Gap Inc. acknowledged Wednesday that many of the overseas workers making the retailer's clothes are mistreated and vowed to improve often shoddy factory conditions by cracking down on unrepentant manufacturers.
The San Francisco-based owner of the Gap, Old Navy and Banana Republic stores made the comments in its first "social responsibility" report -- a 40-page document that mixed contrition about the past with promises to do better in the future.
"We feel strongly that commerce and social responsibility don't have to be at odds," Gap chief executive Paul S. Pressler told a small gathering of shareholders at the company's annual meeting.
As the company strives to hold its overseas suppliers more accountable, Gap is uncovering thousands of violations at 3,009 factories scattered across roughly 50 countries. "Few factories, if any, are in full compliance all of the time," the report said.
Workplace activists who have long chided Gap for making its clothes at "sweatshops" praised the merchant for shedding light on rampant abuses that have been haunting the clothing industry for years.
"We think this goes far beyond the public relations fluff that other companies put out a lot of the time," said Bob Jeffcott, policy analyst for the Maquila Solidarity Network, a workers' rights group in Toronto. "By making some very candid admissions, they are taking an important first step toward cleaning up the problems."
Gap's commitment is particularly significant because the factories supplying the merchant may employ 300,000 workers combined, estimated Bruce Raynor, president of the Union of Needletrades, Industrial and Textile Employees. "We have had our differences with Gap in the past and probably will again, but this is something that deserves to be applauded."
Wal-Mart Stores Inc., a frequent target of sweatshop critics, plans to review Gap's report to get ideas on how it might improve conditions at the factories supplying its merchandise, said Bill Wertz, a Wal-Mart spokesman.
"Hopefully, this will be a wake-up call for Wal-Mart," Jeffcott said.
Gap's report provides a geographic breakdown on the workplace violations uncovered by a team of more than 90 inspectors.
The most frequent problems cropped up in China, a country expected to play an increasingly prominent role in the world economy.
Of the 241 factories in China rated by Gap last year, 73 plants received the company's two lowest grades -- "needs improvement" or "immediate attention required."
The listed troubles covered in the Gap report included psychological or verbal abuse -- something that Gap said occurred at between 10 percent and 25 percent of the factories in China that supply the company.
Unacceptably low pay is an especially widespread problem throughout the world, according to Gap's statistics. The issue is becoming an increasingly thorny topic, with U.S. labor and political leaders arguing the country is losing thousands of jobs as cost-conscious companies export work to take advantage of cheaper wages in other parts of the world.
Between 25 percent and 50 percent of the inspected factories supplying Gap from Mexico, Central America and the Caribbean paid their workers below the minimum wage at some point last year. Between 10 and 25 percent of the factories in Asia, sub-Saharan Africa, Europe and South America shortchanged their workers, the report said.
Gap orders manufacturers to address all violations, including substandard pay, when the problems are discovered, said Anne Gust, the company's chief administrative and compliance officer.
If a factory repeatedly violates the rules, Gap said it dumps the offending manufacturer. Gap cut its ties with 136 factories last year, including 84 in China and Southeast Asia. The company pledged to become even more vigilant in its resolve to improve factory conditions.