Time has an interesting piece about the complex situation manufacturers face when dealing with globalized production. Increased demands for cheaper, faster output and unfair labor practices have created a game of cat and mouse between factories and the teams of auditors that monitor them. The task of keeping factories compliant is getting more difficult as dishonest factory owners go all out to hide illegal practices.
A shadowy industry has sprung up in China in recent years that caters to factory owners anxious to disguise breaches of clients’ codes of conduct — illegal overtime, say, or a lack of fire extinguishers on the factory floor. Unscrupulous consultants offer quick fixes before a factory is audited; for a price, they can even pose as a fake management team to convince auditors that a sound leadership structure is in place. Factory owners can also buy computer software that presets the times when workers punch in and out, so no illegal overtime shows up on time cards. Lower-tech tactics, employed across Asia, include keeping double books, coaching workers on correct answers for auditors and paying bonuses to reward workers for passing audits. “It’s like a nuclear arms race,” says Ian Spaulding, managing director of Infact Global Partners, a compliance consultant and former director of global compliance for a large U.S. retailer. “The auditors do one thing, so the factory does another thing.”