| |
IMPACT OF MULTI FIBRE AGREEMENT
The global Multi Fibre Agreement (MFA) imposed quotas on source countries in 1995 for the amount of textiles that could be exported from developing countries. When it was phased out in 2005, there were concerns that production would become concentrated in fewer countries, notably China. It was feared that workers in other countries, such as Bangladesh, would lose their jobs and fiercer competition would drive down standards. In fact, much of this predicted impact was mitigated by the introduction of new quota systems.
The MFA did not apply to footwear sales, which account for about half of our global revenues. There was no significant disruption to our apparel supply chain as a result of the MFA phase out. We have processes in place to anticipate fluctuations in the garment manufacturing industry. |
|
Our Human Rights Production Standards are rigorously applied when we start and terminate a manufacturing agreement with a factory. We require that workers receive full severance wages when relocations occur.
We do not have a significant presence in the countries most affected by the end of the MFA, such as Bangladesh. While many of the agents and factories we source from have opened new locations in China, this has not made much difference in the total number of suppliers we use in the country. In November 2004, we had approximately 236 active suppliers in China, compared to 216 in November 2005. This drop is largely due to Chinese import quotas, or “safeguards” put in place by the United States and Europe.
With the end of the MFA, we now have more control over where we do business. This does not mean that we plan to put all of our production in one place. We need a diverse sourcing network to mitigate geographic risk and to increase speed-to-market of our wide range of products.
We expect to take advantage of the new opportunities brought about by the MFA phase-out by increasing sourcing from China over a number of years. This sourcing strategy incorporates steps to alleviate the impact on factories and their workers in other sourcing countries.
Given the increasing number of suppliers in China, Reebok has recruited an additional human rights monitor and stepped up human rights education and training for agents and factories in the country. |
|
