Broken Lives behind U.S. Production in China

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Broken Lives:

Behind U.S. Production in China February 1, 2007

By Charles Kernaghan

Corporations have demanded and won all sorts of enforceable laws in the global economy, backed up by sanctions, to defend their corporate trademarks and products. Yet they object that it would be an “impediment to free trade” to extend similar legal protections to the human being who made the product. What sense does that make?

When U.S. companies first started relocating their production to China, corporate spokepeople assured the American people that once on the ground in China, their companies would act as the best ambassadors, promoting U.S. values. They would do the heavy lifting and by their good example would raise health and safety standards and compliance with human, women’s and worker rights, in factories across China.

In most cases these promises have been false, as is graphically demonstrated in the case of the Kaisi Metals factory in Guangdong Province. For years, U.S. companies have outsourced production of furniture parts to the Kaisi factory, while going out of their way to work with their contractor to bring the factory up to international packing specs so that their products will not be damaged in transit to the U.S.

At the same time, the U.S. companies stood by and did not say a word as scores of young workers were injured and maimed due to dangerously unsafe working conditions. Nor did the U.S. companies sourcing production at the Kaisi factory utter a single word to protest the seven-day, 80-hour workweeks, or the fact that workers were being paid below the legal minimum wage and cheated of their overtime premiums while making their goods. Could it be that these companies care more about their products than the human beings in China who made them?

No doubt these companies will now thump their chests in indignation, telling the American people that they have voluntary codes of conduct and private monitoring schemes that guarantee the legal rights of any worker anywhere in the world who is making their products. The Kaisi factory will be labelled the “one bad apple,” the exception to the rule, and we will be told that we should get over it and move on. Or, could it be that corporate monitoring is really an attempt to dress up a pig?

Unfortunately, too many U.S. companies that went to China as self-proclaimed ambassadors to promote respect for worker rights have turned into cheerleaders in the race to the bottom in the global economy. Why Introduction

raise wages in the U.S. when you can cheat the workers in China and pay them just 32 cents an hour? Why pay health insurance or worker compensation in the U.S. when workers in China do not have it? After all, are seven-day, 80-hour workweeks really wrong?

Why care about health and safety standards in the U.S. when injured and maimed workers in China can be cheaply disposed of and replaced? In the global economy, who needs a union, as workers in China do not have one?

In the global economy, an injury to a worker in China is really also an injury to every worker in the United States. Too many workers in China ard in the U.S. are being exploited, and this will not end until we find a common ground, to end the race to the bottom in which corporations pit American workers against workers in China based on who will accept the lowest wages, least benefits and most miserable working and living conditions. Why should the human being in the global economy, who makes the goods we purchase, not be afforded at least the same legal protections as corporations have won for their trademarks and products?

Business as usual in the global sweatshop economy may be about to receive its first real challenge. In January 2007, Senator Byron Dorgan, together with Senators Lindsy Graham, Sherrod Brown, Bernie Sanders, Russ Feingold and Robert Byrd as co-sponsors, introduced the “Decent Working Conditions and Fair Competition Act,” which for the first time, when passed, will hold corporations legally accountable to respect the United Nations/International Labor Organization’s core internationally recognized worker rights standards, including no forced labor, no child

Broken Lives: Behind U.S. Production in China

labor, freedom of association, the right to organize and bargain collectively, and decent working conditions. The legislation prohibits goods made under sweatshop conditions from being imported, sold or exported from the U.S. A similar bill, which was introduced in the House last year, has 66 co-sponsors.

The American people were outraged when they learned that dogs and cats were being slaughtered in China to provide fur for collars on winter jackets being exported to the U.S.—to the Burlington Coat Factory. The U.S. Congress was also upset and had the backbone to pass the “Dog and Cat Fur Act of 2000,” which prohibits the import, sale or export from the U.S. of dog and cat fur.

Now that the American people and Congress have helped protect dogs and cats in China, will we have the courage to protect the lives of human beings in the global economy?

A good place to start would be to clean up the Kaisi Factory.

Executive Summary U.S. Companies Outsource Production of Furniture Parts to the Kaisi Metals Factory in Guangdong, China • In a recent three-month period, U.S. companies imported $13.2 million worth of furniture parts from the Kaisi Hardware company in China. Among the top U.S. importers are Knape & Vogt Manufacturing Company, Grass America, Inc., Fulterer USA, Inc., Fastec Industrial Corporation, and Liberty Hardware.

The National Labor Committee recently purchased several styles of Liberty Hardware’s “Ball-Bearing Side Mount Drawer Slides” made in China and sold in Home Depot.

• Six to seven hundred workers are held under sweatshop conditions at the Kaisi factory, where every single labor law in China is routinely violated, along with the United Nations’ International Labor Organization’s core internationally recognized worker rights standards, while U.S. companies sourcing production there say and do nothing.

• The Kaisi factory was even recently cited by local government authorities for serious health and safety violations, including dangerously unsafe working conditions and the lack of safety trainings, resulting in scores of job injuries, which have left some young workers maimed for life. U.S. companies would never tolerate such abusive treatment of their products and have gone out of their way to work with the Kaisi factory to bring

the company into compliance with international packing specs so that their products will not be damaged en route to the U.S. But these same U.S. companies have not uttered a single word about the young workers who have been seriously injured while working on their products, and whose lives are now destroyed.

• Dai Kehong was just 24 years old when both his hands were crushed while working on a punch press molding machine producing side drawer rails for export to U.S. companies. Dai Kehong’s right hand is mangled and deformed, with only the thumb and forefinger remaining, frozen in place. His left hand was also crushed, and frozen into a claw, as he is left unable to bend or open any of the fingers. He has no ability to use either hand, and will need an artificial limb.

Another worker, Zhu Zhenghong, lost two fingers and the top of a third finger on his right hand when his hand was crushed in a stamp molding machine. In September 2006 alone, five workers suffered serious injuries, including severed fingers.

• In direct violation of China’s laws, the Kaisi factory failed to inscribe its workers in the mandatory national work injury insurance program, and then also failed even to report these serious worker injuSummary

ries to the local authorities. Kaisi management then refused to pay anywhere near the full compensation these injured workers were legally due. Management is even refusing to pay for Dai Kehong’s artificial limb.

• Kaisi workers routinely work daily 14 ½ to 15 ½ hour shifts, from 8:00 a.m. to 10:30 or 11:30 p.m. and sometimes even later. At most, they receive just two or three Sundays off a month. It is not uncommon for the workers to be at the factory for over 100 hours a week while— excluding lunch and supper breaks—toiling 80 hours. All overtime is mandatory and exceeds China’s legal limit by 344 percent each week.

• Gruelling, exhausting, numbing, dangerous and poorly paid would be the only way to describe the work day at the Kaisi Metals factory. Workers are paid on a piece rate system arbitrarily set by management. It is not uncommon for management to set production goals that demand a worker complete 7,785 to 11,837 operations in a day, or 649 to 986 pieces per hour and one piece every four to six seconds, for which they are paid an astounding six-hundredths of a cent per piece!

• Workers are paid below the legal minimum wage and cheated of their overtime premium, earning less than half of what they are legally owed. Workers are paid just $24.33 for a 77-hour workweek, and 32 cent an hour. The workers should be paid at least $52.56. The current minimum wage is 58 cents an hour.

Broken Lives: Behind U.S. Production in China

• Management always withholds one month’s wages from the workers to make it more difficult for them to quit.

• It is a dreary life for the 600 to 700 workers at the Kaisi factory, who are housed in primitive over-crowded company dorms.

Each room measures approximately 11 by 24 feet and its walls are lined with six to eight double-level bunk beds. There is no other furniture, not even a bureau, or a table and chairs. Six to eight workers share each room. For privacy, the workers drape old sheets or plastic over the openings to their bunk beds. The workers’ possessions are pushed under the beds and piled on the top bunks. Clothes are draped haphazardly everywhere, giving the rooms a very crowded and messy feel. There is a tiny bathroom, which the workers say is filthy and disgusting. There is no hot water, and if someone wishes to bathe during the winter months, they must walk down four flights of stairs to fetch hot water in a small plastic bucket and return to their dorm room for a sponge bath. The dorms are very overcrowded and the air reeks of perspiration and sweaty feet. As the factory provides no entertainment, most workers try to relax by standing on the sidewalk and watching television through store windows.

• The workers say the company food is really terrible and that the meat, almost always pork, is almost all fat. The food is so bad that despite a company stipend to eat in the cafeteria, 90 percent of the workers choose to eat on the street.

• Workers rely upon fast food, which they

buy on the side of the road from informal food vendors without business or sanitary permits. This is the cheapest way to eat and costs the workers $63.97 a month, which comes to 70 cents a meal, or $2.10 a day. Such food does not provide anything close to a healthy or nutritious diet, yet it consumes almost 60 percent of the median wage at the Kaisi factory, including overtime.

• Married couples must live “off campus” under equally deplorable conditions, since they are able to afford only the smallest one-room apartments. The apartment Dai Kehong shares with his wife is typical. It is a small room measuring eight by 11 feet. Their furniture consists of a bed, a tiny table with two chairs for eating, a 14-inch television and a DVD player propped up on a box. There is nothing else, not even a bureau, so they must hang their clothing on a string nailed to the wall. There is a small alcove off the room, measuring three feet by four feet which houses the bathroom and kitchen.

The kitchen is really just a shelf next to the bathroom with a small gas stove and a few pots. For this they pay $19.19 a month.

Cooking their own food and eating as cheaply as possible, a couple can survive on $51.18 a month, which comes to just 28 cents per meal. Factory workers cannot dream of eating meat or fruit every day. At best the workers can afford a tiny piece of meat just three or four times a week, and it has to be the least expensive fatty pork, which sells for 58 to 70 cents a pound.

This is all that two people, both working in export factories, can afford!

• The workers are also separated from their children. China has a national household registration system. Every person has a residency permit depending on where their parents live and where they are born. A person is not free to live, go to school or work outside the area stipulated by their residency permit.

When migrant workers travel hundreds of miles to the south seeking work in the booming export factories, they have to purchase a temporary work permit.

But since their children cannot legally attend school in the new province, parents have to leave their children behind in their home town in the care of relatives who will see that the child goes to school. This is just another hardship faced by the workers—separation from their children.

• Few of Guangdong’s estimated 30 million migrant workers have health insurance, as the factories will not pay for it.

If a worker gets sick, seeing a doctor in a hospital is prohibitively expensive, costing $25.59, which is more than a full week’s wages, including overtime. Depending upon how sick a worker feels, they may randomly buy some cheap medicines from informal roadside vendors in hopes that the pills might help. If a worker falls seriously ill, they often just return to their home town and wait to die.

• The Kaisi workers have no right to organize an independent union. Most workSummary

ers do not know China’s labor law and have no idea how the system operates.

Many workers do not even know where the government’s local Labor and Social Protection Bureau is located.

Broken Lives: Behind U.S. Production in China

Kaisi Metals Factory West Industrial Zone Huan Shi Road Nansha Economic and Technological Development Zone Guangzhou City, Guangdong Province CHINA Kaisi International Hardware Company has three factories, the Kaisi Metals factory in Nansha and two other plants in the Panyu District where—according to the company’s website—2,000 workers specialize in the “production of multi-functional hardware for high grade furniture and all kinds of furniture decorated materials,” including drawer slides, shelving materials, brackets, hinges and more.

This report focuses on the Kaisi Metals factory, which produces metal fittings for furniture. There are 600 to 700 people working at the Kaisi factory. Above the factory entrance is written: “Honesty, Creation.”

Quality,

Efficiency

and

In reality, the Kaisi factory is violating every labor law in China, including very serious safety violations which have resulted in many workers being maimed. It is common for workers to be forced to work seven days and 80 hours a week, while being shortchanged on the wages legally due them.

Kaisi Metal Factory

U.S. Furniture and Hardware Companies Sourcing Production at the Abusive Kaisi Metals Factory/Kaisi International Hardware Company in China In just one recent three-month period— September through November 2006—U.S. companies imported $13,219,462 worth of furniture parts from the Kaisi Hardware company in China. The goods imported appear to be almost exclusively furniture drawer slides and ball bearing slides.

By far the largest importer of furniture parts made at the Kaisi factory in China is the Knape & Vogt Manufacturing Company, of Grand Rapids, Michigan, which imported $10,420,260 of “ballbearing slides” during the period of September through November 2006.

Knape & Vogt accounted for 79 percent of total Kaisi factory exports to the U.S. Another major importer was Grass America, Inc, located in Kernersville, North Carolina, which imported $1,722,701 worth of furniture drawer slides made in China by the Kaisi Hardware company.

This represented 13 percent of the total U.S. imports from the Kaisi factory.

Other major importers were Fulterer USA Inc. in High Point, North Carolina, which imported $546,101 worth of furniture drawer slides from the Kaisi Hardware company in China and the Fastec Industrial Corporation in Elkhardt, Indiana, which imported $354,483 worth of drawer slides. The National Labor Committee recently purchased several styles of Liberty Hardware’s “Ball-Bearing Side Mount Drawer Slides” mad in China and sold in Home Depot.

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Broken Lives: Behind U.S. Production in China

Based on U.S. Customs Department shipping records as well as shipping documents smuggled out of the Kaisi factory itself, the following companies are known to have sourced production at the Kaisi Hardware Company in China.

Knape and Vogt Manufacturing Company Grand Rapids, Michigan Grass America, Inc. Kernersville, North Carolina Fulterer USA, Inc. High Point, North Carolina Liberty Hardware Manufacturing Corporation Winston-Salem, North Carolina

Home Depot, Georgia Fastec Industrial Corporation Elkhardt, Indiana Gliderite Hardware Company San Dimas, California Baer Supply Company Vernon Hills, Illinois And in Canada: Palliser Furniture, Ltd. Winnipeg, Manitoba, Canada DeFehr Furniture Ltd. Winnipeg, Manitoba, Canada

Liberty Hardware The National Labor Committee recently purchased several styles of Liberty Hardware’s “Ball-Bearing Side Mount Drawer Slides” made in China and sold in Home Depot.

Draw slides for sale at Home Depot.

Liberty Hardware

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What the U.S. Companies Must Do • Do not cut and run: Pulling your work from the factory is the worst thing you could do, since it will only further punish the workers who have already suffered enough.

• Keep your production in the factory, while working with management to clean up the plant and also immediately implementing changes that will guarantee that the legal rights of the workers are finally respected.

Specifically:

Workers injured and maimed at the Kaisi Metals factory must be made whole again, provided with the medical care and rehabilitation they will need to regain hope of returning some normalcy to their lives. All back wages and disability compensation legally owed the workers must be immediately paid.

– Drastically improve health and safety conditions at the Kaisi factory.

– All workers must be inscribed in the state’s mandatory work injury insurance program.

a lump sum payment of all back wages owed.

– All overtime work must be voluntary and paid correctly.

– Dorm conditions and factory cafeteria food must be brought up to acceptable standards of decency.

– Workers should receive training from respected independent local nongovernmental organizations regarding their legal rights and how China’s labor laws function.

– To restore the confidence of the American consumers that your company is not hiding similar sweatshop production in other factories in China, you should release the names and addresses of all the factories you use in China. This would be a simple, very doable step, and a sign of good faith indicating that your company is not interested in exploiting sweatshop labor.

– Workers must be paid at least the legal minimum wage and the proper overtime premium for all extra hours worked. As the Kaisi factory workers have been systematically cheated of approximately half of the wages legally due them, they should receive What the U.S. Companies Must Do

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The Case of Dai Kehong: At 24 years of age, maimed for life

Dai Kehong was just 24 years old when both his hands were crushed—leaving him maimed for life—while working a punch press molding machine at the Kaisi factory at 9:00 p.m., 13 hours into his shift the night of March 10, 2005. Dai Kehong was producing furniture side drawer rails for export to U.S. companies when he was injured.

The Guangzhou Work Injury Health Recovery Hospital described Dai Kehong’s injuries like this: “Right hand is severely ruined, only the thumb and forefinger remain. No joints can move or flex. There is no ability for voluntary movement.”

On the left hand: “The thumb cannot bend but can straighten. No joints on the other four fingers can bend or straighten.

The ability to use the hand has been greatly lost.

“After external surgery on both hands, the hands’ ability to function has been severely disabled...Both hands have muscle tendons torn apart.”

Hospital physicians officially determined that the extent of Dai Kehong’s work injury was so severe (a Level 5 injury) that he would need an artificial limb, continuing occupational therapy and a subsistence subsidy due to his incapacity.

From the beginning, in regard to Dai Kehong’s case and that of the other injured

workers, Kaisi factory management blatantly violated China’s labor laws, and continues to do so, without the slightest protest from its U.S. clients.

Dai Kehong had not been inscribed in the government’s mandatory work injury insurance program. Nor did factory management report Dai Kehong’s serious injury within 24 hours to the Labor and Social Protection Bureau as is required by law. Management also failed to present Dai Kehong before the State Bureau within 30 days for his official disability appraisal, which is another violation of the law.

Also from the outset, Kaisi factory management refused to pay Dai Kehong anywhere near the compensation legally owed him. Instead of paying Dai Kehong his full salary during his recovery period—which by law can be no less than what he was earning before Dai Kehong: Maimed for Life

15

his injury, including all benefits, overtime pay and living stipends—management gave him just 500 RMB per month ($63.97), or less than half of what he was legally owed.

As no one can live on 500 RMB a month, Dai Kehong and the other injured workers fell deeper into poverty.

Management is even refusing to pay for the artificial limb that the state says Dai Kehong needs (which will cost at least 5,000 RMB, or $640, more than half a year’s wages including overtime), or for any rehabilitation treatment. Management will not pay any further hospital bills and has yet to pay the lump sum handicap injury compensation legally due Dai Kehong.

Dai Kehong’s crushed hands.

Neither hand can function at all, and Dai Kehong will be maimed for life.

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Broken Lives: Behind U.S. Production in China

As a final blow, management is now trying to illegally fire Dai Kehong so they can permanently rid themselves of any further responsibility for the worker maimed in their factory. Management sent a note to “Comrade Dai Kehong” that “the contract signed by both parties will terminate on November 15, 2006.” This is illegal since a worker with a Level 5 injury cannot be sacked until his contract expires, which for Dai Kehong will not be until August 1, 2007.

Kaisi factory management’s strategy to deal with Dai Kehong and the other injured workers is to challenge every appeal the workers make that their legal rights and compensation be respected, hoping to slow

down and drag out the process for as long as possible. Management knows that the workers do not have the resources to continue such a prolonged struggle and that, in desperation, they will eventually break and take whatever little settlement management offers. For management, the workers’ smashed limbs are just another cost of doing business and they are going to bargain hard to keep these costs as low as possible.

The reality is that at 24 years of age, Dai Kehong’s life is broken and he is now just fighting to survive, living in a small nine-byten-foot room with his wife. Their total possessions consist of a bed, a tiny table to eat on and a 14-inch television, nothing more.

Dai Kehong: Maimed for Life

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The Case of Zhu Zhenghong: Right hand crushed in stamping mold

Zhu Zhenghong and his wife, like millions of other rural migrant workers from across China, left Sichuan Province traveling hundreds of miles south to look for factory work in Guangzhou. Zhu’s wife found work in an electronics factory in the Panyu District.

Zhu started working at the Kaisi factory on June 20, 2006. When he signed on he was told he would be working in the welding department. However, with no safety training at all, Zhu was put to work stamping name plates. After two months he was moved and put to work operating a stamp molding machine. Then on September 9, 2006, at 11:00 a.m.—just a little over two and a half months after he started working at the Kaisi factory—Zhu Zhenghong’s right hand was crushed in the mold. Zhu lost two fingers nearly down to the knuckle and the top of a third finger.

Zhu Zhenghong was hospitalized for 17 days.

As was the case with Dai Kehong and the other injured workers, illegally management had not inscribed Zhu in the state’s mandatory work injury insurance program. Nor did management report the accident to local authorities within 24 hours, as is required by law.

Having failed to purchase the work injury insurance, the Kaisi factory was legally bound to pay all medical and hospitalization costs for Zhu Zhenghong; pay his full wages during the time of his recovery, plus paying an injury handicap compensation which is set according to the level of injury.

In China, when a worker is hospitalized, the patient is required to pay separately for his or her food and for a nurse. Kaisi manageZhu Zhenghong’s missing fingers.

Zhu Zhenghong: Right Hand Crushed in Stamping Mold

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ment did provide Zhu with a living stipend of 20 RMB per day ($2.56) and a daily 20 RMB stipend ($2.56) to pay for a nurse. Over the course of his 17 day stay in the hospital, this cost the company a total of $87.00.

Management also paid Zhu Zhenghong a living stipend of 528 RMB ($67.55) for the first month he was out of work following his injury. By law, Zhu should also have been paid his full wages, in addition to any living and transportation stipends. Since the $67.55 living stipend was too small to survive on, Zhu had to borrow 400 RMB ($51.17) from the factory.

However, when Zhu Zhenghong received his August pay in October, (the factory always withholds one month’s pay—as the workZhu and his wife can only afford a primitive small oneroom apartment.

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Broken Lives: Behind U.S. Production in China

ers are paid on the last day of the following month) he was shocked and angered to see that management had not only deducted the 400 RMB loan from his wages, but had also deducted another 450 RMB, or $57.57, from the 528 RMB living stipend they had originally paid him.

Leaving aside the medical and hospital costs, the total living stipend Kaisi management provided Zhu Zhenghong during the month following his injury was just $9.98!

Zhu Zhenghong pleaded repeatedly with factory management to take him to the local Labor and Social Protection Bureau—which the company is legally bound to do within 30 days of a worker’s injury—where he would undergo a physical examination and be pro-

vided a work injury certificate. The severity of the injury as described on the certificate would determine the amount of handicap compensation Zhu Zhenghong will receive.

But as Kaisi factory management did not want to pay Zhu Zhenghong his legal disability compensation, they refused to take him to the local bureau. Management felt they could manipulate Zhu Zhenghong, who like many other workers, does not know how China’s labor laws operate and does not even know where the Labor and Social Protection Bureau is located.

Zhu Zhenghong is furious at all the injustice.

Zhu has no money at all now, and he feels helpless. His hand has not fully healed, and even when it does, Zhu does not know if any factory will hire him, given his missing fingers.

Zhu and his wife live in a single room in a very old house. Their furnishings consist of a bed, which is broken, and three tiny primitive chairs which he made before he was injured with scrap wood he found in the street.

I worked so hard, I exhausted myself for this factory. I made good-quality stuff. I made sure that every order went out on time. It had never occurred to me that I’d get injured. If they don’t send someone out to take care of me, I’ll be lost. Look at the dirty tricks they’re using. Because I got injured at work, I have to give the factory money. They really lock you in a dead end.

Zhu Zhenghong: Right Hand Crushed in Stamping Mold

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There is nothing else. They do not own a television. Since his injury, they can no longer afford propane for their small stove, and now cook with any scraps of wood they can scavenge on the street. As for their diet, all they can afford are turnips.

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Broken Lives: Behind U.S. Production in China

The Case of Lei Shengke: Right hand severely crushed

Lei Shengke’s right hand was severely crushed in a machine accident on September 27, 2005, at 11:00 a.m., in workshop #2 at the Kaisi Metals factory. Other than his thumbs, all four fingers on his right hand were smashed.

The first and middle fingers on the right hand were destroyed and severed. Both joints of the small finger were crushed, and the ring finger was also damaged.

Due to repeated management delays, Lei Shengke did not receive his official work injury certificate from the Social and Labor

Protection Bureau until more than one year after his accident. By law, the factory must guarantee that an injured worker will receive their work injury certificate within 30 days of their accident. To avoid paying Lei Shengke the compensation legally owed him, management simply ignored the law. Lei Shengke was certified as having a 7th level disability.

In the picture of Lei Shengke’s right hand, note the distorted shortness of his two remaining middle fingers.

Lei Shengke: Right hand severely crushed

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The Case of Zhao Chengguang: Left hand crushed while working on order for the U.S. Knape & Vogt Company Zhao Chengguang was seriously injured on September 29, 2006, at 3:00 p.m. He was working on an order for Knape and Vogt (3-point wheel model number 7424) when the stool he was sitting on suddenly slid out from under him leaving his left hand caught in the machine. His hand was crushed, severing two fingers with the knuckles and a large part of his left hand.

Zhao was yet another young worker seriously injured and maimed at the Kaisi Metals Fac-

tory who had illegally not been inscribed in the state’s mandatory work injury insurance program. Nor did management report his serious accident to local authorities within 24 hours as required by law. Kaisi management, also illegally, forced Zhao to wait many months before receiving his official work injury certificate. This was done to cheat Zhao of the work injury compensation legally due him. Serious work injuries continue unabated at the Kaisi Metals factory In September 2006 alone, five more workers were injured on the job.

Zhao Chengguang: Maimed Left Hand

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Injury Registry.

Each worker injury is explained away as “wasn’t careful.”

6 Fingers Severed in a Single Month!

Serious Work Injuries Continue Unabated at the Kaisi Metals Factory In September 2006 alone, five more workers were injured on the job.

September 5:

Worker #1, rolling bearing track—Index finger on left hand crushed—taken to Jinzhou Hospital

September 7:

Worker #2, automatic molding—Middle finger of right hand severed—taken to ZijingHospital

September 7:

Worker #3, automatic molding—Left hand lacerated—taken to Jinzhou Hospital

September 9:

Zhu Zhenghong, rolling bearing track—Middle and ring fingers and pinkie finger of right hand crushed

September 29:

Zhao Chengguang, rolling bearing track—two fingers on left hand injured

NOTE: We hold the U.S. companies responsible to make these seriously injured workers whole again, so that they can at least hope to return to some degree of normalcy in their lives. These workers must receive all the necessary medical care and rehabilitation required, along with full payment of the injury compensation due them. Safety conditions at the Kaisi factory must be drastically improved.

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Broken Lives: Behind U.S. Production in China

Government Cites Kaisi Factory for Serious Health and Safety Violations After documentation on the many serious work injuries and other gross violations at the Kaisi factory were leaked to the media, the local government’s Guangzhou City Nansha District Safe Manufacturing Supervision Management Department launched an investigation of the factory in the third week of December 2006.

The government’s initial investigation cited the Kaisi factory for numerous serious health and safety violations including: •

Inadequate workshop health and safety conditions;

•

Lack of adequate worker safety training;

•

Failure to report work accidents to the local government as required by law;

•

Excessive noise and poor lighting conditions;

•

Unsafe and illegal electrical wiring;

•

Serious overcrowding with boxes, materials and finished goods piled up everywhere;

•

A management style that appeared completely chaotic.

The local government agency issued Kaisi management a “verdict, with a time limit, to reform and clean up” the factory.

(NOTE: Where were the U.S. companies all this time, who for years sourced their production at the Kaisi factory? Were the U.S. companies monitoring their contractor to prevent such gross human and worker rights and safety abuses, as they claim they are? They must answer the question why their corporate social compliance monitoring efforts failed so miserably, and what they concretely intend to do now to clean up their contractor’s factory and finally guarantee that the legal rights of the workers are respected.)

Government Cites Kaisi Factory for Serious Health and Safety Violations

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Corporations Care More About Their Products than the Workers in China who Make Them.

Knape and Vogt spent a full year working with their contractor in China to bring the factory into compliance with acceptable international packaging specs to guarantee that Knape and Vogt products would not be damaged during shipment to the U.S. However, no similar concern was shown by Knape and Vogt—or the other companies—for the workers at the Kaisi factory in China who were making their products under unsafe conditions, and being maimed in the process. Apparently, neither was one word said by the U.S. companies to address the illegal seven day, 80-hour workweeks; the fact that workers are routinely cheated of the minimum and overtime wages legally due them; and the primitive factory dorm conditions in which the workers are housed.

In the late 1990’s the Michigan-based Knape and Vogt Manufacturing Company began outsourcing some of its work to China. This is how the move was described in Packaging World Magazine, April 1999, page 42: Just ask packaging engineer Joe Sleeper at Knape and Vogt in Grand Rapids, MI. This manufacturer of hardware parts such as drawer slides, shelving and shelving supports distributes worldwide to OEMs [Original Equipment Manufacturers] and to retailers alike. Lately the company has identified offshore sources capable of producing some of its products more economically than can be done in the U.S. A manufacturer in The People’s Republic of China,

for example, has been selected as a good source for shelf supports. Packaging them in corrugated shippers, however, is another story.

“According to some stats I got off the Internet, there are 60 box makers in the People’s Republic of China,” says Sleeper. “But they have no standards like the ones we’re accustomed to in the U.S.” Some companies that worry about the reliability of shippers sourced in China simply throw more corrugated at the problem by specifying a double-wall structure. “But that’s expensive,” says Sleeper. “And if our customers have to then dispose of all that corrugated, they’re not too happy. Instead, we’ve moved toward performance-based specs rather than relying on numbers that quantify bursting strength or edge-crush test.”

Knape and Vogt’s supplier in China must subject all packaging materials to a laboratory performance test consisting of drop, vibration and compression tests. The parameters of the tests are clearly spelled out for various part numbers. Also spelled out are the acceptance criteria that packages must live up to.

Packaging passes the test if the criteria are met.

“It’s a matter of defining what’s acceptable and what’s not,” says Sleeper. “If you’ve never used performance specs before, it’s unlikely that you have acceptance criteria defined.” Sleeper’s job was to define them.

Corporations Care More About Their Products

29

Packaging for shelf supports represents the first of many projects Sleeper has worked on, projects that tend to “stretch out,” as Sleeper puts it. “It took a full year to execute that one,” he observes. Part of the process is educating internally what packaging performance specs are all about. “’It’s just packaging’ is what I hear a lot,” says Sleeper. “But if the package fails somewhere in the distribution chain, then its importance is suddenly obvious.”

Assisting Sleeper in developing performance specs was transport packaging consultancy Dennis Young & Associates (Grand Rapids, MI).

It is a crime that Knape and Vogt, and the other companies, do not devote the same time and effort to “educating internally” its contractor in China and “defining what’s acceptable and what’s not” when it comes to respecting basic worker rights and workplace safety standards. What a difference it would make if the companies also set “performance based specs” to guarantee respect for the legal rights of the workers making their products.

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Broken Lives: Behind U.S. Production in China

China’s Paper-thin Labor Laws Easily Flaunted China has its own mandatory workmen’s compensation, unemployment insurance and social security laws, but many—if not the majority of—factories ignore these laws, both to increase their profits and to meet the ever lower production costs demanded by their U.S. clients. In the end, the workers pay a terrible price.

All factories in China are required by law to inscribe their workers, and pay into, a government “social insurance” program which is managed by the local Labor and Social Protection Bureau. At a minimum the state’s social insurance program covers all job-related injuries, unemployment insurance and a pension.

The “Work Injury Insurance” program covers any worker who is injured on the job.

First, by law, all job accidents must be reported to the Labor and Social Protection Bureau within 24 hours. In the case of serious work injuries requiring medical care, the Labor and Social Protection Bureau will pay all medical and hospitalization costs; certain rehabilitation and convalescence fees; and provide a “handicap compensation” payment, which depends upon the extent of the damage and incapacity incurred by the worker due to the injury. It is the legal responsibility of factory management to present the worker before the Labor and Social Protection Bureau within 30 days of the accident, to be examined and given an official “work injury certificate,” which describes the injuries and assesses the level of impairment, from one to ten, with one being the most severe injury. It is on the basis of this

assessment that the amount of the “handicap compensation” payment will be determined.

Beyond what the state’s work injury insurance program covers, the law demands that factory management pay the injured worker’s full wages during the period of his or her recovery. Specifically, this wage cannot be less than the average wage the worker was earning before their injury, including all benefits, overtime, and any living and transportation subsidies.

Besides work injuries, the government’s social insurance program also covers unemployment insurance, providing a monthly stipend to workers during the period of their layoff. The government’s pension insurance provides a modest monthly retirement stipend.

Though not legally mandated, the government’s social insurance program also allows factory management to opt into, inscribe its workers in, and pay a modest fee for a health insurance plan which would cover most of the workers’ medical fees. Parenting insurance is also available, which would provide money to couples who are having a child.

To protect workers who are injured on the job, there is also a back-up law. If factory management cheats the workers—as is all too common—by not inscribing and paying for their workers to be part of the government’s social insurance program, then the factory itself is legally responsible to pay all medical, hospitalization, and convalescence costs, along with paying the handicap compensaChina’s Paper-thin Labor Laws Easily Flaunted

31

tion, and owes workers full wages throughout the time of recovery.

But as we see in the case of the Kaisi factory, it is all too easy for factories in China producing goods for export to U.S. companies to violate the laws on occupational health and safety and work injuries with complete impunity. The U.S. companies involved are also displaying a total indifference when it comes to respecting worker rights. As a result, far too many workers in China are suffering horrible tragedies.

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Broken Lives: Behind U.S. Production in China

A Dreary Life Anyway you look at it, it is a dreary life for the 600 to 700 workers at the Kaisi factory, as it is for millions of factory workers across China. The abusive, illegal and primitive conditions at the Kaisi factory are not unusual.

Dorm Life—Overcrowded and Primitive Conditions: The men’s dorm is located on the seventh floor of the factory building. Each room measures approximately 11 feet by 24 feet and its walls are lined with six to eight double level

-metal bunk beds. Aside from the beds, there is no other furniture, not even a bureau, or a table and chairs. Six to eight workers share each room, sleeping on the bottom bunk.

For privacy, the workers drape old sheets or plastic over their bunk openings. As there is no proper place to store their belongings, the workers’ possessions are pushed under the bed and also piled up on the top bunk.

Clothes are haphazardly draped everywhere, giving the rooms a very crowded and messy feel.

A Dreary Life

33

There is a tiny shared bathroom and shower attached to each dorm room—so small that just one person can use it at a time—which the workers say is filthy and disgusting. There is also no hot water.

With so many workers returning to the dorm at the same time at the shift’s end, the workers say the dorm is overcrowded, noisy, and the air reeks of sweaty feet and perspiration.

In Guangdong, which is in the south, the summer lasts a long time and it is very hot.

Each dorm room has three small electric ceiling fans, but the workers say this is not enough, and room temperatures can be oppressive.

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Broken Lives: Behind U.S. Production in China

During the winter months, workers wishing to wash with hot water need to walk down four flights of stairs to the third floor, where they can fetch hot water in a small plastic bucket and return to their dorm room for a sponge bath. Workers are prohibited from using electricity in the dorm to heat water and if caught doing so, will be fired.

The factory provides no entertainment or cultural activities for its 600 to 700 workers.

In fact, often working 80 hours a week, the workers have no time to do anything that

might interest them, like studying to learn new skills. The dorm has set aside activity rooms, but it amounts to nothing. There is a reading room, but there is not a single newspaper in the room, let alone a book. There is also a television room with a few backless benches; however, the television cabinet is almost always locked, making it extremely rare that the workers actually get to watch television. There is also a room with ping pong tables, but here too only management can access the equipment, so the workers are not allowed to play.

A Dreary Life

35

Ping pong Room with two ping pong tables.

Workers say the equipment is with management and the workers do not get to use it.

Reading Room— but not a single piece of paper in it, let alone a book.

Television Room.

The television is generally locked and it is rare that the workers get to watch it.

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Broken Lives: Behind U.S. Production in China

Basically the workers have just three ways to relax—or clear their heads, as they put it—after working a 12 to 13-hour shift. They can just randomly walk around, or find some friends to hang out with and play poker.

The most popular relaxation for the workers seems to be standing on the sidewalk and watching television through store windows.

ment or cultural events.

Factory management does not allow workers to have televisions or DVD players in their dorm rooms, though one worker does have a small television in his room which he has to watch secretly. Of course, there is no internet access. Workers simply do not have the disposable income to go out for entertain-

Though workers are not charged for the dorm, money is deducted from the workers’ wages each month for water and electricity.

Typical deductions would be 17 RMB, $2.18, for water and 20 RMB, $2.56, for electricity.

Together this amounts to more than a full day’s wage.

There are very few dorm rooms set aside for married couples, both of whom must work at the factory. So the majority of married couples must live “off campus” in similarly deplorable conditions, renting primitive oneroom apartments. (More on this will follow.)

A Dreary Life

37

Company Food—The Workers Say it is Really Terrible: The company cafeteria is also located in the factory building, and serves lunch and dinner. For breakfast the workers are on their own. Each meal costs 3 RMB, or 38 cents, and consists of two vegetable dishes and one meat dish. The workers complain that the meat, almost always pork, is far too fatty and tastes lousy. The food is so terrible, that despite a company stipend to eat in the cafeteria, most workers—an estimated 90 percent—choose to eat fast food from a street vendor. Management provides a 3 RMB stipend per day, or 38 cents, to those who eat in the factory cafeteria. Essentially management is paying for one meal, but again, as the food is so bad the majority of workers fend for themselves.

Single people, even if they live “off campus,” generally never cook. They rely upon fast food which they buy on the side of the road from informal food vendors, who lack business or sanitary permits. To cut costs some of these vendors use leftover rice water, rather than oil, to cook with. This is the cheapest way for a worker to eat, and it will cost about 500 RMB a month, or $63.97. This means the worker will be spending about $2.10 a day on food, and 70 cents per meal. This, of course, does not provide anywhere near a healthy or nutritious diet, yet the cost of even such cheap food can nonetheless consume almost 60 percent of the median wage paid at the Kaisi factory, including all overtime work.

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Broken Lives: Behind U.S. Production in China

“Off-campus” Worker Housing— Couples Can Afford Only Small One-Room Apartments Before he was injured at the Kaisi factory, Dai Kehong and his wife rented a very small one-room apartment, measuring about eight feet by 11 feet. Their furniture consists of a bed, a tiny table with two chairs for eating, a 14-inch television and a DVD propped up on boxes. There is nothing else, not even a bureau, so they must hang their clothing on a string nailed to the wall.

There is a small alcove off the room, measuring three feet by four feet, which houses the bathroom and kitchen. The kitchen is really just a shelf next to the bathroom with a small gas stove, an electric rice cooker, a pot for soup and a wok.

For this they pay 150 RMB per month, or $19.19. This is all that two people, both working in export factories, can afford.

Dai Kehong’s apartment.

“Off-campus” Worker Housing

39

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Broken Lives: Behind U.S. Production in China

“Off-campus” Worker Housing

41

Zhu Zhenghong’s Home Zhu Zhenghong rents a room in this house.

Before his injury at the Kaisi factory, Zhu Zhenghong and his wife also rented one room in a very old house. Their only furniture consists of a bed, which is broken, a few simple wooden tables and three tiny chairs Zhu made himself before he was injured, using scraps of wood he picked up from the street. They cannot afford a television. The kitchen is in a hallway separated by some planks of wood, with an old gas stove. The toilet is an outhouse.

Since Zhu was injured—and the company is refusing to pay the salary and handicap disability compensation legally due him—he and his wife cannot afford to purchase propane for cooking, and have returned to cooking with any wood scraps they can scavenge off the street. Their diet now consists mainly of turnips, which is all they can afford.

Zhu Zhenghong’s Home

43

Zhu’s one prize possession is a new bike which cost about 200 RMB, or $25.59. Zhu’s wife works in a nearby electronics factory in Panyu. This is another example of what sort of living standard two people, both working in export factories, can afford.

An outhouse.

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Broken Lives: Behind U.S. Production in China

Kitchen.

Zhu Zhenghong’s Home

45

Lei Shengke’s Tiny Home Lei Shengke—another worker injured at the Kaisi factory—lives in a single tiny room measuring at most six by ten feet. His small room fits just a bed and a small table. He has no kitchen and must buy food on the street every day. In an alcove off his room, there is a very small bathroom.

This room costs 130 RMB—$16.63—a month.

Lei Shengke’s Tiny Home

47

Zhao Chengguang and Wife Live in One Room Zhao Chengguang and his wife rent a room on the second floor of an old house, where several other people also rent space. Their apartment is about 11 by 14 feet in size and contains a bed, a small bureau, a small dining table and a 14-inch television. Located in a small three-by-three-foot alcove off their room are the toilet and shower, which are right next to each other.

Their kitchen consists of a small gas stove and a pressure cooker.

For this they pay 160 RMB a month, or $20.47.

Zhao Chengguang and Wife Live in One Room

49

Kitchen.

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Broken Lives: Behind U.S. Production in China

A Worker’s Household Costs— Living Primitively To save money, married couples almost always cook their own food. Eating as cheaply as possible, the least a couple could spend on food is 400 RMB per month, or $51.18.

This comes to just 28 cents per meal and 84 cents per person per day.

Low factory wages in China trap the workers in very basic, almost primitive, living conditions. Factory workers cannot dream of eating meat and fruit every day. At best, they can afford a tiny piece of meat three or four times in a week, and the meat would have to be the least expensive, which means very fatty pork, which sells for 58 to 70 cents a pound. Leaner pork costs $1.04 a pound.

Fruit is also too expensive and cannot be purchased every day. And even when the workers do splurge, they can only buy the cheapest fruits.

130 RMB ($16.63) to the monthly household budget.

Altogether then, to subsist at an extremely basic level, it will cost a couple at least 800 RMB per month, or $102.35, and this, of course, does not account for any transportation costs to and from work; medical expenses; clothing purchases and various other necessary expenses, let alone money spent on simple entertainment.

It is the same with clothing. Good clothes— “brand name” clothes, as the workers say— are beyond the workers’ imagination to afford.

Other basic household costs include rent, which as we have seen averages about 150 RMB ($19.19) per month for a single small room. Water and electricity cost another 30 RMB ($3.84) a month. Besides the 400 RMB ($51.18) spent on food, there are additional costs of 50 RMB a month ($6.40) for cooking gas, and 40 RMB ($5.12) for cooking oil and other food-related expenses. Various other costs—for hand soap, toothpaste, laundry detergent, etc.—add an average of A Worker’s Household Costs—Living Primitively

51

Another Hardship for Factory Workers –

Separation from their Children China has a national household registration system. Every person has a residency permit depending upon where their parents are from and where they are born. A person is not free to live, go to school or work outside the area stipulated by his or her valid residency permit.

If a person leaves their birthplace—as tens of millions of migrant workers across China have done, traveling in search of work in the booming export factories—they must purchase a temporary work permit from the local police department. Without this permit, if a worker is stopped by the police, he or she can be fined, detained and in some cases even badly beaten. Migrant workers have to pay for their temporary work permits, which factory management often arranges, deducting the fees from the workers’ wages.

However, it is all too frequent that management takes the workers’ money but does not provide them their temporary work permit, leaving the worker very vulnerable to harassment. This is certainly the case at the Kaisi factory which deducts 35 RMB, or $4.48— which is more than a full day’s pay—from the workers’ pay for their temporary residency permit, but most workers have not received their permits.

Children can only go to school in the place they are registered and have their residency permit. This essentially means that when the parents relocate South in search of work, they cannot take their children with them since, officially, these children have no right

to schooling. If a migrant couple were to take their children with them nonetheless and try to enroll their son or daughter in a good public school, perhaps in the city of Guangzhou near the Kaisi factory, the cost would be astronomical for these poor workers. To accept such an unregistered child in their public school, officials will demand up to 10,000 RMB per year ($1,279.43) in class fees, which is just about what a factory worker would earn in a year, including all the grueling overtime hours they put in.

Even trying to get a migrant worker’s child into the lowest level public elementary school would still cost at least 1,500 RMB per year ($191.91) which is nearly two full months’ wages.

So the vast majority of migrant factory workers have to leave their children behind in their hometowns under the care of relatives, where the children can at least go to school. Of course, the parents must send money home each month for their children’s upkeep and school fees.

Also, given that seven-day, 80-hour workweeks are not uncommon in the export factories, it would be very difficult for the parents to care for their child. So this is another hardship the factory workers face—separation from their children.

Another Hardship for Factory Workers – Separation from their Children

53

Tens of Millions of Factory Workers in Guangdong Province Alone Lack Any Health Insurance Though Kaisi factory management could, for a modest fee, inscribe its workers in the state’s health insurance program, which would cover most medical expenses a worker would face, they have chosen not to do so. It would eat into the factory’s profits and perhaps raise by a few pennies what the U.S. companies have to pay for their goods.

medical care. Even under the very best case scenario and the worker recovers, they will be trapped in a huge debt they cannot possibly pay off for many years.

While lack of health insurance is an enormous problem for millions of working families in the U.S., in China the lack of health insurance is a catastrophe. It is the norm for export factories in China not to provide health insurance, leaving many tens of millions of workers without coverage.

If a factory worker in China gets sick, nine out of ten times they will not see a doctor, as the cost is prohibitive. Seeing a doctor in a hospital for one visit can cost 200 RMB ($25.59), which is more than a full week’s wages including overtime. Depending upon how sick a worker feels, they may randomly buy some cheap medicines from informal roadside vendors, hoping that the pills will help. Given the extreme pollution in China, particularly in the factory areas, it is not uncommon for colds to turn into respiratory infections.

If a worker falls seriously ill, given that they have no money for a doctor or to be hospitalized, they often just return to their hometown and wait to die. Some others will desperately borrow what for them is a huge amount of money in hopes of receiving Tens of Millions of Factory Workers in China Lack Any Health Insurance

55

Hours: Grueling Seven-day, 80-hour Workweeks are Not Uncommon • Routine daily 14 ½ to 15 ½-hour shifts from 8:00 a.m. to 10:30 or 11:30 p.m. and sometimes later; • Workers are often at the factory over 100 hours a week, while working 80 or more hours; • At most, workers receive two or three Sundays off a month; • All overtime is mandatory and failure to work my result in firing; • The common 40 hours of overtime each week exceeds China’s legal limit by 344 percent; • By law, workers must receive at least one day off each week, all overtime must be

voluntary, overtime hours cannot exceed nine per week, and all overtime work must be paid with a premium—all of which is being blatantly violated at the Kaisi factory.

Unlike factories that produce toys and other seasonal goods, there are no clearly defined busy and slow seasons at the Kaisi factory, which produces furniture parts. It all depends on the level of orders, though the factory does seem busiest during the five month period between March and July.

When it is busy, the routine daily shift is from 8:00 a.m. to 10:30 or 11:30 p.m. and sometimes even later. This puts the workers at the factory 14 ½ to 15 ½ hours a day. With a 1 ½ hour lunch break and an hour off for supper, the workers are actually toiling 12 to

Routine Daily Shift at the Kaisi Factory (14 ½ to 15 ½ hours a day)

8:00 a.m. to 12:00 noon

Work, 4 hours

12:00 noon to 1:30 p.m.

Lunch, 1 ½ hours

1:30 p.m. to 5:30 p.m.

Work, 4 hours

5:30 p.m. to 6:30 p.m.

Supper, 1 hour

6:30 p.m. to 10:30 or 11:30 p.m.

Overtime, 4 to 5 hours—sometimes more

Hours: Grueling Seven-day, 80-hour Workweeks are Not Uncommon

57

13 hours a day. A seven-day workweek is not uncommon and rarely will the workers receive more than two or at most three days off a month.

Working seven days a week, this schedule would put the workers—on average—at the factory 15 hours a day and 105 hours a week, while they would be working over 80 hours.

Even with one day off, the workers would still be at the factory 90 hours a week, while actually working 75 hours.

All overtime is mandatory. No matter what reason the worker gives to be excused, anyone who does not remain for overtime will be yelled at and often fined five RMB (64 cents) for each hour of overtime missed. This 64cent fine equals the loss of two regular hours of pay, and for the total four or five hours of overtime routinely worked, the fine would amount to a full day’s wages.

Workers who miss overtime more than a few times will be fired.

The routine 40 hours of overtime work required each week exceeds China’s legal limit of no more than nine hours a week by 344 percent. Also by law, all overtime work must be voluntary and workers must receive at least one day off a week.

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Broken Lives: Behind U.S. Production in China

Wages: Workers paid below the legal minimum wage and cheated of their overtime premium, earning less than half of what they are legally owed. Workers paid just $24.33 for a 77-hour workweek. Grueling production goals require the workers to complete each operation in six seconds or less.

Piece Rate Forms.

• Paid below the legal minimum wage; • No matter how many hours of overtime they are forced to work, workers are never paid the required overtime premium; • Workers paid by a piece rate system, earning just six hundredths of a cent for each operation they complete; • Excessive production goals require workers to routinely complete 7,785 to 11,837 operations a day, or one piece every four to six seconds; • Workers earn just $24.33 a week for working 77 hours—32 cents an hour— which is well below the legal minimum wage of 50 cents an hour. Including unpaid overtime premiums, the workers are earning less than half of what they are legally owed; • One month’s wages is always withheld.

Wages

59

July 2006 Production Goal

Worker’s Pay

One piece every six seconds

$0.0006 per piece

649 pieces per hour

$0.38 per hour

7,785 pieces per 12-hour day

$4.53 per day (12 hours)

49,200 pieces per 76-hour week

$28.63 a week (76 hours)

213,200 pieces per month

$124.05 a month

August 2006 Production Goal

Worker’s Pay

One piece every four seconds

$0.0005 per piece

986 pieces per hour

52 cents an hour

11,837 pieces per 12-hour day

$6.29 a day (12 hours)

74,838 pieces per 76-hour week

$39.78 per week (76 hours)

324,300 pieces a month

$172.37 a month

A Grueling Work Day Grueling, exhausting, numbing, dangerous, and poorly paid would be the only way to describe the work day at the Kaisi Metals factory.

Kaisi workers are paid according to a piece rate system that is arbitrarily set by management, which assigns mandatory production goals and the rates that will be paid per piece.

It is not unusual for management to demand

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Broken Lives: Behind U.S. Production in China

that a worker complete 7,785 to 11,837 operations a day, such as “punching screw holes in end boards” or inserting “hooks in the end boards.” It is hard to imagine how grueling this must be. Even working a 12-hour day, the worker would still have to complete 649 to 986 pieces an hour, which is one piece every four to six seconds! The pace is relentless. In a week, the worker must complete 49,000 to over 74,000 pieces, while earning a piece rate of just six hundredths of a cent ($0.0006) per operation!

A review of the mandatory production goals and piece rates for one machine operator in July 2006 shows him working 28 out of 31 days. He would have worked an average of 12 hours a day and 76 hours a week. The production goal assigned by management required the worker to complete 49,200 operations per week, for which he was paid $28.63—38 cents an hour. He was being paid less than six hundredths of a cent per

piece, and he had to complete one operation every six seconds to earn this.

During the following month, August 2006, working similar hours, the same worker’s production goal was raised to 74,838 operations per week, which is 11,837 operations a day and one operation every four seconds, for which he was paid five hundredths of a cent ($0.0005) per piece.

Legal Minimum Wage Set by the Guangzhou Government Prior to September 2006 (684 RMB per month)

After September 2006 (780 RMB per month)

50 cents an hour ($0.5048)

58 cents an hour ($0.5757)

$4.04 a day (8 hours)

$4.26 a day (8 hours)

$20.19 a week (40 hours)

$23.03 a week (40 hours)

$87.51 a month

$99.79 a month

$1,050.09 a year

$1,197.47 a year

All Weekday Overtime Must Be Paid at 50 Percent Premium Work on Weekends Must Be Paid at a 100 Percent Premium Weekday OT at 50% premium = $0.76 per hour

Weekday OT at 50% premium = $0.86 per hour

Weekend OT at 100% premium = $1.01 per hour

Weekend OT at 100% premium = $1.15 per hour

Wages

61

The Kaisi Workers Should Have Received $52.56 a Week Not the $24.33 They Were Actually Paid Legally the workers should have been paid: For the regular 40 hours a week:

$ 20.19

For the 20 hours of weekday overtime at a 50% premium:

$ 15.20 (20 x $0.76 = $15.20)

For the 17 hours of weekend overtime at a 100% premium:

$ 17.17 (17 x $1.01 = $17.17)

Total: $ 52.56 Kaisi management is cheating its workers of $28.23 a week in wages legally due them.

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Working 77 hours a week to earn $24.33!

Median Wage for Kaisi Factory Workers (824 RMB per month - $105.42)

A random review of more than a dozen workers’ pay envelopes also showed them working 28 days a month. Even if they worked just 12 hours a day, this would mean they worked 77 hours a week, while earning a median wage of $24.33, and 32 cents an hour. This wage is illegal. It is not only below the legal minimum wage of 50 cents an hour, but the workers were also cheated on their legal overtime premium for the 37 hours of overtime they were forced to work.

32 cents an hour $3.79 a day (12 hours) $24.33 a week (77 hours) $105.42 a month $1,265.10 a year

Broken Lives: Behind U.S. Production in China

Workers paid less than half of what they are legally owed.

At the time we reviewed the pay envelopes, the legal minimum wage in Guangzhou was 50 cents an hour. In September 2006, the local government increased the minimum wage to 58 cents an hour. Even after the minimum wage increase, Kaisi factory management did not raise the wages of its workers, who are still paid below the old minimum wage. The workers at the Kaisi

factory are going backward, not forward.

If we return to the pay stubs we randomly reviewed, the monthly pay ranged from a low of 556 RMB to a high of 1,003 RMB, with the median wage being 824 RMB, or $105.42 a month and $24.33 a week. These workers should have earned at least $52.56 a week.

They were paid less than half of what they were legally owed.

During the busier months, as we have seen, the median wage, including overtime hours, appears to be 824 RMB, or $105, a month— though we have seen pay stubs with a high of 1,347.22 RMB ($172.37) a month, or $39.78 a week. But even in this case, the worker was cheated of $11.77 (23 percent) of the pay legally due for the week, which should have totaled $51.55.

During slow periods, workers’ wages can dip as low as 300 to 700 RMB a month ($38.38

to $89.56), and just $8.86 to $20.67 a week.

No one can survive on these wages. In some cases, wages dropped as low as 100 RMB for the month, or $12.79, coming to $2.95 a week.

Another huge problem affecting the workers’ pay as well as safety is that the machinery at the Kaisi factory is reportedly old and frequently breaks down. In the first half of October 2006, many workers had already lost 10 days’ work—and pay—due to the fact that their old machines would break down, be fixed, and then immediately break down again. Some machines, once broken, would be hurriedly patched together and restarted, but not properly repaired. According to the workers, not only does this lead to loss of pay, but also causes numerous accidents and workers being injured on the job.

Kaisi Pay Stub.

Wages

63

Management Always Withholds One Month’s Wages It is typical for factory workers in China to be paid on a monthly basis. However, at the Kaisi factory, management has arranged it so that the workers wages are always paid on the last day of the following month, meaning one month’s wages are always withheld. For example, December wages are not paid until January 31. By withholding wages, management knows it will make it much more difficult for workers to quit—despite the deplorable factory conditions—given that doing so will mean forfeiting their money. Also, the median $105.42 monthly wage withheld from each worker adds up, as there is an average of 650 workers in the factory, which gives management easy, free access to $68,500.

But even withholding one month’s wages may not, in management’s mind, be enough to keep the workers from fleeing. So recently management has started to deduct another 50 RMB ($6.40) from each worker’s wages every month, telling them that this is being done for their own good, to help them save money. This way, when they eventually decide to leave, they will return home with piles of money. In fact, management just wants to tighten its grip on these workers. Any worker who quits will forfeit this money as well. In the course of a year, the deductions add up to $76.77 per worker and $49,899 for all 650 workers, giving management access to more free money. Most workers are skeptical that they will ever receive back any more than a small portion of these deductions.

To cover up what is really taking place, on the workers’ pay envelopes, the 50 RMB deduction is falsely attributed to “medicine.”

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Broken Lives: Behind U.S. Production in China

Of course, both of these deductions are illegal, like almost everything else at the Kaisi factory.

Appendices Appendix 1: Shipping records Smuggled out of the Kaisi Metals Factory Appendix 2: Kaisi shipments to U.S. companies—based on U.S. Customs

Documentation

A. Kaisi shipments to Knape & Vogt, August 2006

B. Knape & Vogt imports from Hongqing Hao and Manley International, August 2006

C. Kaisi shipments to Grass America, August-November 2006

D. Kaisi shipments to Fulterer, AugustNovember 2006

E. Kaisi shipments to Fastec, AugustNovember 2006 Appendix 3: List of U.S. and Canadian Companies importing from Kaisi in China

Appendices

65

Appendix 1 Knape & Vogt Manufacturing

Appendix 1 - Smuggled Kaisi Shipping Records

67

Grass America, Inc.

68

Broken Lives: Behind U.S. Production in China

Grass America, Inc.

Appendix 1 - Smuggled Kaisi Shipping Records

69

Fulterer USA, Inc.

70

Broken Lives: Behind U.S. Production in China

Fastec Industrial Corp.

Appendix 1 - Smuggled Kaisi Shipping Records

71

GlideRite Hardware Co.

72

Broken Lives: Behind U.S. Production in China

Liberty Hardware Co.

Appendix 1 - Smuggled Kaisi Shipping Records

73

Appendix 2 APPENDIX 2A In August 2006 alone, Knape & Vogt of Grand Rapids, Michigan, imported $2,336,310 worth of furniture parts from China, including 15 shipments of ball bearing drawer slides, worth $1,422,731 from the Kaisi Hardware company.

Below is an example of one of those shipments:

U.S. Customs Department Shipping Record

Kaisi Hardware/China to Knape & Vogt, August 9, 2006 Shipper KAISI HARDWARE CO.,LTD HUANSHI ROAD DA CHONG NANSHA,PANYU, GUANGDONG CHINA Packaging Information Weight: Quantity:

123419 KG 4331 CTN

Shipment Detail Carrier: SAFM - SAFMARINE Vessel: MAERSK KITHIRA Voyage: 610 B/L: CHQFCHKU06071041 Estimated Value: $390,775.00 AMS Commodities Container MSKU3764477 MSKU3764517 MSKU3764604 MSKU3764630 MSKU3765576 MSKU3768488 MSKU6657678 PONU1280405

Qty 1296 60 60 41 60 1110 1056 648

Consignee

Measurements: TEU's:

KNAPE VOGT MFG 2700 OAK INDUSTRIAL DR. GRAND RAPIDS MI 49505 USA

16.00

Country of Origin: PEOPLES REP OF CHINA Coastal Region: WEST US Port: 2704 LOS ANGELES For Port: 57078 YANTIAN Arrival Date: 08/09/2006 Description FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE) FURNITURE PARTS (BALL BEARING SLIDE)

Appendix 2A

75

APPENDIX 2B In addition, Knape & Vogt imported $837,244 worth of ball bearing slides made in China from the Hengqing Hao Hardware Manufacturing Co and another $76,335 worth of furniture hardware, such as glass shelf kits, from the Manley International, Ltd. and Fuda Development Company factories in China. Below are examples of shipments from these companies to Knape & Vogt in August 2006

U.S. CUSTOMS SHIPPING RECORD HENGQING HAO TO KNAPE & VOGT, AUGUST 11, 2006 Shipper HENGQING HAO HARDWARE MANUFACTORY TIANTOU INDUSTRIAL PARK YUANZHOU TOWN, BOLUO COUNTY HUIZHOU CITY GUANGDONG CN Packaging Information Weight: 60198 KG Quantity: 4704 CTNS Shipment Detail Carrier: HTML - HATSU MARINE LTD Vessel: LT USODIMARE Voyage: 39E B/L: WTRWSZN06072091 Estimated Value: $683,325.00 AMS Commodities Container EISU3591756 EMCU2553342 EMCU3168628 UGMU8470016

76

Appendix 2B

Qty 1120 1344 1120 1120

Consignee KNAPE VOGT MANUFACTURING CO. C/O CLASSIC WAREHOUSE 4729 DIVISION ST. WAYLAND MI 49348 US Measurements: TEU's:

4.38

Country of Origin: PEOPLES REP OF CHINA US Port: 3002 For Port: 57078 Arrival Date: Description BALL BEARING SLIDES BALL BEARING SLIDES BALL BEARING SLIDES BALL BEARING SLIDES

TACOMA YANTIAN 08/11/2006

APPENDIX 2B-2 U.S. CUSTOMS SHIPPING RECORD MANLY INT’L LTD/CHINA TO KNAPE & VOGT, AUGUST 15, 2006 Shipper: MANLEY INTERNATIONAL LTD 3F-8 NO. 8 LANE 85 CHUNG TA EAST ROAD TAICHUNG TAIWAN CN

Consignee: KNAPE VOGT MANUFACTURING CO. C/O CLASSIC WAREHOUSE 4729 DIVISION ST. WAYLAND MI 49348 US

Packaging Information Weight: Quantity:

Measurements: TEU's:

10822 KG 1439 CTNS

Shipment Detail Carrier: AMPL - AMERICAN PRESIDENT LINES Vessel: HYUNDAI KINGDOM B/L: WTRWSZN06072092 Estimated Value: $8,959.00

AMS Commodities Container TRLU4326760

Qty 1439

Country of Origin: US Port: 3001 For Port: 57078 Arrival Date:

1.17

PEOPLES REP OF CHINA SEATTLE YANTIAN 08/15/2006

Description GLASS SHELF KIT,UPSCALE,PARTS OF MANTIS

U.S. CUSTOMS SHIPPING RECORD FUDA DEVELOPMENT CO/CHINA TO KNAPE & VOGT, AUGUST 2, 2006 Shipper: FUDA DEVELOPMENT CO.,LTD 4TH FL. NO. 81 CHANG AN E. RD.SEC. 1 TAIPEI TAIWAN CN TEL:8862-25230468 FAX:8862-25677083 Packaging Information Weight: Quantity:

Consignee: KNAPE VOGT MANUF. CO. C/O CLASSIC WAREHOUSE 4729 DIVISION ST. WAYLAND MI 49348 US

Measurements: TEU's:

16185 KG 610 CTNS

Shipment Detail Carrier: AMPL - AMERICAN PRESIDENT LINES Vessel: HYUNDAI PATRIOT B/L: WTRWSZN06072041 Estimated Value: $67,376.00

AMS Commodities Container

Qty 610

Country of Origin: US Port: 3001 For Port: 57078 Arrival Date:

2.00 PEOPLES REP OF CHINA TACOMA YANTIAN 08/02/2006

Description NO COMMODITY

Appendix 2B-2

77

APPENDIX 2C In the three-month period from September through November, 2006, Grass America located in Kernersville, NC imported 12 shipments of drawer slides with a total landed customs value of $1,722,701 from Kaisi Hardward in China. Below is an example of one of those shipments: U.S. CUSTOMS SHIPPING DATA KAISI HARDWARE TO GRASS AMERICA, NOVEMBER 11, 2006 Shipper KAISI HARDWARE CO.,LTD HUANSHI ROAD DA CHONG NANSHA PANYU GUANGDONG CHINA TEL:8620-84983138 FAX:8620-84983126 Packaging Information Weight: Quantity:

115469 KG 3591 PCS

Shipment Detail Carrier: CACG - CMA-CGM Vessel: CSCL SYDNEY Voyage: PX284 B/L: CMDUGZ1252410 Estimated Value: $443,181.00

78

Appendix 2C

AMS Commodities Container

Qty

TOLU3515167

76

TPHU5069767

836

Consignee GRASS AMERICA INC. PO BOX 1019 1020 HWY 66 SOUTH KERNERSVILLE NC 27284

Measurements: 113 CM TEU's: 12.00 Country of Origin: PEOPLES REP OF CHINA US Port: 1401 NORFOLK For Port: 57078 YANTIAN Arrival Date:

11/13/2006

Description MATERIALS AND HAS BEEN FUMIGATED AS PER THE REQUEST OF IPPC. FREIGHT PREPAID NVOCC HOUSE BILL NO.:CNCAN4050617502 TOTAL:3591CARTONS FUINITURE PART DRAWER SLIDE HS CODE:83024200 PO 57271(4)/57321/57271(5)/56893/ 57321(2)/57321(3)/56985/57907/ 57428/57247 THIS SHIPMENT CONTAINS REGULATED WOOD PACKING MATERIALS AND HAS BEEN FUMIGATED AS PER THE REQUEST OF IPPC. FREIGHT PREPAID NVOCC HOUSE BILL NO.:CNCAN4050617502 TOTAL:3591CARTONS FUINITURE PART DRAWER SLIDE HS CODE:83024200 PO 57271(4)/57321/57271(5)/56893/ 57321(2)/57321(3)/56985/57907/ 57428/57247 THIS SHIPMENT CONTAINS REGULATED WOOD PACKING MATERIALS AND HAS BEEN FUMIGATED AS PER THE REQUEST OF IPPC. FREIGHT PREPAID NVOCC HOUSE BILL NO.:CNCAN4050617502

APPENDIX 2D In the three-month period from September through November, 2006, Fulterer USA, Inc of High Point, North Carolina imported $546,101 worth of furniture drawer slides from the Kaisi Hardware company in China. Below is an example of one of those shipments:

U.S. CUSTOMS SHIPPING DATA KAISI HARDWARE TO FULTERER USA, Inc., SEPTEMBER 10, 2006 Shipper KAISI HARDWARE CO.LTD. HUANSHI ROAD DACHONG NANSHA PANYU GUANGDONG CHINA TEL:86-20-8498-3138 FAX:86-20-8498-3126

Consignee FULTERER USA 542 TOWNSEND AVE,HIGH POINT,NC 27263 USA TEL:001-336-431-4646 FAX:001 -336-431-4620

Packaging Information Weight: Quantity:

Measurements: TEU's:

16351 KG 800 BOX

Shipment Detail Carrier: MLSL - MAERSK LINE Vessel: SL CHAMPION B/L: DEWCZE6044600797 Estimated Value: $62,757.00

AMS Commodities Container PONU0381052

Qty 800

Country of Origin: US Port: 1401 For Port: 57078 Arrival Date:

5.60

PEOPLES REP OF CHINA NORFOLK YANTIAN 09/10/2006

Description 800 CARTONS FURNITURE PARTS 26 PALLETS DRAWER SLIDES

Appendix 2D

79

APPENDIX 2E In the three-month period September through November, 2006, Fastec Industrial Corporation in Elkhardt, Indiana imported $354,483 worth of drawer slides from the Kaisi Hardware company in China. Below is an example of one of those shipments:

U.S. CUSTOMS SHIPPING RECORD KAISI HARDWARE TO FASTEC INDUSTRIAL, SEPTEMBER 11, 2006 Shipper KAISI HARDWARE CO. LTD HUANSHI ROAD, DA CHONG NANSHA PANYU, GUANGDONG, CHINA

Consignee FASTEC INDUSTRIAL CORP 23348 CR 6 ELKHART, TN 46515

Packaging Information Weight: Quantity:

Measurements: TEU's:

20164 KG 1328 PCS

Shipment Detail Carrier: CACG - CMA-CGM Vessel: MSC TEXAS B/L: CMDUHK1277512 Estimated Value: $57,151.00

AMS Commodities Container TOLU3580310

80

Appendix 2E

Qty 1328

Country of Origin: US Port: 2709 For Port: 57078 Arrival Date:

30 CM 1.56 PEOPLES REP OF CHINA LONG BEACH YANTIAN 09/11/2006

Description 1328 CTNS ========= FURNTIURE PARTS DRAWER SLIDES (39 PLTS) FCL/FCL (CY/RAMP) FREIGHT PREPAID TOTAL: 1X40' CONTAINER ONLY THIS SHIPMENT COTNAIN SWPM TREATED AND MARKE ACCORDING TO REGULATIONS REMARKS ------THIS CMA CGM NVOCC HOUSE BL - CROSS REFERENCE WITH MASTER B/L NUMBER HK1277511

Appendix 3 U.S. Companies Importing from the Kaisi International Hardware Company in China Knape & Vogt Manufacturing Company 2700 Oak Industrial Drive NE Grand Rapids, MI 49505 www.knapeandvogt.com Phone: (800) 253 1561, Fax: (616) 459-1260 Peter Martin, President and Chief Executive Officer The company describes itself as “a leading designer, manufacturer and distributor of drawer slides, shelving, storage and ergonomic office products.”

Revenue in 2006 were $164.9 million.

(In July 2006, Knape & Vogt was acquired by Wind Point Partners based in Chicago.)

Grass America Inc. P.O. Box 1019 1202 Highway 66 South Kernersville, NC 27284 www.grassusa.com Phone: 800-334-3512 Fax: 336-996-5149 Charles J. White, Jr., President According to the company, Grass is committed to “producing the highest quality hinges and drawer slides in the world...” backed up by “the Grass promise....we will stand behind this commitment for as long as you own any Grass products.”

Note: All of Grass America, Inc. import records from the Kaisi factory include the following statement: “This shipment contains regulated wood packing materials and has been fumigated as per the request of the IPPC.” The fumigation is to prevent more destructive beetles and other insects from entering the U.S. via these shipments. It shows that if companies are legally regulated, they will at least try to do what is right. If Grass America and the other U.S. companies were also held legally accountable to respect basic, internationally recognized worker rights and health and safety standards, conditions for workers in China would greatly improve.

U.S. & Canadian Companies Importing from Kaisi International

81

(Grass is an Austrian company founded in 1947.)

Fulterer USA, Inc. 542 Townsend Avenue High Point, NC 27263 www.fultererusa.com Phone: 336-431-4646 Fax: 336-431-4620 Herb Schmidt, Vice President (Fulterer is an Austrian-owned company that manufactures drawer slides.)

Liberty Hardware Manufacturing Corporation 140 Business Park Dr. Winston-Salem, NC 27107 www.libertyhardware.com Phone: 800-542-3789 Fax: 336-769-1839 Jerry Volas, President (Liberty Hardware is owned by the Masco Corporation of Taylor, Michigan.)

Liberty Hardware furniture parts made at Kaisi International Hardware factories in China can be purchased at Home Depot.

Home Depot 2455 Paces Ferry Road, NW Atlanta, GA 30339 www.homedepot.com Phone: 770-433-8211 Fax: 770-431-2685 Francis Blake, Chairman & CEO

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Fastec Industrial Corporation 23348 CR 6 Elkhart, IN 46514 www.fastecindustrial.com Tel: 800-837-2505 Fax: 574-266-0123 Charles White, President In 2005, Wesco International Inc. in Pittsburgh, Pennsylvania, purchased Fastec for approximately $32 million.

GlideRite Hardware Company 515 West Allen Ave. Suite 10 San Dimas, CA 91773 www.gliderite.com Phone: 909-599-7752 Frank Guccione

Fax: 909-394-0254

Baer Supply Company 909 Forest Edge Drive Vernon Hills, IL 60061-3149 www.baerco.com Phone: 800-944-2237 Fax: 888-558-BAER Scott Zettek, CEO According to the company’s website, “Baer Supply Company is one of the nation’s leading specialty wholesale distributors to the woodworking industry, offering an exhaustive inventory of decorative and functional hardware and fittings...” In 1997, Baer was purchased by the Würth Group of Germany, which is “the world’s largest fastener distributor.”

Canadian Companies importing from the Kaisi International Hardware Company in China: Palliser Furniture, Ltd. 55 Furniture Park Winnipeg, Manitoba R2G 1B9 Canada www.palliser.com U.S. & Canadian Companies Importing from Kaisi International

83

Phone: 204-988-5600 Fax: 204-663-1776 Arthur DeFehr, President and CEO U.S. sales account for almost three quarters of Palliser’s wholesale income.

Among the stated core values of the Palliser company are: “Demonstrate integrity in all relationships” and “promote dignity and value of each other.”

In March 2006, Palliser pleaded guilty to violating the Workplace Health and Safety Act and paid a penalty of $103,000 after a woman’s right hand was partially crushed while working on a roll coat machine which applies lacquer to wood panels.

In 2005, Palliser Furniture laid off 200 Winnipeg workers as it shifted most of its leather cutting and sewing work to Mexico, where it expects to employ up to 1,400 workers.

A message from Palliser Furniture’s president, Art DeFehr on the company’s website reads in part: “We are committed to use the skills and resources of our globe to bring you leading-edge designer and innovative products delivered to your requirements. We are also committed to leave the globe in as good condition as we find it—and maybe a little better.

God has blessed us and we seek to honor our Creator by being responsible in our business practices and our social and environmental impact.”

Mr. DeFehr and his Palliser Furniture company could do great things if they would work with their contractor in China to clean up the Kaisi Metals factory and to bring it into compliance with internationally recognized worker rights and health and safety standards.

Their workers in China would greatly appreciate this.

DeFehr Furniture Ltd. 125 Furniture Park Winnipeg, MB R2G 1B9 Cananda www.defehr.com Tel: 204-988-5630 Fax: 204-663-4458 Email: webrequests@defehr.com Andrew DeFehr, CEO The DeFehr Furniture company was, until recently a division of Palliser, a family-owned company whose president is Arthur DeFehr.

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Broken Lives: Behind U.S. Production in China

S E V I L N E K BRO DO WE HAVE TH

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National Labor Committee 540 West 48th St., 3rd Fl., NY, NY 10036 (212) 242-3002 fax: (212) 242-3821

S S E E V I V I L L N N E E K K O O BBRR UTCSTS D DC O OU R R P P R R I I E E H H T T T U U O O OR OERAE BAB EM RAERM A C C S S E E ..

I I N N EM A A P P HTEHM T M M E E K K CO CO A A M M O O H H W W PLPELE THTAHNANTHTEHEPEPOEO