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December 19, 2005

PhD Candidate Henrietta Lake challenges assumptions on the best way to run a sweatshop - recommending less sweat and more cents

Henrietta Lake, a former journalist more used to quizzing corporate executives in the City of London and hoping around the capital in its famous black cabs, has more recently found herself on the back of motorbikes navigating the muddy roads during the monsoon in West Africa and being jolted around in old cars on bad roads in some of India’s toughest industrial zones.

“Sometimes I feel like my research work has equipped me more with the skills of a seasoned ‘road warrior’ than anything else”, jokes Henrietta, a PhD Candidate at The Fletcher School. In fact what brings Henrietta to these far flung parts of the world is her research on global supply chains, which more often than not these days start in developing countries, from the cocoa farms of Ivory Coast to the garment factories in India.

For her doctoral thesis, Henrietta is studying the outsourcing of garment manufacturing to Asia by the big brand names on our high streets. In particular she is examining the effect of working conditions on productivity. She aims to show that even in a place like India, where labor is comparatively cheap, “factories can add to, rather than reduce, their profits by investing in their workforce, training them and creating decent working conditions.”

A native of Great Britain, who began her career as a financial journalist and section-editor on The Times, in London, Henrietta became interested in supply chains at Fletcher while studying international business and looking at the role corporations play in international economic development, specifically human capital formation.

She started out studying chocolate—the use of child labor in its production that is.

During her first summer at Fletcher, she was working for a corporate social responsibility (CSR) consulting firm and was asked to investigate allegations of trafficking and child slavery on cocoa farms in Ivory Coast. The big-name chocolate companies like Hershey, Nestlé and Mars were threatened with boycotts and controls unless they did something to address these alleged human rights violations. The next summer, she decided to go and check it out for herself. “It was really important for me to get out there and see the reality on the ground before I made any recommendations”. Based in Kolondièba in southern Mali, Henrietta trekked through the villages along the Ivory Coast border to investigate the situation.

Challenging the assumptions people had about what was going one she found out that: “rather than poor Malian families selling their children into slavery, these kids were secretly leaving their homes, drawn by the promise of opportunity in bright lights of the cities across the border. Unfortunately many would be intercepted at bus stations by traffickers who offered them work in the city but often abducted and sold them to the cocoa farmers instead”.

The work that Henrietta is currently doing on her doctoral thesis, this time on the apparel supply chain, is busting more assumptions. “It makes business sense to treat workers well, they are more productive and make fewer mistakes, but in this context many people assume it is a cost with very few associated benefits.”

The Indian garment factory owners, who operate in a low-margin industry where labor is plentiful and employee turnover is high, see little reason to invest in training or even provide basic health services for their workers. Why should they seek to change their primary competitive advantage: the supply of low-cost labor? “Meanwhile the big brand clothing buyers in the US and Europe are pushing these same contractors to produce cheaper clothing for them, of higher quality, in shorter time and manufactured in better working conditions, a seemingly un-attainable set of demands,” explains Henrietta.

Previously the buyers have relied on codes of conduct to protect their brand image and ensure a basic standard of working conditions at their contractor factories, backing this up with inspections. “But this punitive approach is clearly unsustainable and not very helpful,” she adds.

Instead Henrietta is working with a consortium of major clothing brand names and a host of manufacturers in India to find an alternative approach. By analyzing of the costs and benefits of different human resource management practices she aims to find out what works and is cost-effective in this context.

“Under pressure from buyers and with competition from China increasing these factories need to find ways to be more productive without busting their bottom lines”. This requires new business models: “Everyone needs to think about it differently, from the buyers, which need to take responsibility for the knock-on effect of their own inefficiencies further down the supply chain, to the factories which need to see good working conditions as a part of their value proposition.”

Henrietta will defend her thesis in 2006. After that, she wants to apply her knowledge by advising multinational companies on how to enhance labor performance within their global supply chains.

“I’m optimistic,” say Henrietta, “I’m getting some pretty interesting results already that show how small changes can really help the factories with their retention and quality issues,” she muses.

By Raya Widenoja, MALD '07

Posted by jessica at December 19, 2005 12:11 PM