $11.86 would represent the total cost of
production. PUMA's mark-up would be 494 percent, or $58.14.

So again, any way you look at it, there is plenty of money out there to address the pitifully low wages and abuse the PUMA workers in China are staggering under.

 

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PUMA at a Glance
  • Sales: $2,130,780,000.

Sales increased 23 percent in 2003. Europe accounts for 68 percent of sales, followed by the U.S. with 19 percent. U.S. sales totaled $25,400,000.

  • Net profit: $225,864,210.

Net profit was 10.7 percent of sales.

  • Advertising: $206,428,300.

Advertising was 9.8 percent of sales. PUMA spends $3,969,775 a week on advertising.

  • PUMA sources production in more than 40 countries using over 300 independent suppliers and manufacturers, more than half of whom are in the Far East. Footwear accounts for 67 percent of sales, and 90 percent of footwear is sourced in Asia.
  • PUMA is a member of the Fair Labor Association.
  • PUMA is on the Steering Committee of the World Federation of the Sporting Goods Industry.

 

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ACTION ALERT
You Can Help
Ask PUMA to Do the Right Thing
 

1. PUMA should not pull out of Pou Yuen plants F and D. This would be the worst thing they could do. The workers desperately need these jobs, and they are willing to work very hard. But, they also want to be treated like human beings. PUMA should stay and work with its contractor to clean up the factories, and see that the rights of the workers are finally respected.

2. The climate of repression, abuse and fear must be ended. Workers must have the right to speak the truth publicly without fear of being immediately fired. The routine practice of yelling at and humiliating the workers must end.

3. All overtime should be voluntary and paid correctly.

4. We believe that healthy profits and sustainable wages can co-exist. PUMA should increase the workers' base wage by 20 cents an hour, which would allow the workers to climb out of misery and at least into poverty. This 46 ½ percent increase in wages would have an enormous positive impact on the lives of the workers, and yet it is easily affordable.

5. Internationally recognized core labor standards should be respected—in fact and not just words. PUMA's workers in China should be afforded their legal right to freedom of
association and the right to organize an independent union.

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KEY CONTACTS

PUMA/ GERMANY (International Headquarters)

Mr. Jochen Zeitz, Chairman and CEO
PUMA AG
Wurzburgerstrasse 13
91074 Hezogenaurach, GERMANY
Phone: (49) 9132 81 0 Fax: (49) 9132 81 2246
Email: [email protected] or [email protected]

PUMA/ USA

Mr. Jay Piccola, President and General Manager
PUMA North America
5 Lyberty Way
Westford, MA 01886
Phone: (1) 978 698 1000 Fax: (1) 978 698 1174 Or (1) 877 786 2329
Email: [email protected] or [email protected]

NATIONAL LABOR COMMITTEE

Charles Kernaghan, Executive Director
540 West 48th Street, 3rd Floor
New York, NY 10036
Phone: 212-242-3002 Fax: 212-242-3821
www.nlcnet.org
Email: [email protected]

CHINA LABOR WATCH

Li Qiang, Executive Director
China Labor Watch
P.O. Box 4134
Grand Central Station
New York, NY 10163-4134 U.S.A.
Phone: 917-257-8589
Email: [email protected]


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Click here to read a letter written by the National Labor Committee to MR. Jochen Zeitz, Chairman and CEO of PUMA. 

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