Mattel struggles to balance profit with morality

GUANGDONG PROVINCE, China — Just off a wide dirt road that leads to a densely packed jumble of factories, workers behind one guarded metal gate toil seven days a week, sometimes as many as 24 hours straight, making toys for about 20 cents an hour.

The pace makes them almost numb to the poor ventilation, the lack of bathroom breaks and a fear that they will be beaten if they complain.

Sweatshops aren't unusual, of course, in a country that possesses a large and cheap workforce and a permissive government hungry to attract big business. What makes this situation notable is that these workers make products for a company widely considered one of the most socially responsible American enterprises: Mattel.

The El Segundo, Calif.-based toy manufacturer was one of the first U.S. companies — and the only major player in its industry — to establish an independent system for monitoring and publicizing how factory workers are treated. In fact, Mattel routinely checks and rechecks hundreds of plants around the world, aiming to ensure that they comply with its 112-item code of conduct.

The seven-year effort has paid off — at least to a point.

When it comes to limiting work hours, ensuring fair pay and improving health and safety standards, "Mattel is one of the best," said Chan Ka Wai, associate director of the Hong Kong Christian Industrial Committee, which has done extensive investigations into working conditions in the Chinese toy industry.

Yet for all of that, tens of thousands of workers who make Mattel products still suffer.

One big reason is that half of the toys displaying Mattel's familiar red logo are made in facilities, such as the one here in an industrial area of Shenzhen, that the company doesn't own.

"Mattel has no way to know the truth about what really goes on here," said a 24-year-old worker at the Shenzhen factory. "Every time there is an inspection, the bosses tell us what lies to say."

Labor advocates agree that the situation is difficult. Mattel might be doing a lot to turn its own factories into showplaces, Chan said. "But their vendors look very different," he added.

Hard to verify standards

As increasing numbers of Western manufacturers shift production to China and other developing countries, Mattel's experience underscores how difficult it is to guarantee humane working conditions and still make the ever-less-expensive goods that consumers demand. It also raises the question of how much responsibility a single company should bear when it operates in parts of the world where poverty is omnipresent and the exploitation of workers is rampant.

The Los Angeles Times interviewed workers at 13 factories in southern China, Indonesia and Mexico that make Mattel products, including company-owned facilities and contractor-run plants.

Visits to five of the factories were arranged by Mattel. The Times talked independently with employees at the other plants, where workers agreed to tell their stories only if they and their employers were not identified by name.

Many said they were worried about retaliation from supervisors. Others expressed concern that if Mattel knew about the conditions, the company would cancel its contracts, casting the workers onto the streets.

"It's good that they monitor, but not if it costs our jobs," said the Shenzhen factory worker, who has performed a variety of tasks for a Mattel contractor in the last two years, most recently stamping eyes onto plastic animals. "It's better to have bad conditions than no job at all."

Across Guangdong province, on the northeast outskirts of the Guangzhou city limits, Li Xiao Hong helps churn out toys at one of Mattel's best-regarded contractor factories.

Vendor No. 5, as it's known, boasts dorms with TV rooms, a library, sports facilities, classrooms — even karaoke machines to help Li and her co-workers unwind after a long stint on the factory floor.

Still, conditions are far from ideal. The plant's work areas are so poorly lighted that they seem permanently shrouded in gray. A strong smell of solvent wafts across the facility as rows of workers hunch over pedal-operated sewing machines and gluepots.

Li is the fastest worker on a long, U-shaped assembly line of about 130 women who put together Mini Touch 'n Crawl Minnie, a scampering version of the Disney character activated by a baby's nudge.

Li moves with lightning speed — gluing the pink bottom, screwing it into place, getting the rest of the casing to adhere, tamping it down with a special hammer, pulling the battery cover through its slats, soldering where she glued, testing to make sure the leg joints on the other side still work, then sending it down the line.

The entire process takes 21 seconds.

She generally works 5½ days a week, as much as 10 hours at a time. Her monthly wage — about $65 — is typical for this part of China, enough for Li to send money back home to her poor farming family in Henan province and to afford a computer class in town.

But Li, 20, pays a heavy price: Her hands ache terribly, and she is always exhausted — a situation to which she seems resigned.

"People at my age should expect some hardship," said Li, clad in bluejeans and a pink factory blouse, which she left unbuttoned to reveal a white T-shirt emblazoned with the silhouette of Mickey Mouse. "I should taste bitterness while I'm young."

Many workers here apparently have it worse.

Last year, Mattel's independent auditors noted that the overtime extracted by Vendor No. 5 often exceeded the maximum allowed under Chinese law and under what Mattel calls its Global Manufacturing Principles.

The extra hours, inspectors found, were not completely voluntary because workers were forced to seek permission to leave after their regular shifts, another violation of Mattel's rules. Some were found to have worked for nearly three weeks without a day off, which ran afoul of both Chinese law and company mandates.

Robert Eckert, Mattel's chairman and chief executive, said he wasn't surprised that some contractor factories had violated Mattel's wage-and-hour restrictions. What's important, he said, is that the company work with its business partners to recognize and correct the problem.

So far, Mattel has terminated 33 suppliers for violating its standards, while refusing to add 28 others to its list of approved vendors because they failed to meet the company's code.

Eckert made clear, however, that firing factories isn't the goal.

"Our job is to fix it," he said. "We're not in the business to try to cut off plants."

Changes take time

Even at Mattel's own factories, change doesn't come overnight.

On the eastern side of Jakarta, past the garbage-strewn streets in the main part of the city, Mattel's twin Indonesian production facilities rise up out of the green fields like gleaming, white-tile temples.

The Dua and Satu factories — where half of the world's more than 100 million Barbie dolls are made each year — consist of low-rise buildings connected by walkways with lush overhanging plants. The campuses, built in the early 1990s, feature computer rooms, a library, a health clinic, sports fields and a community garden. Management here has given a nod to both fun and faith: The complex includes a disco as well as two mushollas, prayer rooms for the workers, 90 percent of whom are Muslim.

Still, most of the dorm rooms, which house about 40 percent of the factories' 10,000-plus workers, fail to meet Mattel's guidelines for the maximum number of workers per room (16) and the minimum amount of personal space allotted to each (20 square feet).

Instead, the rooms are crowded with four rows of four bunk beds lined up side by side, mattress to mattress. For all but people in the outside beds, getting in and out can require a feat of gymnastics.

Mattel is moving to a less-crowded format — two bunk beds in a row, each with a lamp, fan and curtain shielding the bed from the open area — to come into compliance with its own guidelines. But those changes, Mattel said, take time.

"We can point to deficiencies in the system," said Jim Walter, Mattel's senior vice president of worldwide quality assurance, who oversees the ethical manufacturing initiatives, "but I'm going to look at how far we've come."

For some people, it's still not far enough.

Critics want faster change

In 2001, a report by the Hong Kong Christian Industrial Committee rapped Mattel, along with Hasbro, Walt Disney, Wal-Mart and others, for making toys in brutal Chinese sweatshops. The National Labor Committee in New York, the group that exposed the problems with Wal-Mart's Kathie Lee Gifford clothing line, followed with another critique the next year.

Marie-Claude Hessler-Grisel, a French human-rights advocate, still sees many of the same problems that were highlighted in those reports.

Hessler-Grisel says she appreciates that Mattel has poured more than $500 million into its own state-of-the-art facilities and spends about $10 million a year on monitoring factories, upgrading plants and training contractors.

But given that Mattel earned more than $500 million last year on sales of nearly $5 billion, she expects the company to do a lot more and to do it faster.

"These workers can't wait forever for a change," she said.

Around the world, workers at factories making Mattel toys complain about one thing above all else: the grueling hours.

Mattel's rules state that the most anyone can work is 12 hours a day, six days a week — and that's only for very limited periods and when overtime is voluntary. Regular workdays aren't supposed to exceed 10 hours a day, including overtime. What's more, factory employees are not supposed to work more than 13 days in a row. But according to more than a dozen workers, the reality is something else.

Near Shenzhen, outside a large vendor plant, two 20-year-olds eating a lunch of boiled noodles recounted how they routinely worked 11 hours a day, six days a week. The worst time, they said, comes during the monthly changeover, when their group goes from the day shift to the night shift — and they must plow straight through, with barely a break in between.

In Indonesia, a 21-year-old woman who worked at Mattel's Jakarta plant talked about friends and colleagues who have assembled Barbie dolls for 30 days straight without time off.

Even at a Mattel-owned plant in Guanyao, where the hours are within company guidelines, workers are so fatigued that those who return early from lunch sleep at their spots on the assembly line, their heads resting on their hands.

In environments like these, the slightest break can seem like a tremendous perk.

Near the city of Dongguan, two young women recently sat in a fourth-floor room sectioned off by crude corrugated-metal walls. They have little to show for their drudgery; they share a mattress and a hot plate. But they said their life at a Mattel contractor factory had been good. Unlike at the last plant where they worked, the Mattel vendor gives them a "day off."

At the Shenzhen factory, where about 1,000 people are employed, it seems everybody knows the drill.

Before Mattel comes through twice a year for inspection, workers said, managers promise to pay them time-and-a-half if they repeat the company line: that they work just eight hours a day, six days a week, as allowed by Chinese law.

In truth, they slog for far longer than that.

Inside a tiny metal-walled shed a short walk from the factory, the 24-year-old worker reclined on his bed with his fiancée by his side and recalled how he recently was ordered to work 24 hours straight without rest.

"On the second morning we just kept working," he said. If all goes well, the couple said, they can each earn about $65 a month, half of which they send home to their families in rural China.

Newcomers and slower workers, they pointed out, sometimes get no pay at all: There is nothing left after charges are subtracted for meals and rent, as many workers live in company housing.

The couple said they and their colleagues sometimes thought about complaining, but the memory of what happened last year to one who did always stopped them. At first, they said, the worker was shouted down by the floor manager. Then, about 8 p.m., as he was leaving the factory, he was stabbed repeatedly by a group of men.

Mattel said it was unaware of any such incident.

Tijuana workers in hovels

More than 7,000 miles from China, along the U.S.-Mexico border, a 41-year-old Mattel factory worker rocked back and forth on a rusted metal chair and talked about life at the job site — and beyond.

The Tijuana facility where this woman earns $50 a week, Mattel's Mabamex plant, is clean and well maintained. The company strictly enforces its work-hour rules here, and she has few complaints. Mabamex appears little different from factories on the U.S. side of the border.

But outside the 550,000-square-foot factory, the scene of squalor is all too familiar: Like most maquiladoras — assembly plants that produce goods principally for export — Mabamex is surrounded by the hovels where its workers live.

The dwellings are made of sheets of scrap metal and prefabricated wooden walls — often, discarded garage doors from across the border. Few homes have anything other than earthen floors. Fewer still have running water. Most bathrooms consist of a system of buckets and open rivulets, which wash the waste downhill.

The Mattel worker, a mother of four, said she would like to move her family somewhere nicer. But given her salary, there is very little that she can do.

"When we collect our checks, we feel bad about how little money we make," she said. "We feel the pressure."

For a company like Mattel, it is a tricky matter figuring out what its obligation to workers — as well as to society — should be.

"Is it Mattel's responsibility to determine and pay a living wage? I don't think so," said Walter, the company's quality-assurance chief. "But should Mattel prompt a local government to determine what a reasonable wage is? We should have some impact on that."

The struggle between morality and profitability goes right to the top of the company.

"Do we want to make people's lives better? Absolutely," said Eckert, Mattel's CEO. "Do we want to unilaterally do things that make us uncompetitive and therefore our products don't sell and therefore nobody gets employed? No."

Few, if any, of the Tijuana maquiladoras do better for their workers than Mattel does, said Alfredo Hualde, director of the Department of Social Studies at El Colegio de la Frontera Norte, a research institution in Tijuana.

Hualde notes that to have even the most basic amenities — sanitary drinking water, indoor plumbing — the 150,000 maquiladora workers probably would need to see their pay doubled. And that's unimaginable when the Mexican government is doing all it can to keep factories from fleeing Mexico for cheaper locales such as China.

"The main objective is to keep the maquilas here in Mexico to create employment," Hualde said. "The quality of the employment is secondary."