Published in CommPro.biz 2013.04.30

A Better People

 

OK! We get it. We understand that manufacturing economics too often makes outsourcing the creation of goods a necessity, especially when a major hand assembly component is involved. And when horrific calamities strike in faraway places, such as the building collapse last week (2013.04.24) in Savar, a suburb of Dhaka, the capital of Bangladesh, the American companies whose goods come from these factories wring their hands and say they are doing everything they can. That is simply untrue.  There is an alternative.

A low wage outsourcing model that works indefinitely better. It’s better for the workers and still allows the production of goods at competitive price levels. Born in the mid-1960s – 30 years before NAFTA – the Maquiladoro concept continues to be a cost-effective outsourcing alternative for American manufacturers. This concept flourishes along the US border with Mexico. American companies build factories in Mexican free trade zones. The workers and most managers are Mexican nationals, but the working conditions and standards are firmly in the hands of the American owners.

That’s very different from the 5,000 +/- factories in Bangladesh. Their owners, Bangladesh nationals, are driven by nothing but cost. The disaster that saw an eight-story building collapse in a pile of rubble came one day after cracks in the building made it apparent that it was unsafe. The owners were told to close it, an order they simply ignored. This calamity that took hundreds of lives cannot be ignored by the brands that used this facility and others like it.

It’s not enough for these brands to promise to put pressure on the factory owners. It’s time for them to build their own factories in countries where labor costs are favorable. It’s time for the major global clothing companies, Walmart, Gap, Sears, Tommy Hilfiger and all the rest, to act. They owe it to the more than three million workers in Bangladesh that sew their goods for minimum wage, under $40.00 a month. It’s not enough for Apple to say that FoxConn, a manufacturer in China, is making improvements. Apple could buy out FoxConn and make things right for the workers in those factories. Americans can afford the tiny bump up in prices that these ethical moves would bring.

The Maquiladoro concept works. For half a century most Maquiladoro workers have had clean, safe working conditions. Many have access to free healthcare on site, to nutritious meals at reasonable cost, to simple things like showers that we take for granted. While their wages are low by American standards, they make what is a living wage in their society, and we benefit from the cost of the goods they produce. Ethically, how can we accept anything less in the creation of what we wear on our backs and carry in our pockets? We have been blessed with much. How can we see those who make these goods suffer, even die to save us pennies? We are a better people than that.

Surprise, Surprise 

The Same Great Winners

A nationwide research study by Satmetrix, a West Coast provider of customer experience software, reinforces the ethical business model’s value. By and large it’s no surprise that companies boasting a long history of ethical standards top the Satmetrix Benchmark study. Wegmans, Costco, Apple, Jet Blue, American Express, Virgin America, Amazon, Lowes, Google, all the usual suspects top this  study and when it comes to doing the right thing by all their stakeholders. And guess what? They are leaders when you check their bottom line.

Satmetrix measured the attitudes of 30,000 consumers and used the results to rank 200 brands in 22 industries to create its Net Promoter Scores (NPS®) for each company. People were asked to score the companies they do business with on a zero-to-ten point scale. NPS® scores are based on a customer’s willingness to recommend their company. The percentage of those giving a company a 9 or 10, minus the percentage of those rating them 6 or lower, produces the company’s NPS® score.

Surprisingly, the highest score -an 83% NPS®- was in the banking sector, USAA, an organization that offers a wide range of financial services and insurance to its members - active duty and military veterans. When you look at the broad picture banking had more detractors than supporters. Seven large banks were in negative territory with Wachovia leading the charge to the bottom with a minus 15% NPS® score. Among major credit cards American Express was on top with a 43% NPS®. 

Amazon’s 76% NPS® was a close second to USAA’s overall lead, followed not too far behind by ethically oriented Wegmans and Costco at 73% & 71% respectively. These two perennial poster children for maintaining a healthy bottom line while covering all the ethical bases, manage it in spite of the large number of entry level jobs in their operations. Wegmans also has managed to stay on the Fortune 100 Best Places to Work list ever since it was created. They have been in the top five for eight years running and were ranked number one in 2005. That’s amazing when you consider the benefits and salary levels of companies like Google that they go head-to-head with year after year for the Fortune workplace honor roll.

Costco was on top of the retail pile again this year with a NPS® 71%, Nordstrom and Belk had a very respectable 66%. Once proud and respected Sears is at the bottom of that list with less than half the Costco score, a 35% NPS®. Is it any wonder? Reminiscent of a famous Roman fiddle player, Sears Chairman Edward Lampert is reportedly laying out $40 million for an estate just north of Miami; it’s said to be a record price for a single-family home in Dade County. All this while he is gutting the iconic retailer, selling off and closing Sears stores. Adding a let-them-eat-cake touch, the ethically challenged Lampert’s new digs features a series of “Versailles-Style Reflecting Pools” that will enable them to reflect on all the little folks they crushed so they could enjoy this idyllic setting.