Children Used as Slave Labor at Indian Subcontractor of the Gap

The day after we linked to the Salt Lake Tribune series on Chinese workers, another chilling story of exploited workers is discovered. CNN is reporting that the Gap has cancelled an order from an Indian company accused of using child slave labor to make blouses for the Gap's Christmas collection. 

Note that the blouses are $40 apiece. How cheap is that? The argument that we consumers want cheap goods is beginning to wear a bit thin. The Gap is not the Dollar Tree. No one shops in the Gap for "cheap" and the Gap isn't some mom and pop outfit with no expertise in the market. It is a billion dollar business, traded on Wall Street that is struggling to return enough profit to make its shareholders and the analysts happy.

According to a May report in the San Francisco Chronicle, the San Francisco retail chain reported a net income of $242 million (28 cents per share) compared with $291 million (31 cents) for the same period last year. The earnings were a penny per share above the average estimate among analysts surveyed by Thomson First Call.

First-quarter sales fell 5 percent to $3.44 billion compared with $3.63 billion for the same period last year. Same-store sales, sales at stores open at least a year, decreased 9 percent compared with 4 percent the year before.

To the Gap's credit, they cancelled the contract as soon as a British newspaper reported the story. If more companies punish bad actors, then abusers won't be rewarded for slave labor.

One has to continue to wonder what retailers will do to keep their stockholders happy. Will the Gap's stock prices rise on the report of their doing the right thing or will it fall because they will have to find another vendor?

See http://www.cnn.com/2007/WORLD/asiapcf/10/29/gap.labor/index.html