DECEMBER 1985 - VOLUME 6 - NUMBER 18
Baseball Manufacturers Taking A Walk On Workers Rightsby Allan Ebert
In the garbage-strewn industrial suburb of Port-au-Prince, Haiti, 3,500 Haitian women are employed by five U.S. sporting goods companies to make 90 percent of the world's baseballs, including every baseball used in the major leagues.
Although baseball isn't played in Haiti, the country lures U.S. sporting goods companies and other assembly industries to its shores by offering both cheap labor and significant tax "holidays." And now, under the Caribbean Basin Initiative (CBI), U.S. companies can establish offshore manufacturing facilities in 27 Caribbean countries, including Haiti and re-export those goods to the U.S. duty free for 12 years.
The principal corporations involved in this $75 million annual industry are the Rawlings Sporting Goods Co., a division of Figgie International, MacGregor Sporting Goods Inc., and Wilson Sporting Goods Co., a division of Wesray Corporation. All of these companies have their facilities located in the industrial park on the edge of Port-au-Prince, Haiti's capital city.
Haiti is the poorest country in the Western hemisphere, with an average annual income of $320. Small farmers in the countryside barely make $160 a year. The women who stand all day hand-stitching cowhide baseballs earn more than that. They make $3.10 per day, swinging their arms like butterflies to make 108 stitches per ball, 3 dozen balls per day. nearly 10,000 a year. The average cost of labor to produce a baseball, that will be sold anywhere from $2.50 to $4.50, is nine cents.
Rawlings Sporting Goods employs about 1,300 women in its Port-au-Prince facility. It is the sole supplier of baseballs to the major leagues under an exclusive multi-year contract and has an equally exclusive contract with the International Baseball Association (IBA). Rawlings and IBA are vigorously lobbying the International Olympic Committee (IOC) to make baseball an Olympic medal sport for the 1988 Games in Seoul, South Korea. This could increase Rawlings sales world-wide by as much as $100 million. If baseball goes to the Olympics, national teams would be encouraged to take up the sport, and Rawlings, along with its competitors in Haiti, who have a corner on the market, would reap the profit. Sales of baseballs, uniforms and other equipment could reach over a billion dollars.
Rawlings is one of several sports related divisions of Figgie International. Figgie's consumer division, which includes Rawlings, Adirondack bats, and Fred Perry sportswear, had a total net sales of $125 million in 1984. Rawlings itself had 1984 net sales of $26 million, up 17 percent from the previous year.
According to Figgie International's first quarter report, the company has assets of $508 million; its first quarter profit was $15 million. Along with its sports divisions, Figgie International is also growing as a defense contractor. In 1969 it acquired Hartman Systems, an electronics company. Hartman Systems designs and manufactures electronics systems for the military. Hartman Electrical Manufacturing, another division of Figgie, has lucrative contracts with McDonnell Douglas to supply electrical relay systems in the Air Forces' F-15E fighter jets. The Air Force plans to build 392 of these air-to-air fighter bombers in the next few years.
Rawlings' competitor in Haiti is MacGregor Sporting Goods, Inc. It is a small company compared to Rawlings' parent Figgie International. MacGregor's net sales in 1984 totalled $36 million, a 39 percent jump from the previous year. Gross profits increased 22 percent in 1984. The Haitian facility is increasingly making a larger share of MacGregor's products.
MacGregor employs approximately 1,485 people fulltime at its Haitian facilities. Another 450 are employed at a New Jersey plant, 135 in a Wisconsin operation and 50 more at a Georgia plant. Although hundreds of MacGregor's New Jersey employees are covered by collective bargaining agreements, Haitian workers haven't any such right. There are only government unions which have to accept the minimum in benefits. Haitian women who stitch baseballs for the World Series have no maternity leave and even breaks are frowned upon because they make it impossible to meet the quotas set by the company.
The Chairman and Chief Executive Officer of MacGregor, Frederic Brooks, refuses to comment on working conditions at the Haitian plant, but recently told a reporter that "The Haitians are warm, decent people. They are only too desirous to work because of their high unemployment rate. They are very pro-American."
The Duvalier dictatorship has made every effort possible to bring in more off-shore assembly plants like Rawlings and MacGregor. A U.S. company gets an eight-year tax "holiday," whereby it pays no taxes and thereafter only pays on a slow, gradual increase in taxation. There is a guarantee of full convertibility of cash, without any requirement that the company get permission from the central bank, as in some other countries. Thus, MacGregor, Rawlings, and others like them can reap their profits and immediately move their money out of the country.
U.S. companies heading down to the impoverished island gain not only important tax benefits but cheap labor coupled with proximity to the United States. "Part of the reason of choosing Haiti was its easy access. There's a daily non-stop flight from New York to Haiti that takes three and a half hours-compare that with a business trip to the Far East," said Brooks.
Reagan's CBI has made Haiti even more attractive for assembly businesses. Manufacturers in the CBI program do not have to reveal any documentation of their marketing costs. Thus, they can claim high costs to offset the limited duty charges they may have to make in the future.
In 1984, Brooks and 21 other corporate executives visited Haiti to investigate further investment ideas. One of the highlights of their trip was a meeting with the dictator himself, "Baby Doc" Duvalier.
"Whether you like the government or not, it is very stable. It has had no periodic regime changes. That makes a good conduit for companies to operate in," said Brooks.
A third sporting goods company in Port-au-Prince is Wilson Sporting Goods Company. They were acquired this year by Wesray Capital Corporation, a private investment banking firm based in New York and New Jersey. While owned by PepsiCo Company, Wilson had been operating at a considerable loss.
Wesray acquired Wilson as part of an acquisition spree where it gobbled up 14 companies, including Atlas Van Lines Inc., Gibson Greetings Inc., Premium Corp., Wear-Ever Aluminum Inc., and Proctor Silex, also in Haiti.
Wilson, which accounted for 3 percent of PepsiCo's sales of $7.7 billion in 1984, was sold for $150 million to Wesray. Wesray's Chairman William Simon said after the acquisition, Wesray would operate Wilson as an independent company and would be "expanding its operations aggressively."
Although Rawlings, MacGregor and Wilson have brought 3,500 jobs to the poverty-stricken country, many critics charge that because of the hefty tax breaks that the country offers, few Haitians really benefit from the sporting goods operations.
The Haitian Corporate Campaign, inspired by the North American Justice and Peace Commission which "adopted" Haiti as a priority social concern, was launched in September 1984 to look at the impact of U.S. companies operating in Haiti. The HCC has specifically targeted the Haitian operations of the baseball manufacturers and has acquired stock in Rawlings, MacGregor, and Wilson. The HCC hopes to "exercise their social responsibility by influencing their companies in matters that affect the justice of the marketplace. It means exercising economic power for people as well as profit."
Heading up the HCC, which is located in San Antonio, Texas, is Rev. Tom Byrne. He wrote to Harry Figgie, Chairman of Figgie International, in March 1985, enclosing articles about the company's practices in Haiti from the Wall Street Journal and the Multinational Monitor. Rev. Byrne asked Figgie for a company reaction to the articles. He also asked Figgie to disclose the number of employees, the company's pay scale and working conditions in the Portau-Prince plant.
In responding, Harry Figgie claimed he hadn't seen the articles, however, "[a]s far as Haiti goes, we are the largest employer in Haiti to the best of my knowledge and have been for quite some time.
"If we are the largest employer in Haiti, then I would say that we contribute to the economy and well-being of the people that at least work there."
HCC made a similar inquiry of MacGregor's Chairman Frederic Brooks, but never received a response. After purchasing stock, HCC has "begun dialogue with management on the working conditions of the plants in Haiti." They hope to pressure the companies to raise wages, provide better fringe benefits, grant promotions and improve their health and safety standards.
Allan Ebert is program associate for the Washington Office on Haiti.