Alta Gracia Apparel: Making Ethical Apparel Production Real Worker Rights Consortium (WRC) February 4, 2011

Alta Gracia Apparel: Making History A garment factory in Villa Alta Gracia in the Dominican Republic. A garment factory in Villa Alta Gracia in the Dominican Republic. The first ever union, living wage export apparel factory in the Global South. The first ever union, living wage export apparel factory in the Global South. The sole supplier of Alta Gracia-branded clothing to leading collegiate apparel maker Knights Apparel. The sole supplier of Alta Gracia-branded clothing to leading collegiate apparel maker Knights Apparel. The world’s only garment factory with working conditions and living wages publicly verified by an independent labor rights monitor – the WRC. The world’s only garment factory with working conditions and living wages publicly verified by an independent labor rights monitor – the WRC. A producer of high-quality competitively-priced t-shirts and hoodies for the collegiate, promotional and non- profit market. A producer of high-quality competitively-priced t-shirts and hoodies for the collegiate, promotional and non- profit market.

The WRC and its Role at Alta Gracia Worked closely with Knights Apparel and Dominican unions and NGOs on project concept and startup. Worked closely with Knights Apparel and Dominican unions and NGOs on project concept and startup. Calculated a living wage for garment workers in the Dominican Republic using market basket research. Calculated a living wage for garment workers in the Dominican Republic using market basket research. Conducts ongoing monitoring of Alta Gracia’s labor compliance in consultation with local stakeholders. Conducts ongoing monitoring of Alta Gracia’s labor compliance in consultation with local stakeholders.

The Alta Gracia Commitment: Above and Beyond Knights Apparel commits to: Knights Apparel commits to: Year-round employment of workers at a living wage and factory compliance with all applicable labor standards. Year-round employment of workers at a living wage and factory compliance with all applicable labor standards. Respecting the right to unionize and bargain collectively. Respecting the right to unionize and bargain collectively. Maintaining world-class health and safety standards. Maintaining world-class health and safety standards. Providing full access to factory by the union and the WRC. Providing full access to factory by the union and the WRC. WRC commits to monitor and verify factory’s labor compliance for universities and students. WRC commits to monitor and verify factory’s labor compliance for universities and students. Dominican Free Trade Zone Workers Union commits to help provide labor rights training to workers and respect their decision on unionization of factory. Dominican Free Trade Zone Workers Union commits to help provide labor rights training to workers and respect their decision on unionization of factory.

The Living Wage Commitment All Alta Gracia workers receive Living Wage as minimum pay for regular working hours. All Alta Gracia workers receive Living Wage as minimum pay for regular working hours. Alta Gracia Living Wage: Alta Gracia Living Wage:US$759/month. Prevailing wages in Dominican free trade zones: US$216/month. Prevailing wages in Dominican free trade zones: US$216/month. AFW – Cambodia AFW – Cambodia US$ 274/ month US$ 274/ month (36% of the Alta Gracia (36% of the Alta Gracia Living wage) Living wage) Living Wage is calculated using market basket of goods: Living Wage is calculated using market basket of goods: Food and water Food and water Transportation Transportation Childcare Childcare Housing Housing Clothing Clothing Healthcare Healthcare Education Education Savings and discretionary spending Savings and discretionary spending

What Living Wage Means for Alta Gracia Workers

Alta Gracia Apparel: Making History Before Alta Gracia “I worked to be tired, without accomplishing anything”. Work only allowed the workers to live a day longer in the same conditions, without any hope for improvement. Before Alta Gracia “I worked to be tired, without accomplishing anything”. Work only allowed the workers to live a day longer in the same conditions, without any hope for improvement. Alta Gracia’s policies empower workers to have dreams, set goals and make choices, providing a pathway out of poverty. Alta Gracia’s policies empower workers to have dreams, set goals and make choices, providing a pathway out of poverty.

World Class Health and Safety Alta Gracia health and safety program developed in cooperation with Berkeley-based Maquiladora Health and Safety Support Network (MHSSN). Alta Gracia health and safety program developed in cooperation with Berkeley-based Maquiladora Health and Safety Support Network (MHSSN). MHSSN consulted on Alta Gracia’s initial workplace design and has conducted health and safety trainings for workers and managers. MHSSN consulted on Alta Gracia’s initial workplace design and has conducted health and safety trainings for workers and managers.

Business Model Produce premium garments and distribute through a high value channel: University bookstores. Produce premium garments and distribute through a high value channel: University bookstores. Alta Gracia sell as similar price as competitors, like Nike. Alta Gracia sell as similar price as competitors, like Nike. It sells, but is it sustainable? It sells, but is it sustainable? Based on Alta Gracia: Working with a Salario Digno. Georgetown University – research progress report

Business Model - Benefits Employer of first resort, can attract highly productive workforce. Employer of first resort, can attract highly productive workforce. Reduced need for supervisors. Instead of “hovering over the workers, supervisors are “problem solvers”. Reduced need for supervisors. Instead of “hovering over the workers, supervisors are “problem solvers”. Happy (and well-fed) workforce make fewer mistakes cutting material waste Happy (and well-fed) workforce make fewer mistakes cutting material waste

Business Model - Challenges The productivity gains cannot overcome the fact that the workers are paid three times the minimum wage. The productivity gains cannot overcome the fact that the workers are paid three times the minimum wage. Have not fully penetrated the university bookstore market yet, and is still rely on Knight's Apparel willingness to fill up with other orders with smaller profit margins, bearing the losses. Have not fully penetrated the university bookstore market yet, and is still rely on Knight's Apparel willingness to fill up with other orders with smaller profit margins, bearing the losses. Costs per minute is 14 US cents, compared to Sri Lanka’s 5 US cent per minute. Costs per minute is 14 US cents, compared to Sri Lanka’s 5 US cent per minute. High non-payroll costs (electricity) compared to neighboring countries High non-payroll costs (electricity) compared to neighboring countries Dominican Republic is isolated from other countries in the supply chain Dominican Republic is isolated from other countries in the supply chain

Business Model - Potential When Alta Gracia is able to produce and sell at full capacity through university bookstores, it will be profitable for Knights Apparel despite they are paying a living wage of 759 US$ per month. When Alta Gracia is able to produce and sell at full capacity through university bookstores, it will be profitable for Knights Apparel despite they are paying a living wage of 759 US$ per month. The average price of Alta Gracia apparel is US$ 25. The average price of Alta Gracia apparel is US$ 25. Imagine what would be possible with the Cambodian Asian Floor Wage of US$ 274 Imagine what would be possible with the Cambodian Asian Floor Wage of US$ 274

Alta Gracia Is Making Ethical Apparel Production Real Alta Gracia shows ethical apparel manufacturing can change garment workers lives. Like Knights Apparel, brands must make a real commitment to lead – no business as usual. Label but verify. The place to measure the real impact is at the factory and in workers’ lives. When buying t-shirts and hoodies, one choice makes a real difference – Alta Gracia.