The Solidarity Fund

The Solidarity Fund The Solidarity Fund and Gildan and Gildan Activewear, Inc.Activewear, Inc.

The Solidarity Fund QFLThe Solidarity Fund QFL

A development capital fund of Quebecers to help create and maintain jobs in Quebec (Canada) by investing in small and medium-sized businesses.

Its mission involves offering its shareholders (unionized workers, unaffiliated individuals) a fair return.

Gildan Activewear, Inc.Gildan Activewear, Inc.Founded by 2 brothers from a family of

textile entrepreneurs and their associate in 1984.

Its core business was producing low-cost T-shirts and fleece garments.

Its strategy was to compete on the basis of low prices, good quality, and fast delivery times

Their relationshipTheir relationship In 1990s, Gildan began

moving some assembly operations to subcontractors and build several factories in Honduras.

In 1995 Gildan contracted the Fund for finances.

In 1996 the Fund invested $3 million in Gildan stock and lent the company another $3 million.

IssuesIssues In 1999, the Fund’s officer undertook a new

social audit of Gildan and left 3 issues of concern.

In 2002, public controversy emerged and swirled around the company’s labor practices in its manufacturing plants in Central America.

- MSN and EMIH indicated that Gildan’s wages did not meet the basic needs, excessively high production targets, …

- Gildan fired 38 employees in Honduras that were supposed to try to form a union

In Nov 2003, the Fund had to consider to decide on what to do about their investment in Gildan Activewear.

The Solidarity Fund’s PurposesThe Solidarity Fund’s PurposesIts 2 central goals

- To democratize access to professionally managed retirement accounts.- To support job growth in Québec either through long-term investment or by investing outside companies.

The purposes why the Fund invested in Gildan Activewear, Inc. - The Fund recognized that Gildan proved to be an excellent business partner for the Fund.- It would also protect and expand Canadian jobs in design, marketing, finance.

Especially, the Fund’s investment does represent an example of social investment:

+ Develop employment opportunities+ Support community investment+ Improve institutional investors+ Look to invest in companies with good working conditions, positive relations with local community, …

Is Gildan Activewear a socially Is Gildan Activewear a socially responsible company?responsible company?

In 1999- Damaged facilities and substandard working

conditions- High level of cotton dust in the plants- An inconsistent production system

Scandal might be created by competitors who lost market share to Gildan, employees were coerced and trained by rivals to lie bad things.

In 2003 - Award for Excellence in Corporate social and ethical

responsibility - Code of ethics applied to business partners and

subcontractors- Good benefits that it offered its employees in

Honduras- Environmental achievements

Gildan’s Benefits and Costs of Gildan’s Benefits and Costs of GlobalizationGlobalization

• Thanks to expanding operations:- Early 1996 annual growth: 20-30%- Took market shares from 2 competitors: (Fruit of the Loom; Hanes)- 1998’s sales reached nearly $200 millions, market share 10%

• Thanks to thriving growth:- Top executives’ salaries: rose from $1.5 $13.3 million.

• Expansion caused distinctive operational management faced many diversity problems in operation.

The Solidarity Fund’s The Solidarity Fund’s influences on Gildaninfluences on Gildan

Did a social audit in Honduras.- Showed concern about employees’ working

conditions and wages. - Recommended ceasing all dealings with

contractors.

Requested Gildan for an investigation of the firings for union organizing.

- Recommended applying for membership in SA8000.

Arguments for divesting in Arguments for divesting in Gildan Gildan

Supervised break11-hour days, illegal firings, poor air quality in the shops, forced

pregnancy testYoung women working at a furious pace in noisy and dusty

conditionsFailure to provide day care and nursing facilities as required by

lawLack of freedom of association

Arguments against divesting Arguments against divesting in Gildanin Gildan

They gave workers salaries much higher than the minimum wage

Workers could always form a union if they were dissatisfied

Gildan’s workers have an excellent working condition (many benefits)

Always prove the world that this industry can be profitable and maintain excellent working conditions for their employees

Becoming an industry leader in a relative short period of time

Proving to be an excellent business partner for the Fund

Solutions for the Solidarity Solutions for the Solidarity FundFund

The Solidarity Fund managers should - keep its shares- step up its effort to influence the

company’s behaviors

Thanks for listening!!!