Human cost behind bargain shopping

Our first stop is a large factory that's done business with several American giants.

Factory Manager: “We work for Sears, Wal-Mart, Kohls.”

We've brought along a denim shirt and ask if they could make one like it for our company, Hansen Fashions, to sell in the U.S. We explain that like other American companies we're not just looking for the lowest price.

Kernaghan: “Of course, like you, we have a certain reputation in the United States which we have to guard.”

We want assurances that their working conditions are humane and that they comply with those codes of conduct required by U.S. companies.

Kernaghan: “We're certain that the factory is in a hundred percent compliance, you know?”
Factory Manager: “Hundred percent. That's what I say.”

To try to prove their point, they take us on a factory tour. We see American companies' codes of conduct posted in a public area. And they say they go further. They have a medical office for employees, though on the day of our visit, the doctor isn't in. On the factory floor, they assure us they don't overwork their employees.

Dateline: “So how many hours normally do they work?”
Factory Manager: “Eight hours, 8 to 5 --
Dateline: “Really?
Factory Manager: “-- with one hour lunch break, plus two hours' overtime up to 7 p.m..

That's 10 hours a day. Based on a six day work week, that’s a total of 60 hours, the maximum allowed under Bangladesh law and most corporate codes of conduct.

At a second factory where we take our denim shirt, we hear the same kinds of promises about working conditions. And this executive boasts about his relationship with his employees:

Factory Executive: “They are very much happy with the management. Yes they love us.”
Dateline: “This is Fila?”
Factory Manager: “Yeah, yeah, for America.”

Most of what they make, they say, is headed for the U.S. They make NFL sportswear. At the second factory, we ask what kind of a deal they can give us on our denim shirt.

Factory Executive: “Five point five [$5.50]. It is final. No bargaining.”

$5.50 per shirt is less than half what it would cost to make at a factory in the U.S. We tell him we're interested, and the next day we return, saying we're ready to close the deal, but only if he'll agree to sign a basic code of conduct. The terms include what many American retailers ask for, to obey local laws by guaranteeing one day off per week and a maximum of two hours overtime per day.

And he signs.

We also want to make sure he's paying his employees at least the minimum wage, which in Bangladesh is extremely low, less than 20 cents an hour. So we're stunned when he says he pays 10 times that amount.

Factory Executive: “$2 per hour.”
Kernaghan: “Per hour, $2, here?”
Factory Executive: “Yes.”

$2 an hour sounds much too high to be true.  We wonder if he understands us, so we ask again. He doesn't know that over a two-week period, we've been monitoring his factory with our hidden cameras. We've been documenting the real working conditions and speaking with some of his workers.

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