Fred Waelter: If we want to look at the fashion supply chain, it's helpful to start with a finite type of garment. I can give you an example of a denim skirt with some buttons and rivets on it. Potentially it’s distressed denim, with some man-made holes in the garment to make it look a little worn.
If we take this as an example, there are the raw material suppliers, which includes the suppliers of the denim itself, the thread that's used to sew the panels together and the other items, like the rivets and buttons, which are made in other factories that specialize in the pressing of metal or metal surface treatment.
So you've got these suppliers, the zipper supplier, potentially, and then you've got the actual primary factory. That primary factory could have a variety of different situations going on. You could have one primary factory that has embroidery happening on-site, but the embroidery might be carried out by an on-site contractor – which is another company that sends workers to the factory, though they're not directly employed by it.
There's another potential situation which is subcontracting, of which there are a couple of different flavours so to speak. One is what we would call overflow subcontracting, which is essentially when the factory is at capacity.
In this situation, they have to take the entire item and say “we were going to make a thousand skirts, but we don't have the capacity to do that. Here's 200 skirts’ worth of material and embellishments, go and make 200 skirts for us.” Therefore, the subcontracted factory does 200 skirts and the original primary factory does 800 skirts to make up the order. That's what we class as overflow subcontracting.
There's also process-specific subcontracting, which is where the actual processes that are needed for the production of the final goods are done at another site.
For example, it could be off-site contractors that are doing the embroidery. So, what you see in the factory is a semi-finished product, or ‘intermediate goods’, packed into some plastic bags that are then taken down the street to the factory that is going to do one process on those garments and then send them back to be completed in-house.
There's one other fun thing which, obviously, you can tell I'm a little bit jaded from having audited in factories for 19 years! We also see prison labour which is actually done through subcontracting schemes. It's typically done illegally whereby the warden is the one who is accepting the order and giving it to the prisoners to work on.
The prisoners are not paid, because this isn't an established system. So simple stitching – or anything that's a low-level, low-skill sort of job could be outsourced to a prison as well.
Then it goes back to the factory and finally to an unwitting consumer, probably here in the United States, not knowing much about the situation, nor particularly knowing the difference. So that's a little bit about garments.