Presentation to the Colleagues in Jesuit Business Education Conference - Philadelphia, PA – July 20, 2002 The Team X Story – A Practical Alternative in.

Presentation to the Colleagues in Jesuit Business EducationConference - Philadelphia, PA – July 20, 2002

• The Team X Story – A Practical Alternative in the Fight Against Sweatshops – www.teamx.coop

• Team X, Inc. of Los Angeles, CA produces Sweat X ® brand apparel.

• Team X, Inc. is a cooperatively owned manufacturing firm operating under a union contract with UNITE!, the nations premier apparel union.

• Presentation by:• Pierre Ferrari, Chairman of Team X of Los Angeles and President of the Hot Fudge

Venture Fund of Atlanta, GA - 213-362-900, 404-431-8265

• Christopher Mackin, President of Ownership Associates, Inc. of Cambridge, MA and Bilbao, Spain www.ownershipassociates.com – 617-868-4600

The Mission & Vision of teamX inc. in making SweatX® clothes

TeamX seeks to change the of lives garment workers, both those that it directly employs, as well as the hundreds of thousands of other workers in this global industry. We believe it is possible and necessary to equitably share the vast wealth generated by garment production in a sustainable manner.

Through creative marketing, we believe that SweatX will become the garment industry’s premiere brand, recognized by consumers worldwide as a pioneer of the best practices in workplace democracy, sweat-free operation, and compensation that provides workers a dignified place in the modern economy. To be successful, TeamX, starting from a seed operation in Los Angeles, must first create a financially viable business model beginning with a focus on the labor-intensive sewing and cutting production segments.

Ultimately, TeamX will seek strategic vertical integration in order to bring the entire production process within the scope of our values. TeamX recognizes that it challenges the industry status quo, much like the trade unionists and other activists, from which we must seek support and meaningful participation. Together we will create a sustainable model, which can be replicated worldwide by ourselves and others, that changes the garment industry for the better on behalf of all its workers.

Challenges to the Garment Industry

and Activists Fighting Sweatshops

• Return of Sweatshops• Threat of offshore flight

of capital and jobs

READ BEHIND THE LABELby Richard Applebaum and Edna Bonacich

Students, Trade Unionists, Progressive Musicians/Artists

and other Community Activistscan claim important victories

Results of Victories

• Media attention

• More consumers are more educated, demanding/open to sweat-free options

But…• No real solutions from industry leaders• Unions largely unable to organize workers• So, sweatshops, low wages, and serious violations of labor law continue

teamX inc. Believes

• Labor and management can cooperate to create and share wealth

• Cooperative ownership structures that include labor and management as partners in each enterprise can improve compensation without significantly raising wholesale costs

• sweatX can generate $4-5 million `revenues in first year (break even)

• sweatX can achieve revenues in the $20 million range in three to five years

• “Sweat-free” is not enough

SweatX Competitive Strategies

• Target concerned, educated consumers (25-35%) • High quality stylish casual apparel• High productivity from:

– committed workers with a stake

– latest production technology

• Patient, committed startup capital from Hot Fudge• Direct marketing to consumers • Vertical integration of production

teamX inc. Markets

• Unions • Non-profits / NGOs / activist organizations• Music/Event market…progressive bands• Universities / Colleges• Elementary Schools• Faith-based, progressive communities• Private label manufacturing

Most of above includes Internet

SweatX Products: the basics

• Style: casual active-wear (mostly tops?)

• Quality: high (push the envelope)

• Price: competitive, mid-range

• Volume: 60 workers worth (expandable)

• Hang Tags: educate the consumer

• Tag Line: “Clothes with a Conscience”

• When: NOW!

SweatX Products: range of creations

• Casual, active wear– t-shirts– sweat shirts– polo shirts– stylish tops

• Funky embellishments– Custom silk-screening, embroidery– Advanced artwork technology

Do consumers really want “sweat-free”????

• Research that shows it’s viable

• teamX inc. will add to and update research

Will stores even carry “sweat-free”?

• Allegedly sweat-free already on the racks

• Organic foods were originally resisted by retailers

• If students and consumers demand sweat-free, it will be carried

How can consumers really trust that “sweat-free” claims are for real?

(Part 1 – Compare and Contrast)

Social Awearness"Change Through Choice"“All garments identified by a "No Sweat" Labor sticker are constructed in the USA by a sewing facility which is randomly audited a minimum of four times each year by an independent auditing firm recognized by the US Department of Labor to ensure full compliance of all United States Labor and Health Codes.”

SweatX• Worker-owned Cooperative

(1 person, 1 vote)

• Unionized with UNITE!

• Liveable wages

• Health Benefits

• Voice at Strategic Level (Board of Directors)

• Actively supports

anti-sweatshop movement

How can consumers really trust that “sweat-free” claims are for real?(Part 2 - Transparency)

• Union Involvement is key• UNITE! (apparel union) as Outside Monitor structurally loyal

to the cause more than to any one firm • “Sweat-free” is not enough• Can People Live on what they earn?• “Living Wage” • Who Benefits from Profitability?

How can consumers really trust that “sweat-free” claims are for real?

(Part 3 - Workplace Democracy)

• Union Involvement is key

• Shop Floor (shop steward) representation

• Board of Directors (strategic) level representation

• Union helps “keep a Co-op a Co-op”

• They tend toward economic justice – They direct the “fruits of labor” to those who pick the fruit – or in this case - sew the clothes.

• Fulfill the explicit goals of the 19th century Labor Movement that spoke of the trap of “wage slavery” and the need for a Cooperative Commonwealth.

• Consistent with various theological traditions. For Catholics various encyclicals. One recent encyclical (Laborem Exercens) spoke explicitly of the “Primacy of Labor” – Capital works for Labor in a Cooperative

• Develop democratic interpersonal skills and strengthens civic life.

Advantages of Co-ops – Part 1

Thanks to Chris Mackin, Ownership Associates, Cambridge, MA & Tim Huet, San Francisco

• Environmentally responsible, owners are also likely to be neighbors.

• Cooperative (worker) ownership also means Local ownership. Local ownership contributes to community stability. The plant is not likely to move.

Advantages of Co-ops – Part 2

Thanks to Chris Mackin, Ownership Associates, Cambridge, MA & Tim Huet, San Francisco

Managing in a Cooperative

• High volumes, technology, complex cash flows mean … a necessary division of labor

• Professional expertise is necessary – but can also be learned

• “Good Fences Make Good Neighbors” – need to help people understand their roles

• Democracy Means you can change the fence posts.

Board of Directors

22. Fate of the Company: merger, sale,major location change

21. Selection of Board of Directors

20. Constitutionalism: Setting & MovingDecision-Making Boundaries

19. Corporate Strategy

18. Distribution of Profits (dividends,reinvestment, debt reduction, etc.)

17. Selection and Compensation ofSenior Management

16. Product, Technology, andInvestment Strategy

15. Raising Capital, Relationships withBanks and Investment Groups

14. Marketing & Advertising Strategy

13. Asset Purchases

12. Firing

11. Promotions, Job Evaluations

10. Speed of Production

9. Lay-off Policy, Employment Levels

8. Employee Compensation & Benefits

7. Grievances

6. Safety Rules and Practices

5. Hiring

4. Equipment Layout

3. Quality Standards and Measurement

2. Job Assignments

1. Physical Working Conditions

CORPORATEPOLICY

Negotiation Represen-tation

Consultation

Influence Allocation Chart

Types of InfluenceForms of Employee Voice

MANAGERIALOPERATIONS

Management

COLLECTIVEBARGAININGCONTRACTS

Voting

Shareholder Voting

CollectiveBargaining

Task ForcesCommittees

Shared Influence

DEPARTMENTLocal Policy,Planning andCoordination

2002 Ownership Associates, Inc

www.ownershipassociates.com

Input Sourcing

• High quality and unionized sources are top priorities • Labor intensive inputs are now at teamX inc.• If conflict between quality & union:

– Short run: top quality prioritized, after extensive search for quality union sources

– Medium/Long run: Unionization of input sources• Strategic partnerships with unionization

• Buy the necessary machinery

• Buy the source company, take it union

• Everything transparent (social/enviro audit reporting)

Why Are We Doing This?

• Spirit Matters:– We try to be part of a growing spiritual

movement that seeks a new bottom line for our society based on love and caring, ethical, spiritual and ecological sensitivity, and awe and wonder

– We rejoice in well-being and we seek to build a world in which everyone can enjoy a life of plenty