Where Our Products are Made: Disclosing Our Factory Locations

Here it is, the street address of the contract factories which make MEC branded products (follow this link www.mec.ca/factories).  MEC is the first Canadian retailer to disclose its factory base.  It's one step closer to greater transparency.

Disclosing our vendor list involved 18 months of planning.  We had to deepen our understanding and monitoring of contract factories.  We had to establish an administrative system to support all of this.  We had to negotiate consensus internally and with our business partners overseas.  Not all factories supported our efforts as one can read in our factory disclosure list.

Two important concerns that troubled us throughout this initiative were commercial and brand risks.  By disclosing the physical location of our factories, we were weary of helping our competitors "copy" our merchandise.  Retailing is cut-throat and monitoring the product lines of competitors is common.  In addition to our commercial worries, we were tepid about possibly exposing ourselves to inquisitive journalists who may conduct an unflattering profile of one of our contract factories.  Bad press is never good for a brand's image.

These risks have not disappeared.  Nonetheless, we believe the importance of transparency outweighs the risks.  

This disclosure exercise is not without shortcomings.  Originally, we played with the idea of linking a product to a factory and its audit findings.  We quickly withdrew that idea as beingcommercially reckless in terms of product competitiveness and intellectual property.  Equally significant, by making a public statement on the performance of a named factory, we would expose ourselves to a host of legal issues including being sued for maligning a business partner.  As much as we want to connect the consumer to the factory which makes the product, we must balance our ideals with the real world of running a retail business.   Some may see this as a cop out.  Frankly, I see it as maturity.  

Comments

[Charlie]

-22 Factories excluded-

"A minimum of $10,000 in purchase orders was used to determine the list; we bought less than $10,000 from the 22 excluded factories"

Why not include the smaller factories?

[HC]

Hey Charles,

We excluded factories under $10,000 in this exercise for the following reasons:

1. Resource constraints - Every audit is time consuming. On average an audit will discover 5 - 10 issues. Each one of these issues typically involves multiple sub issues. The verification and resolution of these issues require investigation, face time and negotiation. All of this is across the oceans involving different cultures, languages and legal standards. Limiting the scope of this program is one way to handle the typical exponetial growth of issues in factory audits.

2. Audits typically point out issues to improve. These issues have cost implications for factories. Buying $10,000 per year from a factory builds a very weak rationalie for a factory to reengineer its payroll practices just because MEC instructs it to. More simply, the less we buy the lower is our leverage.

Cheers

[Rico]

Great transparency!

[Matthew]

It would be nice to see thias on a google map!

Thank you for sharing this information. I think it is important for all who shop MEC to see this.

-Matthew

[Harvey Chan]

Hey Matthew,

Yes, it would be visual "mind blowing". Especially if can be imaged on Google Earth. We don't have any plans to do this right now but sure doesn't stop someone else from doing it.

Cheers

[Peter]

Thanks Harvey and MEC.

It's great to see the transparency and this has the added benefit of showing everyone just exactly how the industry contracts with factories works.

I second Matthew's suggestion of plotting this information using Google Maps, especially since they now allow you to create "custom" maps with points-of-interest. If no one else does this I will try to do it in my spare time and post a link.

[Bill]

I'm very surprised to see MEC taking on this kind of exposure to competition. While I admire the bravery, I don't really understand the need. Because we're a coop, I think most members would be satisfied with unique (maybe highly visual/graphical) forms of reporting rather than the details on factory locations.

As suggested by others, Google Earth portrayal or maybe some simple pie charts on numbers of suppliers by region/country or volume of supply by region/country could suffice and be less effort both to produce and to absorb.

On the flip side, I did explore a couple of factory sites just to try to get a sense of why I might like to know exactly what factories were supplying MEC. Not all were easy to identify and some presented interesting data when I dug in a bit.

However, again I found myself wondering why I wouldn't prefer to have this information digested for me. Is the reason for this high level of transparency through primary source information a challenge to other retailers?

Are we trying to set a new bar for transparency in the industry? If not, I trust MEC digested information because we have a board and staff that care. I'd rather have easy to digest information about how we qualify our suppliers (i.e. what's in an audit).

But maybe I've missed the point. Updating a list of factories is relatively easy - updating reports and easy to consume information about process might not be.

[HC]

Bill,

Thanks for the suggestion. We provide two types of information. The list of our factory locations and the type of issues we're finding in the factories.

Both complement one another and adds to transparency.

Chers

[Annik Moyal-Waldman]

Full disclosure is the best way to be in today's economic climate. Building trust is the way to go!!

[Marcella Kraay]

Way to go MEC!! I am proud to be a member of a coop that takes its responsibility towards the workers that produce its products as well as taking steps to inform its members. One question I do have is how MEC finds out about problems in the factories (do you actually talk to people in the work place or do they have a possibility to file complaints) and what is MEC's role in solving these problems once they have been found?

[HC]

Hi Marcella,

We audit our factories which includes interviewing workers. We also have a worker hotline in China where workers can report incidences. We then investigate them.

MEC's role is to ensure that the workplace is safe and compliant with local employment standards.

Thanks for your support.

[Grant]

Looking at the list, I was terribly disappointed to see there was twice as many factories in China than in Canada. Years ago when I became a MEC member, one of the things that appealed was the high proportion of Canadian manufactured goods. Whilst I accept I cannot avoid some goods made in China, when shopping, I take the option of avoiding chinese goods if possible. I've noticed that it's increasingly hard to avoid the China label at MEC and it doesn't sit well with me. I find myself buying elsewhere more and more. It goes contrary to MEC's stated aim of supporting local businesses and promoting local sourcing. Perhaps the board of MEC no longer believe in these things! Perhaps the bottom line matters more these days! Certainly increasing profit margins by outsourcing to China does that, yet prices at this co-op don't seem to drop significantly as a result. It seems that MEC has become a retailer seeking a greater market share rather than a Canadian cooperative serving its existing members. At a time when financial uncertainty abounds and Canada needs jobs, MEC should not be outsourcing jobs to China. It is more ethical to support Canadians. A fact that the new US president seems to realize in relation to US jobs.
The board of MEC should remember this is a cooperative and not a retailer, however compiling this list is certainly a service to the membership and it will be interestng to see what develops from it.

[HC]

Hi Grant,

Thank you for your valid comments. Personally, I believe in Canadian manufacturing but only if it supports a well paid workforce. Apparel manufacturing is a minimum wage industry that largely attracts immigrant women (and even these women are avoiding this occupation).

Thanks.

[Grant]

HC - Surely it goes beyond merely sewn goods, as MEC sells equipment as well as clothing.
Additionally just like we are encouraged to buy from farmers markets to reduce our carbon footprint by less transport distances/costs/greenhouse gas emmissions, why would outdoor gear be different? If purchasing locally sourced vegetables helps reduce an individuals carbon footprint, think of the exponential reduction should an organization like MEC make an active decision to source it's wares similarly.
Not only is this one of the basic principles that attracted me to MEC and yet MEC has diverged from, but MEC should be setting a positive example to others by operating in such a manner.
Incidental to the above and part of the reason I choose against goods from China, is the enormous carbon footprint that country's industry has. The less goods I buy that originate there, the better it is for the environment.

[HC]

Hi Grant,

You're right. China has become the largest aggregate producer of carbon gases. However, on a per capita basis, you, me and every Canadian produces 5 to 6 times more carbon than the average person in China (and a even greater ratio for the rest of the developing world.) It's the irony of environmental politics. We're astonished at China's environmental record yet we as individuals in the West are warming the planet much faster than our counterparts overseas.

I fully understand your other points about buying local, fair trade and organic. In terms of food products, I personally prefer local and natural when possible. When it comes to factory made goods, honestly, I look for price, quality and functionality. Regrettably, very few Canadian firms can do it competitively.

I've blogged extensively on many of your points. Hit the Environment and Ethical Sourcing category.

Cheers

[Tommy]

You might fool a few of your members and pull off the "good corporate citizen " routine while sourcing in Asia but seriously dude, you have a poor reputation for bullying in many of those factories.

In Canada, the local sewn products industry wrote you off a few years ago. Don't try and paint a picture that we don't have the skilled workforce or it's just immigrant woman working within. Check figures with the CDN Apparel Federation or the Goverment. Or the BC Apparel Federation.Things are glum in BC, but ok in many others.

Like the jackass at HBC/Zellers who tried to tell Canadians Olympic apparel could not be produced in Canada, why don't you just say it like it is and tell everyone you make more money sourcing overseas. Regrettably, I will tell everyone MEC and HC blog guy are hypocrites and are being deceptive about many things.

[HC]

Tommy,

You're right. We all live in a world of ironies. Retailing is about getting people to consume. Consumerism is at the heart of our climate change woes.

Consumers like you and just about every other Canadian want deals at the cash register. We want it even more given the looming economic turmoil. But what consumers don't realize is that low prices are directly tied to "Made in Asia". A "Made in Canada" product comes with a certain price tag, a tag most Canadians don't want to pay and most retailers don't want to stock.

Have no regrets about telling everyone what you think about MEC. The reality is retailers and consumers live in a world of ironies (or in your words hypocrisy). The sooner we have an informed debate about what's happening in the our world and the very serious climate and poverty challenges facing the human race the better. People are reasonable and bright. They can discern between informed reasoning and vapour blogs.

Keep blogging.

[Tommy]

HC,

You seem quite adept at stickhandling thru these issues and trying to deflect certain points. You do so with the consumerism angle and again bring it back to CDN's (or consumers) wanting low prices. Who doesn't ?

Why don't you tell all your informed readers what an FOB price is ? Or what LDP means ?

Maybe when they find out the thermal underwear you sell at MEC is purchased for a mere fraction of the retail prices they might even demand lower prices.

So in the end your sourcing strategies are about getting lower prices yes, but more importantly it is about maximizing YOUR profit margin. Irony, hypocrisy, just be honest and tell the truth.

We are so past being spun by guys like you pal.

I'll be sure to make the BC and Canadian Apparel Federation know of these comments and let them too form their own conclusion as well.

[HC]

Tommy,

MEC's Board (which is elected by members) have mandated MEC to run a retail business that hits a gross margin of 33-35%. Second, MEC regularly compares the price of a basket of goods at its own stores with that of competitors. The goal is to price lower or equal to the competitors.

What this means is MEC just can't mark up goods to maximize profit as you claim. There are constraints. MEC must hit the GM target plus be price competitive.

It is highly unlikely that MEC will disclose costs at the item level as this is proprietary and competitive information.

The great thing about MEC is that its a voluntary coop. Members choose to shop here. If they can get a better deal on thermal underwear else where, more power to them. And if everyone, as you claim, is "tired of being spun" by MEC they too will find a better retailer. Again more power to them.

That's the great thing about the market place. It discerns substance from fluff - something the BC and Canadian Apparel Federation are equally adept at doing.

Keep the faith.

[Virginia Daniel]

I notice 3 suppliers in Israel. Considering the Israeli actions in Gaza, I would encourge MEC to join the ethical people of the world and boycott Israeli produced goods.

[Jim]

HC, I appreciate your honesty, but also your diplomacy in answering the many comments. It's an intersting discussion to read.

[HC]

Hi Jim,

Thanks.

[Nancie]

I applaud the transparency of identifying our primary sources. But I would like to second Virginia's comment about boycotting plants in Israel. I am not anti-Israel, but there must be some consequences to illegal occupation and violence against so many displaced people. Neutrality in this case is unethical. Social responsibility isn't just about working conditions, it's about not supporting oppression.

[Aimee]

It is very fashionable these days to criticize Israel. What have we become that we turn a blind eye to atrocities all over the globe (like China!) but focus on Israel fighting for survival. If MEC considers pulling out of Israel, I assume that they will also pull out of China, Thailand, Turkey (not mentioned but I have MEC things from Turkey), Singapore, Vietnam, India, Sri Lanka and Taiwan. Canada has a deplorable track record with our First Nations people, and the US, well, they are the worst with their wars in Iraq and Afghanistan. I guess we will need to shop elsewhere since there won't be much left to buy at our beloved M.E.C. So much for transparency.