SUMMARY REPORT Q3/2014
IDH, the Sustainable Trade Initiative (IDH), together with Dell, HP, Philips, Apple, Microsoft, ELEVATE, ERI and civil society organizations, has developed a program to improve the working conditions and environmental impact of over 75 electronics factories in China, reaching over 200,000 workers. A wide variety of training on labor, health & safety and environmental performance is being offered, however the innovative focus of the IDH Electronics Program is the development of effective worker-management dialogue to strengthen the ‘continuous improvement muscle’ of local manufacturers, as a prerequisite to addressing the root causes of social and environmental performance issues.
ELEVATE believes sustained, impactful improvement in social and environmental performance requires sincerity of intent and a responsible balance between maximizing financial return and meeting supplier responsibility requirements. We call this Business Driven Sustainability. ELEVATE’s mission is to help our clients design and implement customized programs that provide complete insight into risk and improve supply chain social, environmental and business performance. Within the IDH Electronics Program ELEVATE is responsible for the executive facilitation of the program as well as the implementation of the ‘non-dialogue’ (business performance) curriculum.
The Economic Rights Institute (ERI) is a non-profit organization, registered in Hong Kong, with a mission to support alliances of stakeholders to actualize economic development that respects the rights of all. Within the IDH Electronics Program, ERI is responsible for designing the methodology to promote worker-management (employer employee) dialogue, for support to service providers who implement this methodology and for appraisals of the evolution of dialogue and where this promotes wider enterprise improvements.
2
Index of Contents:
Supplier uptake Comments on program progress (Q3 ’14) Progress status overview on supplier implementation Work-plan completion vs work-plan agreed timelines by supplier Program trend analysis KPI’s Appendix 1: Worker satisfaction index Appendix 2: Worker management dialogue maturity index
3
Supplier Uptake Overview of Supplier On-boarding Status by Brands Total 30/6/2014
Dell
HP
Philips
Apple
Microsoft
Regular Program
47
11
7
14
12
3
Fast Track Program
7
0
0
7
0
0
Geographic Location by Brands Program
Dell
HP
Philips
Apple
Microsoft
TOTAL
47 + 7
11
7
14 + 7
12
3
Guangdong Area
36 + 4
10
6
8+4
9
3
Shanghai Area
9+3
0
1
5+3
3
0
2
1
0
1
0
0
Other
Number of Fast Track Program suppliers is in blue lettering
4
Total Factories on board (by Sept. 30)
Geographic location, total factories (by Sept. 30)
Total: 54
Total: 54 3
12
2
11
12 7 40
21 Dell
HP
Philips
Apple
Microsoft
South
Shanghai Area
Other
Comment on Progress During Q3 ’14 the program was closed for any new entrants, so the number of active factories is now locked down at 54 (47 full program and 7 fast track). All factories in the program have completed the EPA (Entry Point Assessment) and have an agreed work-plan, plus all factories are in the implementation phase of the program. Implementation focus IDH focused on following up on implementation timelines, to ensure all factories and brands made progress on completing the work-plans, and resolving any bottlenecks with the service providers or factory alignment. For the WMD (worker management dialogue) curriculum, CC5 began rollout with the factories. The WMD curriculum has 7 modules in total, so the early entrant factories are now progressing into the later stages of WMD training and deployment. This has presented some challenges, especially consistency of team members for core curriculum training, related to worker turnover or the availability of representatives and team members. This is a key focus for the coaching organization and service providers, along with the brands and the factories, to try to maintain sustainable momentum on dialogue development. Mid-term assessments During Q3 IDH began the deployment of the ‘Mid-Term Assessment’ (MTA) methodology. The assessment process for the MTA involves repeating some of the EPA (Entry Point) checkpoints (worker survey and WMD maturity assessment) and independently analyzing the data. The objective is to identify any measurable signs of impact (positive or negative) on the sample batch of factories so far. The MTA involves assessment of approximately 15 factories, most of which are at least half way through the dialogue and non-dialogue implementation. The initial results of the MTA will be available and published in early Dec ’14, to be shared with the steering committee (SC) and wider stakeholders at the forthcoming program meetings. KPI trend analysis As is visible in the later section of this report, IDH now has over 30 months of monthly KPI data reporting from the factories involved in the program.
5
(1) Worker turnover trend in Q3 ’14 shows a seasonality peak for worker turnover in August, which is normally related to temporary student labor turnover. However, there was a 20% reduction in worker turnover in August 2014 (17%) vs the turnover in August during the previous two years (21%). (2) Rework rates increased in August & Sept, which is possibly related to the increased worker turnover, noted above. A similar increase in rework can be seen in Feb 2014, after the increased worker turnover in Jan 2014. (3) Average salaries and working hours show some increase again in Q3, with the average WH’s in Q3 reaching 54 hours per week. This is likely to be related to high seasonal workloads. Key Focus Points: 1) The program closed for new factories to join (including the Fast Track) at the end of Q2’14, focus shifted in Q3 onto completing implementation by end of Q2 ’15. 2) 17 factories, plus the new fast track factories, did not report KPI’s during Q3 (down from 19 in Q2). IDH will continue to jointly review this with the brands to try and ensure maximum data collection.
6
Progress Status – Summary of the status of the active suppliers in the program and the WMD service providers they are working with. No.
By Brand
1
D1
2
D2
3
D3
4
D4
5
D5
6
D6
7
D7
8
D9
9
D10
10
D11
11
D12
12
H1
13
H2
14
H4
15
H5
16
H8
17
H9
18
H10
19
P3
Status
EPA
Implementation Starting Point
Work Plan
KPI Collection
On Track
Completed
Jan. 2013
On Track
Submitted by Sept. 2014
TUV, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Aug. 2014
TIME LINE
On Track
Completed
Jan. 2013
On Track
NOT SUBMITTED
CLSN, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Apr. 2014
TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Jul. 2014
LESN, TIMELINE
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
TIMELINE
On Track
Completed
Oct. 2013
On Track
NOT SUBMITTED
TIMELINE
Move to new location On Track
Re-doing EPA
May 2014
To be revised
-
TBD
Completed
Jan. 2014
On Track
NOT SUBMITTED
Taos
On Track
Completed
Jan. 2014
On Track
Submitted by Aug. 2014
Taos
On Track
Completed
Jan 2014
On Track
Submitted by Aug. 2014
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Jul. 2014
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Sept. 2014
Timeline
On Track
Completed
Sep. 2013
On tract
Submitted by Sept. 2014
Timeline
On Track
Completed
Jun. 2012
On track
NOT SUBMITTED
TUV
On Track
Completed
Oct. 2013
On track
Submitted by Sept. 2014
TUV
On Track
Completed
Jan. 2014
On track
Submitted by Aug. 2014
Taos
On Track
Completed
Jan 2014
On track
Submitted by Jun. 2014
TBD
Re-joined
Completed
Aug. 2013
On Track
Submitted by Sept. 2014
TAOS
7
Involving WMD SPs
20
P5
21
P6
22
P7
23
P8
24
P9
25
P10
26
P11
27
P12
28
P13
29
P14
30
P15
31
P16
32
P18
33
PFT19
34
PFT20
35
PFT21
36
PFT22
37
PFT23
38
PFT24
39
PFT25
40
A1
41
A2
On Track
Completed
Jan. 2013
On Track
Submitted by Sept. 2014
Timeline
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
TUV
On Track
Completed
Mar. 2013
On Track
Not Submitted
TUV
On Track
Completed
Mar. 2013
On Track
Submitted by Aug. 2014
LESN
On Track
Completed
Sep. 2013
On Track
Submitted by Aug. 2014
TUV
On Track
Completed
Oct. 2013
On Track
Submitted by Sept. 2014
TUV
On Track
Completed
Oct. 2012
On Track
Submitted by Jul. 2014
SUSA
On Track
Completed
Oct. 2013
On Track
Submitted by Sept. 2014
TUV
On Track
Completed
Oct-. 2013
On Track
Submitted by Aug. 2014
E&T
On Track
Completed
Nov. 2013
On Track
Not Submitted
BLC
On Track
Completed
Oct. 2013
On Track
Submitted by Sept. 2014
BLC
On Track
Completed
Oct. 2013
On Track
Not Submitted
TAOS
On Track
Completed
Mar. 2014
On Track
Submitted by Sept. 2014
E&T
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
Jun. 2014
On Track
Not Submitted
Taos
On Track
Completed
Jun. 2014
On Track
Not Submitted
TUV
On Track
Completed
Jun. 2014
On Track
Not Submitted
Hengyi
On Track
Completed
Jun. 2014
On Track
Not Submitted
Hengyi
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
LESN
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
LESN
8
42
A3
43
A4
44
A5
45
A6
46
A7
47
A9
48
A10
49
A11
50
A12
51
A13
52
N1
53
N2
54
N3
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
CLSN
On Track
Completed
Mar. 2013
On Track
Submitted by Sept. 2014
LESN
On Track
Completed
Aug. 2013
On Track
Submitted by Mar. 2014
TAOS
On Track
Completed
Oct. 2013
On Track
Submitted by Sept. 2014
Timeline
On Track
Completed
Oct. 2013
On Track
Submitted by Jun. 2014
Timeline
On track
Completed
Oct. 2013
On Track
Submitted by Sept. 2014
Taos
On Track
Completed
Jan. 2014
On Track
Submitted by Sept. 2014
E&T
On Track
Completed
Jan. 2014
On Track
Submitted by Mar. 2014
BLC
On Track
Completed
Jan. 2014
On Track
Not submitted
Timeline
On Track
Completed
Mar. 2014
On Track
Submitted by Jul. 2014
BLC
On Track
Completed
Completed
On Track
Not submitted
TBD
On Track
Completed
Completed
On Track
Submitted by Sept. 2014
Taos
On Track
Completed
Completed
On Track
Submitted by Sept. 2014
Timeline
9
Program Status Overview: Work Plan Completion VS Work Plan Timeline Summary showing the progress of each supplier on their WMD and Non-Dialogue WP (work plan) vs the agreed project timeline from the EPA (Entry Point Assessment). 0%
20%
40%
60%
80%
100%
P3 P6 P8 P10
Philips
P12 P14 P16 PFT19 PFT21 PFT23 PFT25
HP
H2 WP Timeline
H5
WMD Completeness
H9
Non-D Completeness
D1
Dell
D3 D5 D7 D11 A1
Apple
A3 A5 A7 A10
Micros oft
A12 N1 N3
10
Trend Analysis - KPI’s measuring worker and productivity data to indirectly link social factors with business performance. Worker Turnover (%)
Rework Rate (%)
The worker turnover seasonality peak of 17% in August 2014 shows a 19% reduction vs 2013 & 2012. Average turnover rate is <15%.
Program trend is reducing overall, but rework rates were higher in August & September, possibly related to the increased worker turnover above.
11
Average Monthly Net Wages (RMB)
Average Weekly Working Hour (Hours)
Program trend has increased slowly, which mostly reflects the adjustments of legal minimum wage and seasonality. Average program net wages are now at RMB3,000 per month.
Working hours are showing a marginally increasing trend over the course of the program, and increased again during Q3. Average WHâ&#x20AC;&#x2122;s are now 54hours per week.
12
Program average and leader KPI data points KEY PERFORMANCE INDICATORS â&#x20AC;&#x201C; Comparative Analysis (LATEST QUARTER) *Compared to last quarter data in bracket Factory Name
Program Average
Leader
WMD Benchmarks (Non-rep comm systems) in EPA
6.1
9.2
WMD Benchmarks (Rep systems) in EPA
4.3
6.5
6.0
8.4
# of work-related injuries
0.84
0.00
# of days lost due to work-related injuries
8.43
0.00
Average weekly working hours in the calendar month
54.43
34.00
Average # of rest days
5.00
9.00
527,056.44
N/A
18.74
0.00
Average monthly net wage (RMB)
2,995.17
4,048.23
Average monthly gross wage (RMB)
3,195.96
3,907.00
Ratio of OT Premium to Gross Wages
36.54
N/A
1st quartile of monthly net wage (RMB)
2,474.67
3,145.67
2nd quartile of monthly net wage (RMB)
3,045.06
3,911.15
1st quartile of monthly gross wage (RMB)
2,691.71
3,504.38
2nd quartile of monthly gross wage (RMB)
3,270.42
4,196.73
434.36
0.000098
Unit Produced Per Hour (UPPH)
48.59
429.85
Rework Rate (%)
2.27
0.00
Turnover (%)
14.23
5.90
Worker-Management Dialogue
Worker Satisfaction Worker Satisfaction Indicator from EPA Working Condition
Total monthly working hours in the calendar month % of workers working more than 60h in the week
Environmental Condition Kilowatts used per product unit Business Impact
13
Appendix 1 Worker Satisfaction Index Comparison by Supplier: Measured at Entry Point Assessment & repeated at Exit Point Assessment (no suppliers completed exit point as yet). Directly measuring program impact through 6 dimensions on worker satisfaction before & after. (Remark: 1 means unsatisfied/not living up to expectations, and 10 means satisfied/living up to expectations. Overall scale is generated by the 6 dimensions score in even weight)
Working Relationships Wage Fairness and Transparency Working Hours Facilities Health and Safety Career/Personal Development
Overall Scale
Working Relationships
Wage Fairness and Transparency
Working Hours
Facilities
Health and Safety
Career/Person al Development
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
Above Average Below Average
6.0
6.9
6.3
4.1
5.8
6.5
6.3
1
A1
6.0
2
A2
5.2
6.5 6.3
6.4 6.4
6.0 2.3
5.6 4.7
5.6 5.9
5.8 5.5
3
A3
5.9
6.8
6.8
3.7
5.9
6.0
6.4
4
A4
5.9
6.8
6.0
2.5
6.5
7.0
6.5
5
A5
6.5
6.6
6.8
6.5
6.2
6.8
6.3
6
A6
6.0
6.5
5.8
5.3
5.1
6.7
6.4
7
A7
6.3
6.9
6.4
4.7
5.6
7.0
7.3
8
A8
6.2
6.5
6.5
4.5
6.0
7.1
6.6
9
A9
5.8
6.3
6.1
5.4
4.7
6.7
5.8
10
A10
5.9
6.6
5.8
6.0
5.2
6.4
5.2
11
A11
4.8
6.3
5.3
1.5
3.1
6.4
6.0
12
A12
5.7
6.7
6.7
2.8
6.0
5.8
6.2
13
A13
5.6
6.9
6.0
1.8
6.0
6.2
6.6
14
D2
7.3
7.8
7.8
5.8
7.0
8.2
7.2
15
D3
5.2
6.3
5.4
3.2
5.1
5.8
5.5
16
D4
6.3
7.0
7.1
4.5
6.2
7.2
6.0
17
D5
4.9
6.4
5.4
2.9
4.9
4.6
5.2
18
D6
6.3
6.8
7.4
4.6
6.0
7.0
6.2
Factory Name
14
19
D7
5.2
6.5
5.5
3.7
4.4
5.1
5.9
20
D8
5.1
6.3
5.1
2.7
4.2
6.2
5.8
21
D10
5.5
6.7
6.0
3.3
4.6
6.3
5.9
22
D11
5.4
6.7
6.4
2.0
4.8
5.7
6.4
23
D12
5.2
6.6
5.6
1.8
5.6
6.1
5.7
24
H1
5.1
6.5
5.4
3.1
5.0
4.5
5.8
25
H2
5.8
6.7
6.0
2.8
6.0
7.5
5.8
26
H3
6.1
6.6
7.2
4.8
6.7
6.1
5.4
27
H4
5.8
6.3
5.8
6.0
5.7
6.0
5.3
28
H5
5.3
6.3
5.8
3.4
5.6
6.1
4.5
29
H6
6.3
6.7
7.0
4.2
6.3
7.3
6.4
30
H8
7.5
7.9
7.3
6.5
7.1
8.2
8.0
31
H9
4.9
6.3
6.4
1.4
4.4
5.8
5.3
32
H10
4.9
6.9
5.1
2.6
4.0
4.4
6.3
33
N1
6.3
6.7
6.0
6.0
6.5
6.5
6.3
34
N2
5.5
6.4
5.8
5.2
3.6
6.3
5.9
35
N3
7.1
7.6
7.1
5.0
7.2
8.3
7.6
36
P3
7.7
7.9
7.7
7.7
7.2
8.6
7.1
37
P4
8.1
8.4
8.3
6.7
8.1
9.1
7.8
38
P5
5.6
6.6
6.5
1.0
6.5
6.8
6.2
39
P6
5.8
6.7
6.6
2.9
6.1
6.4
5.8
40
P7
6.7
7.0
7.1
5.9
6.1
7.8
6.3
41
P8
4.7
6.5
4.9
1.8
4.7
4.2
6.3
42
P9
7.0
7.8
7.1
3.8
8.6
6.6
7.9
43
P10
5.4
7.0
4.1
3.0
5.1
6.3
6.7
44
P11
5.5
6.8
5.3
3.1
6.4
5.0
6.6
45
P12
6.4
7.1
6.7
3.8
6.2
7.9
6.8
46
P13
5.0
6.8
4.7
3.7
4.1
4.8
6.1
47
P14
5.7
6.6
6.2
3.9
4.6
6.4
6.4
48
P15
7.2
7.8
7.7
5.8
6.8
7.5
7.8
49
P16
8.4
8.6
8.3
6.8
9.2
9.0
8.7
50
P17
6.3
7.4
6.9
3.6
6.2
7.1
6.7
51
P18
7.1
7.3
6.2
6.8
7.4
7.8
7.0
15
Appendix 2 Worker Management Dialogue Maturity Index Comparison by Supplier: Measured at Entry Point Assessment & repeated at Exit Point Assessment (no suppliers completed exit point as yet). Directly measuring program impact on WMD before & after by covering below criteria:
Non-rep comm systems System & roles Rep structures Depth of worker rep role Representation & participation S/election of employee reps Employee reps & employees Scope of discussion Resources Time Funding Peer network
(Remark: 1 means no functioning systems/ no resources available; 10 means well functioning systems/ required sources available. The overall score of Rep. system is generated by 8 KPIs divided in 3 areas weighing 25% (system & roles), 37,5% (representation & participation) and 37,5%(resources))
Rep systems
Non-Rep Supplier/ Factory Name
Above Average Below Average 1 2 3 4 5 6 7 8 9 10 11 12
A1 A2 A3 A4 A5 A6 A7 A8 A9 A10 A11 A12
comm systems Representa tion & participa tion (1~10)
Overall (1~10)
System & roles (1~10)
6.1
3.2
4.3
5.1
4.3
4.8 5.6 5.6 6.0 6.4 5.2 6.4 6.8 5.6 6.8 4.0 6.8
3.0
6.7
5.3
5.0
4.0
8.7
3.0
6.0
4.7
2.0
2.0
4.7
3.0
2.0
7.3
3.0
4.7
4.0
3.0
4.7
5.3
3.0
5.3
5.3
2.0
2.7
3.3
3.0
4.7
4.0
5.0
7.3
4.7
4.0
6.7
8.0
5.3 6.0 4.8 3.0 4.3 4.0 4.5 4.8 2.8 4.0 5.8 6.5
16
Resources (1~10)
Overall (1~10)
13
A13
14
D6 D7
15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
D8 D9 D10 D11 D12 H6 H7 H8 H9 H10 N1 N2 N3 P3 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14
41
P15 P16
42
P17
43
P18
40
6.0 6.4 4.4 4.0 4.4 5.2 5.6 4.4 6.4 5.2 8.8 5.2 4.8 7.2 4.8 8.4 8.4 6.4 6.0 6.4 4.8 8.0 5.6 5.6 6.4 4.8 5.2 8.4 9.2 7.6 7.6
2.0
3.3
5.3
3.0
8.0
4.0
4.0
6.0
8.0
3.0
4.0
3.3
4.0
2.7
3.3
3.0
4.0
6.0
3.0
5.3
4.7
3.0
5.3
5.3
4.0
6.0
7.3
3.0
5.3
5.3
3.0
4.0
4.0
2.0
2.7
2.7
3.0
2.0
3.3
4.0
6.7
6.0
3.0
5.3
4.0
5.0
5.3
6.0
3.0
2.7
4.0
2.0
2.7
3.3
2.0
2.0
5.3
2.0
2.7
4.0
2.0
2.7
4.0
4.0
6.7
5.3
3.0
4.0
5.3
4.0
2.0
4.7
5.0
4.7
8.0
3.0
6.7
4.7
2.0
3.3
5.3
3.0
2.7
5.3
4.0
4.0
6.0
2.0
2.7
3.3
4.0
2.0
4.7
17
3.8 5.3 6.3 3.5 3.3 4.5 4.5 4.8 6.0 4.8 3.8 2.5 2.8 5.8 4.3 5.5 3.3 2.8 3.3 3.0 3.0 5.5 4.3 3.5 6.0 5.0 3.8 3.8 4.8 2.8 3.5