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DEUTER
SOCIAL REPORT
2013
Reporting period Januar 2013 – June 2014
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CONTENT
Foreword
3
Two-Minute Version 4
1.
About Deuter 1.1. Our Brand
1.2.Our Products 1.3.Our Values
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5
6
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2.
Corporate Responsibility
2.1. Our Approach
2.2.From acorns oak trees grow
2.3.Stakeholder Dialogue
2.4.Challenges
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8
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10
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3.Employees
3.1. Headquarters in Gersthofen
3.2.Subsidiary Deuter USA
12
12
15
4.Suppliers
4.1. Sourcing strategy and production cycle
4.2.Vietnam – backpacks, bags and accessoires
4.3.China – sleeping bags
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5. Deuter Monitoring 2013/2014
5.1. FWF Labour Standards
5.2.Audits 2013/2015
5.3.Audit results 2013/2014
5.3.1. Vietnam
5.3.2 . China
5.4.Training measures 2013/2014
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6. Key Focus and Challenges 2014/2015
6.1. Key Focus: Safe Working Conditions
6.2.Challenges
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2
FOREWORD
Mr. Martin Riebel, Managing Director
Dear Deuter family, customers, partners
and anyone interested!
The year 2013 had a strong and lasting impact on our world.
The streets were alive with protests and uprisings in the Arab
countries, in Turkey, Thailand and the Ukraine. Yet it was also
a year where we witnessed the start of a gentle revolution.
The Vatican is undergoing a ‘top-down’ reform rather than a
‘bottom-up’ revolution – initiated by a man from Argentina,
Pope Francis, who simply sets a good example.
This is the stage of world politics, yet on our small corporate
stage we also have a strong conviction to contribute making
this world a little bit better – every day – by pushing our “Corporate Responsibility” efforts. Step by step. From acorns oak
trees grow.
We are very proud to work with two partners – our backpack
producer Duke and sleeping bag manufacturer Bellmart – who
are also committed to address these issues. Whether it concerns the improvement of working conditions, wages or daily
efforts such as free staff lunch in Ho Chi Minh – our partners
are open and constructive and they effectively implement solutions.
2013 has also been a year of generational changes. Sadly, in
spring 2013 S.H. Oh, founder and head of Duke, passed away
suddenly. His son S.T., who has been working at his side for
years and has already been responsible for several divisions,
inherited a company with – by now – more than 4.000 employees.
We feel strongly responsible for the team in Asia, too. If we
make a wrong decision at the HQs in Germany, it directly
affects the workers in Vietnam and China. That was one of
many reasons why we at Deuter took our time and had a longer transition phase from ‘old’ to ‘new’ CEO than most other
companies. For over a year, Bernd Kullmann and I worked
together, side by side, so I could learn and benefit from his
extensive experience.
Maybe also because we know that our approach is different,
we were not too surprised that the brand performance check
2013 conducted by the Fair Wear Foundation (FWF) was again
very positive.
We will continue to work hard on sustainable, step-by-step
improvements. From acorns oak trees grow. Today and in the
future.
We hope you enjoy our 2. Social Report.
Your Martin Riebel
Managing Director
3
TWO-MINUTE VERSION
Mr. S.T.Oh & Mr. Martin Riebel at the production
Deuter’s Corporate Responsibility approach encompasses four areas of focus: Employees & Suppliers, Environment & Nature, Customers and Community Involvement. The reporting period has been adapted to the Fair
Wear Foundation’s system from legal year to fiscal year
01.07.2013-30.06.2014.
Deuter joined the Fair Wear Foundation in 2011. Now that
our sleeping bag supplier in China has been audited as well,
100% of our suppliers has been monitored by FWF’s independent auditors (chapter 5).
For the fiscal year 2014/2015 we will focus on the issues of
workplace safety and living wages. (chapter 6).
Although announcing a complete sustainability report in our
Social Report 2012 we will again focus on the area of Employees & Suppliers. The topic is of high interest for our customers. And we want to collect further data from our new
building before publishing relevant environmental figures.
In 2013 we not only had a change of management at the
Deuter HQs in Germany. There were also changes at our
partner Duke in Vietnam and Korea. Martin Riebel is our
new CEO at Deuter Sport GmbH1 and S.T. Oh has taken over
the position as CEO at Duke Corp. from his father. Yet we
are still firmly rooted in a 20 years partnership that assures
solid continuity. And both companies have a strong team of
long-term, dedicated employees (chapter 3).
The same approach of consistency applies to our Chinese
partner Bellmart that has been producing the Deuter sleeping bag range for more than 10 years (chapter 4). For the
first time we publish a so-called supplier list – it is extremely
short with two suppliers and four factories only, but it nevertheless adds transparency.
1
At the turn of the financial year Deuter has been renamed
4
1. ABOUT DEUTER
1.1 Our Brand
Deuter is a brand with a long and strong tradition! Hans Deuter founded the company in 1898 in Augsburg/Germany. He
soon was commissioned to supply the Royal Bavarian Post
Office with mail bags and post sacks. Today, 116 years later,
we are one of the leading brands for
backpacks worldwide. 80 employees
are working in our headquarters in
Gersthofen near Augsburg, and we are
represented in 54 countries worldwide.
An essential part of our tradition is
the close cooperation with alpinists
and athletes. Since the 1920ies we
have equipped expeditions that went
down in alpine history. Such as Willi
Rickmer’s exploration of the remotest
regions of the Pamirs in1928 or the famous Nanga Parbat excursion in 1934,
where the team already used our first
Tauern backpacks. Anderl Heckmair
was the first to conquer the notorious
North Face of the Eiger and he relied on
our material and so was Hermann Buhl
on his first ascent of the Nanga Parbat
in 1953.
30 YEARS
VENTIL ATION
84
19
patentiert
Over the decades, Deuter again and again revolutionized the
backpack market with its groundbreaking innovations. One of
them was the Aircomfort mesh back carrying system, which
was introduced in 1984 and was unique at that time and has
by now become an industry standard. In 2014, our legendary
airy construction celebrates its 30th anniversary and has been
further refined in our new Futura pack range.
In 2006 Deuter was acquired by the Schwan-Stabilo Group – a
family owned company with an even longer tradition of almost
160 years. Deuter forms the Outdoor Division of the group
together with the mountaineering brand Ortovox.
TURN-OVER IN MIO.
80
60
40
20
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2008 / 09
2009 / 10
2010 / 11
2011 / 12
2012 / 13
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5
1. ABOUT DEUTER
A selection of our products in 2013/2014
1.2 Our Products
Deuter is known for its high quality, durable backpacks, bags,
sleeping bags and accessories. We are an outdoor brand – and
this clear specialisation allows us to do what we do best! This
is what enables us to always be innovative and to stay ahead
of the rest of the market. Our competence is deeply rooted in
the functionality of our products.
We are always focusing on:
state-of-the-art material and professional workmanship: Deuter products stand for reliability, durability and safety.
smart solutions instead of frills: Deuter products are
not overloaded with superfluous extras – every single feature
brings a true customer benefit.
products perfectly adapted to the range of use: they
are designed to the detail for a specific activity.
ALPINE
Guide Tour
Kid Comfort III
products perfectly adapted to the wearer’s anatomy:
they guarantee top individual comfort. The SL range is engineered to fit the anatomy and needs of female athletes, and
our EL range is specifically designed for tall people.
FAMILY
Deuter is an authentic brand! We know how essential it is that
you can fully trust your equipment. We not only work closely with professional mountain guides and athletes, we also
use our products ourselves. No wonder we are so passionate
about our work and our collection.
Trek Lite
SLEEPING BAG
6
1. ABOUT DEUTER
1.3 Our Values
Top of our corporate ‘list of values’ comes work enjoyment! This is what motivates and drives us. With
our authentic passion we can inspire our customers
and convince them of Deuter products. We believe in a
good work climate. It guarantees a high identification
with the company, the brand and our daily tasks. Our
down-to-earth approach is defined by an open, trustful way of dealing with each other. Mutual respect is
essential, in particular when it comes to integrating
new colleagues.
Our team dynamics are strongly shaped by productive,
creative team work, while we also encourage our employees to work independently. Our success has shown
that fostering a work environment where all employees can contribute ideas and achieve their greatest
potential is the basis for our famed creativity and our
drive for innovation. It also defines our ambitious approach: our goal is to perfectly understand and master
what we do.
This commitment and this spirit is pretty similar to the
commitment and spirit of an athlete – in the end, outdoor sports is at the heart of Deuter. And this means
automatically that there is another central value that
defines the brand: our products are designed for the
outdoors. This is where we are (and where we feel)
at home. For us the protection of the environment is
a deep personal conviction. Sustainability can only be
effective if it is based on a long-term approach. No
short-term profit gain will make us strong. We believe
that only a holistic approach, where every aspect of
environmental, economic and social impact is part of
the equation, presents a safe and strong foundation
for us as a brand.
For more details on
our corporate values see:
http://www.deuter.com/values
Team work Deuter USA:
Working as a team in the mud
to cleanup after the flood
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2. CORPORATE
RESPONSIBILITY
2.1 Our Approach
The conviction that we as a brand must act socially and ecologically responsible has always defined Deuter. In September
2011 we have created a new full-time position to integrate and
foster our corporate responsibility concepts.
Mitarbeiter & Produzenten
We have deliberately chosen the term CR (Corporate Responsibility). For us, the commonly used term CSR (Corporate Social
Responsibility) implies a strong focus on the social aspect. Yet
we believe that a sustainable company policy is fundamentally
rooted in the fusion of economy, ecology and social commitment. On this basis we mapped four CR pillars:
For more details on our corporate values see:
www.deuter.com/Responsibility
Kunden
Umwelt & Natur
Gesellschaftliches Engagement
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2. CORPORATE
RESPONSIBILITY
2.2. From acorns oak trees grow
Our commitment is themed “from acorns oak trees grow”. It is
a great challenge, yet every athlete is seeking challenges and
we are very ambitious to achieve our targets. We do not believe in “the one, major leap”. We believe that a step-by-step
approach is the roadmap to effective, sustainable changes. Our
goal at Deuter is to constantly reduce the negative impact of
our actions on man and nature. We still focus on our products:
there are no compromises when it comes to their quality and
durability.
To supervise and promote the numerous, complex Corporate
Responsibility activities we have recruited Katrin Bauer (former
Riedel) as CR Manager in September 2011.
ENT
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She is supported by our Deuter experts from the product department as well as sales, marketing and logistics. They are
also directly involved – as is the management board – in the
further development of the CR strategy. At Deuter the internal
ways are short and open promoting a direct and dynamic communication. Corporate Responsibility is on the agenda at every
meeting of the departmental managers. Further, in 2013 we
held several CR workshops where the Deuter team identified
and discussed relevant issues such as mobility, environmental
indicators and the bluesign® certification. One of the highlights was a workshop for our apprentices and trainees, where
they looked into the subject of sustainability and corporate responsibility. They eagerly discussed in particular how to improve
daily practices – such as shopping.
LOGISTIC
S
Purchasing
Sourcing
Warehouse
Distribution
TE
CO R P O R A ILIT Y
IB
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MARKETING
PR & Marketing Service
SA LES
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National Sa
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Internationa
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Pr
Individual
ACCOUNTING
IT& Accounting
Staff Service
T EC H N O
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INNOVAT GY &
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PM Backp N
ack
PM Sleep
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PM Daypa bag
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Qualit y M
anagemen
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2. CORPORATE
RESPONSIBILITY
Marco Hühn, Quality Manager
2.3. Stakeholder Dialogue
Our CR approach is embedded in a complex environment defined by the corporate structure of the Schwan-Stabilo Group,
the competitive dynamics within the outdoor industry as well
as, of course, our global supply chain. This is the framework
for all the manifold questions, expectations and suggestions
put forward by our employees, retail partners, end consumers,
non-governmental organisations and media.
We use different channels to communicate with our stakeholders. Yet on all levels we believe that personal contact is key!
One significant part of our external communication is to cultivate personal contact at regular customer visits. However, we
also build and maintain face-to-face contact at the numerous
trade shows, end consumer events, industry meetings and retail training programs.
Further, the Sustainability Working Group of the European
Outdoor Group (EOG), our membership in organisations such
as the Outdoor Section (FGO) of the Association of the German Sporting Goods Industry (BSI) as well as the Fair Wear
Foundation and bluesign® system provide platforms where
we regularly meet other outdoor brands to discuss and exchange CR issues and concepts.
Katrin Bauer, Corporate Responsibility
nal conference on living wages and joined the Fernweh festival
in Göttingen with our regional sales representative.
In cooperation with sports brands Meindl and Leki we host
an annual hiking excursion for journalists. During the entire
day, our CR manager eagerly discussed CR concerns with the
media.
And, of course, anyone interested can always get in contact
with us directly via email or phone:
Katrin Bauer (former Riedel), Tel.: +49 821 / 4987358,
[email protected],
and her successor during maternity leave
Marco Hühn, [email protected].
We are happy to answer all your questions and suggestions!
The same applies for our internal communication: we prefer
personal contact. Our employees can also bring up ideas and
suggestions via our ‘idea box’ (in-house suggestion system).
We also present our CR progress, our targets and answer open
questions at our bi-annual staff meeting.
In 2013 we were able to present our CR approach at several
events. Among them the Stabilo management panel, a platform for all the management representatives of the Stabilo
group. We were also part of the 8th Bavarian Round Table talk
in Munich focusing on the topics of social and environmental
corporate standards; in Berlin we attended the first internatio-
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2. CORPORATE
RESPONSIBILITY
2.4 Challenges
Deuter stands for trusted quality and functionality – and this
will never change. We are and we will always remain a ‘product focused’ company. For us Corporate Responsibility means fusing economy, ecology and social equity. It is a very
demanding task to continuously maintain and strengthen this
balance. This should not be misinterpreted as an excuse – we
want to present a realistic and comprehensive picture of our
CR commitment.
We are proud of our trusting, long-term partnership with our
suppliers, which also gives us the opportunity to have significant influence on the production as well as the working conditions. Of course, our influence is limited as we do not have any
company-owned production facilities. We depend on the cooperation of our partners, but we have strong, dedicated and
willing partners. Still the factories are not located in Germany,
but in countries with a different legal structure and different
conventions. This can make the implementation of necessary
changes more difficult and more time-consuming. Further it
is important to emphasize that – especially when considering
the sensitive issue of wage policy – we as well as our partners
operate in a highly competitive market.
Our ecological commitment also holds many challenges. We
have to consider the use of new material or new production
technologies very carefully. Will a change live up to our demands and the demands of our customers in regards to quality,
functionality and longevity? In the end, no one will buy an environmentally friendly product if design, functionality or price
do not meet the expectations.
Against this backdrop we have formulated our objective: step
by step we want to reduce the negative impacts of Deuter’s
activities on man and nature. We hope that our customers will
accompany and support us on this way.
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3. EMPLOYEES
3.1 Headquarters in Gersthofen
For Deuter, 2012/2013 was a year of change. With the start
of the new year we moved to our “new home”. The distinct,
round building with its wood and glass construction does not
only look stunning, it also creates a great working climate. The
glass façade and the transparent interior glass design make our
offices bright and open. We have integrated so called “multi
zones” which facilitate easy exchange und informal meetings.
This reflects our communication culture of short ways and direct communication.
At the change of the fiscal year in summer 2013, Martin Riebel
assumed the CEO position from Bernd Kullmann. A 12-month
training and transition phase guaranteed the successful succession. After 27 years (seven years as CEO) at Deuter, Bernd
Kullmann took up the role of CEO at Schwan-Stabilo Outdoor
on 1st of July 2013. Besides Deuter, the division further includes mountain sports brand Ortovox.
Bernd Kullmann and Martin Riebel
Our new company building
Martin Riebel knows he can depend on a team of experienced
employees and colleagues. Almost 60% of the Deuter staff
has been with the brand for at least five years and more than
25% have even been trained at Deuter. For example, Robert
Schieferle, General Manager and Head of Sales, started his
career at Deuter in 1990, while Head of Product Management
Steve Buffinton joined us in 1996. The employee with the longest Deuter history has been with us since 1970. Not only on
the management level we count on extensive training and solid continuity. Several people have also re-joined our company
after successfully passing further education.
Such as, for example, our new head of bike sales assistant
Martin Zanker. In 2007 he had finished his apprenticeship as
industrial clerk in our company. After three years in our leather goods division he decided to return to school and study
business economics. He always stayed in close contact with
Deuter. During his school holidays he returned to work for us
at fairs and events or in our warehouse. Martin also counted
on his working experience in the practice related part of his
studies: for one of his main performance tests he chose the
topic “How to pack my backpack” and his bachelor thesis discussed the issue of selective distribution – also one of the key
issues in our house since Deuter implemented its own selective
distribution agreement in 2013.
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3. EMPLOYEES
Question:
What do you like most
at Deuter?
Martin is one of 9 new employees that have joined Deuter
between 1.7.2013 and 30.6.2014. The growing number of
employees in the business year 2013/14 has therefore remained on a high level. Further, two employees returned after
their maternity leave to work part time. Unfortunately we still
have not achieved a cooperation with the city of Gersthofen
or neighbouring companies to set up a kids day care centre.
But we were lucky to find day care for all the ‘Deuter kids’ to
ensure a smooth return of the parents to the company.
Answer:
“family-like work environment”. Every time I returned to work
here, it was like coming home. The way I was welcomed back –
it was like I’ve never been away.”
We have continuously grown as a company – and the growing
number of employees brings new challenges in personnel management and organisation. We have therefore worked out a
“home office guideline“ in 2013, which sets up a clear framework for all home office work. Yet our working culture is firmly
rooted in direct communication and thus we will ensure the
major part of the work will be performed in our headquarters
in Gersthofen.
Although we have almost reached the magic number of 100
employees, many processes are not yet standardized. For HR
development we are working on a systematic and strategic
approach, which we will continue to pursue in 2015.
Martin Zanker
Assistant sales manager - Bike
13
Over
30 years
3. EMPLOYEES
Job tenure*
21 – 30 years
3,1
6,3 % %
16 – 20 years
8,3 %
21,9 %
under
3 years
Employees
Total staff
81
Thereof women
43
11 – 15 years
14,6 %
Thereof part-time18
28,1 %
4
Parental leave
Trainees8
6 – 10 years
Women in executive positions31
3
3 – 5 years
17,7 %
Employees with managerial authority
*All employees (Incl. employees on parental leave and trainees)
Number of employees
9
6
45
5
2007/2008
Part-time
8
49
8
4
2008/2009
Permanent
60
67
6
12 64
8
15 62
5
18 63
8
5
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
Trainees
as of June 2014
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3. EMPLOYEES
3.2 Subsidiary Deuter USA
Deuter USA Inc. is a small but growing company and the education and advancement of our employees is a core value for
us. In 2013 we had a unique opportunity to build our team
cohesion, when heavy and continuous rainfall in the mountains above Boulder and Longmont caused record flooding. A
tragic event that gave us the chance to show our community
and team spirit. We volunteered time and donated packs to
help people who suddenly found themselves homeless. We
also assisted Boulder Parks and Recreation to clean up and
remove debris from a stretch of open space that had flooded.
A further team building experience was the AVI 1 and AVI 2
training courses that provided our team with valuable avalanche awareness and safety equipment use expertise.
Education Reimbursement
Days of Service
Four new employees joined Deuter USA in late 2012. They
were all assigned a trainer/mentor and provided with two
weeks of introductory training. We also believe in the importance of cross training and the product training seasons are
open for any team member who wishes to attend.
In 2013 we instituted two new policies designed to encourage individual education and personal growth. The first is our
continuing education reimbursement policy. We provide
600 $ per year to each employee who takes course work designed to improve their skills or in pursuit of a degree.
“Deuter USA recognizes that a well-educated and motived
work force will propel this company to success. Continuing
education will only increase the value of our employees to the
company and to themselves.”
The second is our Days of Service policy. We provide 3
days per year for each employee to volunteer their time and
be paid by Deuter.
4 Employees
Office Skills
4 Employees
Avalanche Safety and Awareness
programs
6 Employees
Flood clean up
“Deuter USA recognizes it is our responsibility as a good corporate citizen to help strengthen the community in which we
live and work. Consequently, we encourage our employees to
become involved in their communities, lending their voluntary
support to programs that enrich the quality of life and opportunities for all citizens.”
15
4. SUPPLIERS
4.1 Sourcing strategy and production cycle
We believe in long-term and trusting partnerships! This way
we can guarantee our team’s high level of motivation, creativity, quality and reliability – from our head office in Gersthofen
to our retailers and, of course, our production partners. In our
brand performance check 2012 the FWF identified our partnerships as ‘Best-Practice Example’.
We have been working with our backpack manufacturer Duke
since 1991. And since 1994 Duke has been producing our entire backpack collection – and we are Duke’s exclusive customer. For more than a decade we have been working with
our sleeping bag producer in China and our collection today
accounts for 25% of their overall production.
Short, efficient transportation
In Germany you can no longer produce complex and technical
sewing products at a competitive price point. One issue is the
competitive price, yet another factor is the lack of handicraft
expertise – every backpack is sewn from more than 220 different parts In Germany traditional sewing professions have
more or less become extinct. Today more than 4.000 employees produce our demanding high quality backpacks, bags
and accessories.
100% of the material used for the Deuter products come from
Asia, making the transportation of textiles, buckles, zippers
etc. short and efficient.
Lieferantenliste
Country
Supplier Name
Factory
City
Vietnam
Vina Duke Corp. Hoc Mon (Factory 3)
Ho Chi Minh City
Vietnam
Vina Duke Corp. Cu Chi (Factory 1/2) Ho Chi Minh City
Vietnam
Vina Duke Corp. Count Vina (Factory 4) Tien Giang
China
Kingtai Industrial (Xiamen) Co., Ltd. Bellmart
Xiamen
Germany is still our key market, yet today about 50% of our
products are sold in more than 50 countries worldwide. The
majority of our products is shipped directly in containers from
Vietnam and China to the respective countries.
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4. SUPPLIERS
On the basis of our design and our material request, our manufacturers present the price for a specific product. If it is too
high we work together on the product to achieve a competitive
price point. We have no interest in bargaining and we have no
interest in putting pressure on our producers. We know that
our partners offer fair prices, because both sides strongly believe that a trusting relationship creates a solid basis and will
always pay off.
We produce one main collection per year and an additional
smaller winter range. The main collection is presented in summer at the international sports trade show OutDoor in Friedrichshafen/Germany, The winter range is introduced in February at the ISPO trade show in Munich.
Thus, we only change a third of our collection each year. Most
of the products remain in the range for several years with only
minor modifications. For example, one of our classics, the Trans
Alpine, has been in our collection since 2000. Over the years
only a few details have been adapted. It is almost a taboo to
even consider a major change of our best selling bike pack. In
the past five years we have sold 330,000 pieces.
Simplified Production Cycle: Sample main collection 2015
Approval
Kick-Off Meeting
Product presentation
First delivery
to the shops
$$$?
$
$$
Strategy Development and Design Test case Production Production shipment
sales samples from Asia
05
07
0104
06
07
0812
01
201320142015
17
4. SUPPLIERS
4.2 Vietnam – backpacks, bags and accessories
In 2013 we not only had a change of management at the Deuter HQs in Germany, but also at our long-term partner Duke.
After the death of his father, Mr. S.T. Oh took over the executive role. He is supported by S.I. Kang who has been an
important figure at Duke for many years. Oh and Kang share
more than 30 years of experience at the company and had
taken over the operations several years ago. They will assure
solid stability and continuity.
China
Vietnam
Laos
Thailand
Kambodscha
Ho Chi Minh
Duke has been producing all of our backpacks, accessories
and since 2011 also our bag range at three sites close to Ho
Chi Minh/Vietnam. This accounts for 90% of our production
volume. In the first 1.5 years of our FWF membership we
therefore focused on the production in Vietnam. Altogether,
4000 employees (thereof 3.050 women and 950 men) assure
our famous Deuter quality (as at September 2014).
Our products are known for their high quality and durability
– the kind of standards that can only be guaranteed by welltrained, experienced and skilled employees. Achieving high
levels of staff retention and motivation in Vietnam is therefore
vital for us. The Duke employees have a binding employment
contract and basic social benefits such as health insurance and
paid holidays – unfortunately still not a matter of course in
Asia. Employees are also paid above-average wages, are given
free lunch, a free shuttle service from/to Ho Chi Minh City and
the opportunity of free accommodation in company-owned
housing for women.
Mr. S.H. Oh
Thank you for 20 years of friendship,
for your incredible know-how,
your patience with us »long noses«
and for millions of perfect backpacks
from your / our production.
Your Deuter Team
18
4. SUPPLIERS
4.3 China – sleeping bags
Our partner in China with about 321 employees (thereof 254
women and 67 men) has been producing our sleeping bags
for more than ten years. Deuter is the second biggest customer and accounts for about a quarter of the production.
China
Xiamen
Vietnam
Laos
Good working conditions are also emphasized at our Chinese
production partner. The general living standard in Xiamen, a
coastal town and economic centre, is relatively high. To foster
staff retention employers correspondingly have to offer respective benefits. Of course, all employees have an employment contract and general social security benefits are ensured.
Our partner further offers free lunch and – on request – free
dinner. Since there are no company-owned housing facilities,
the employees get a monthly financial support for rent and
accommodation.
Thailand
Kambodscha
In Practice
Last year our trade show give-aways were again produced by
our partner Duke. For those free products, which are distributed in large amounts, the price point is a key buying criteria.
Yet, of course, we want to make no compromises when it comes to working conditions. We can ensure fair working conditions by producing the freebies with Duke in Vietnam. Further,
our product managers have designed practical shopper bags
using left-over material from design modifications, colour or
collection changes. Thus our partner reduced the inventory
and was able to offer us a good price – an exemplary winwin-situation.
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5.DEUTER MONITORING 2013/2014
Die Arbeitsrichtlinien der FWF
Mit dem Beitritt haben wir uns den strengen
Arbeitsrichtlinien der FWF verpflichtet.
1
employment is
freely chosen
2
no discrimination
in employment
3
www.fairwear.org
no exploitation
of child labour
4
freedom of association and
the right to collective bargain-
5
payment of
a living wage
6
no excessive
working hours
7
safe and healthy
working conditions
8
legally binding employment
relationship
In August 2011 Deuter joined the Fair Wear Foundation
(FWF). The international, independent verification initiative
works with companies and factories to improve labour conditions worldwide. The non-profit organisation supports our efforts to ensure good labour and social standards and regularly
keeps track of the improvements we make.
In the first months of our membership we have focused on
the factory sites of our production partner Duke in Vietnam,
where all of our backpacks, bags and accessories are manufactured – all in all 90% of our production volume.
Of course we have also addressed the working conditions and
FWF standards at our sleeping bag manufacturer in China
from the beginning. CR issues were key points on the agenda
when we visited our supplier in China as well as at meetings
in our headquarters in Gersthofen. Further, the working conditions were inspected by independent experts as part of the
bluesign® screening in April 2012.
For the business year 2013/2014 we now focused on the implementation of the Corrective Action Plan in Vietnam and on
a FWF training as well as audits at our sleeping bag partner
Bellmart.
5.1 FWF Labour Standards
By joining the FWF we have committed ourselves to implementing the strict FWF Code of Labour Practices.
20
5.DEUTER MONITORING 2013/2014
5.2. Audits in 2013/2014
We were able to finalise the audits at our production partner
Duke in Vietnam in November 2012. Our sleeping bag manufacturer was audited in June 2014 by the FWF audit team.
Thus 100% of our production volume has been audited.
In the past business year we were primarily working on the
implementation of the Corrective Action Plans (CAP1) at all
of the three production sites in Vietnam. The implementation
of our improvement measures is independently conducted by
our production partners and if required supported – financially
and organizationally – by Deuter. Our partners regularly report updates on the status quo of the implementation. At the
same time, our product managers follow and document the
realization of measures during their stays (every 4-6 weeks in
Vietnam, 1-2 annual visits in China).
Our production partner Bellmart in China took part in one of
the FWF’s Workplace Education Programme (WEP) in June
2013. The objective of this parallel staff and management training was to inform and educate on rights and obligations at
work as well as to improve internal structures of communication.
Audits
DateType
Supplier
Auditors
Country
10/2011
Initial audit
Duke – Fabrik 1/24 FWF Audit team
Vietnam
11/2012
Initial audit
Duke – Fabrik 3 and 4
FWF Audit team
Vietnam
11/2012 Verification audit
Duke – Fabrik 1/2
FWF Audit team
Vietnam
04/2013
WEP training
Bellmart
FWF Team
China
06/2014
OHS Check
Duke – Fabrik 3
FWF Auditor
Vietnam
Also due to the tragic events in Bangladesh a special emphasis during the reporting period was put on chapter 7 “safe
and healthy working conditions”. Together with the FWF and
our production partner we decided not to conduct a complete
audit to avoid a certain ‘audit tiredness’ and to effectively use
financial and human resources. An expert of the independent
FWF audit team performed an “Occupational Health and Safety (OHS) Check2” at the oldest factory in June 2014. The check
also verified the successful implementation of the measures
from the CAP in 2012. The OHS Check was complemented by
an OHS Training for 15 employees (factory management, line
leaders, office and production employees and safety personal)
in the same factory. In addition Duke provided first aid trainings to 150 employees of all factories.
In June 2014 the FWF further performed a so-called Verification Audit3 in China. Our quality manager joined the audit.
The FWF audit team in China applied the same standardised
specifications used in Vietnam.
Corrective Action Plan
Englisch: Occupational Health and Safety; Deutsch: Arbeits – und Gesundheitsschutz
3
Englisch: verification audit; Deutsch: Überprüfungsaudit
4
Die Benennung der Fabrikstandorte ist historisch gewachsen. Fabrik 1 und 2 bezeichnet zwei Produktionsbereiche an einem Fabrikstandort, während Fabrik 3 und Fabrik 4 jeweils einen weiteren Standort zugeordnet
werden. Es gibt insgesamt drei Fabriken in Vietnam, die alle dem gleichen Management unterstellt sind und über
weitestgehend standardisierte Prozesse verfügen.
1
06/2014
OHS Training
Duke – Fabrik 3
FWF Auditor Vietnam
06/2014
Verification audit
Bellmart FWF Audit team
China
2
21
5.DEUTER MONITORING 2013/2014
5
Payment of a living wage
Wages and benefits paid for a standard working week shall meet at least legal
or industry minimum standards and always be sufficient to meet basic needs of
workers and their families and to provide some discretionary income. Deductions
from wages for disciplinary measures shall not be permitted nor shall any deductions from wages not provided for by national law be permitted. Deductions shall
never constitute an amount that will lead the employee to receive less than the
minimum wage. Employees shall be adequately and clearly informed about the
specifications of their wages including wage rates and pay period.
5.3 Audit results 2013/2014
This social report aims at providing transparency about working conditions in our supply chain including monitoring activities as well as results. We are very pleased to see a growing interest in those topics. We want to be as transparent as
possible while respecting the need of our production partners
to protect their business interests and integrity. We therefore
chose to report in more detail on the most prominent social
issues: living wages, working hours and occupational health
and safety. In contrast to our prior report, this time we are
assessing Vietnam and China separately.
5.3.1 Vietnam
Although no complete audit has been conducted at our partner in Vietnam over the reference period, we are still looking
(as in the Social Report 2012) into the following core points:
living wages, working hours and occupational health and safety. We will not address the issue of child labour since those
measures have been successfully implemented (see Social Report 2012, page 27).
Living Wages
Living wages is one of the most challenging and most controversial issues we are confronted with. There is a general
consensus that in many countries the national minimum wage
law does not meet the needs of the workers. Wage increase is
therefore necessary in many places, yet what does that mean
in practice? Living wages are often defined as estimations
on how much a family’s income should be to meet the basic
needs and to provide some discretionary income. Living wages
are calculated for different regions and with different calculation methods. Different stakeholder use different assumptions
like family size or numbers of income earners per family to
calculate their living wage – thus, we cannot define the one
living wage.
Currently there are two calculation systems for Vietnam: the
“Basic needs Assessment” of the VGCL’s Institute of Workers
and Union and the “living wage” of the Asia Floor Wage Campaign that refers to a living wage for a family of four (2 adults
and 2 children) with only one income earner. It is rather difficult for us to evaluate the validity and comparability of these
two benchmarks. We noted that most workers interviewed
during the audit were happy with their salary and that none of
them were sole earners.
To initiate valuable discussions we joined a project by the
FWF in cooperation with the European Outdoor Group (EOG).
Together with FWF members Haglöfs, Kjus, Mountain Force,
Odlo and Vaude and the member factory KTC we took part in
the “Living Wage Engineering3” study. The objective was to
learn more about the buying practices and working conditions
within the outdoor industry as well as the impact on wages
and product pricing.
Unfortunately we were not able to derive any concrete measures from the study. The implementation of living wages is
still a tough challenge due to many aspects. Every brand has
to survive in the global competition of the world market. And
so do the factories. Issues that need to be cleared include the
question of who will account for wage increases or how the
increase of costs can be balanced (increase of productivity,
new price calculations etc.).
3
Fair Wear Foundation (2014): Living Wage Engineering. Version 1.
22
5.DEUTER MONITORING 2013/2014
Also: how can we assure that the money actually goes to the
sewers and is not lost along the supply chain. For more information we recommend the FWF’s “Living Wage Engineering”
report. Living wages, therefore, will remain a central issue in
the coming years.
To gain more input and establish a network outside the outdoor industry, our CR manager also attended the first international conference on living wages in Berlin in November 2013.
Audits in Vietnam at Vina Duke
23
5.DEUTER MONITORING 2013/2014
Working hours
Excessive working hours are a common problem in the textile industry – not only in Vietnam. The issue is quite complex since workers like to do overtime because it is paid at
premium rates. Some NGOs insist that workers only favour
overtime because the salary for a normal working week is not
high enough. In our experience this is not always the case:
most workers appreciate the extra money because they want
to gain a higher standard of living regardless of their normal
salary. Overtime is paid at a premium rate of 150% on normal
working days and 200% on Sundays and 300% on holidays.
Still, of course, we agree that the level of overtime has to be
reasonable to ensure the health and well-being of the workers. Plus, too much (excessive) overtime also has a negative
impact on product quality.
6
No excessive working hours
Hours of work shall comply with applicable laws and industry standards. In any
event, workers shall not on a regular basis be required to work in excess of 48
hours per week and shall be provided with at least one day off for every seven-day
period. Overtime shall be voluntary, shall not exceed 12 hours per week, shall not
be demanded on a regular basis and shall always be compensated at a premium
rate.
Overtime had already been an issue before our first FWF audit
in 2011 – but then we had it black on white: excessive overtime during the peak season at our partner Duke. In January
2011 they amounted to more than 25 excessive hours a week
in some departments. And the report stated cases with 89
excessive working hours a month! Further the site was operating on three Sundays, while the FWF labour standard states
that workers should be provided with at least one day off over
a seven-day period. As the main reason was the lack of production capacities, we had hoped to significantly improve the
situation by building an additional third production site. However the recruiting and training of the new staff took its time.
We were not able to reduce the workload as quickly and to the
extent we had wished for. We therefore shifted more orders to
the so-called low season in the summer to effectively reduce
excessive working hours during peak season.
By now the new factory has more than 1000 employees and
has become a major relief for the two other production sites,
although it still focuses on simple products such as daypacks
or accessories. In close cooperation with our partners we are
continuously working on an even, steady capacity utilization.
It sounds like an easy task – yet it is not. At our headquarters
we plan the orders for the German market, while about half
of the products are sold internationally via importers. The distributors in the respective countries have their own planning
system and can place their orders independently. We now try
to shift more orders to the low season offering sale appeals
and setting up precise specifications and earlier deadlines.
The diagram shows that we are on a good way: we were able
to significantly reduce the excessive working hours since 2011.
Also there was hardly any work on Sundays over the past years. We have not yet achieved the norm working time specified by the FWF of 48 hours plus an overtime of 12 hours per
week, but we are working with our partners on a continuous
improvement.
24
5.DEUTER MONITORING 2013/2014
Safe and healthy working conditions
More than a year after the factory fires in Bangladesh workplace safety is one of the top issues – not only in Bangladesh.
The improvement measures identified in the CAP of the last
audit in Vietnam 2012 have been implemented. There were no
massive violations, yet some minor – and still very important –
deviations. These were all corrected: e.g. all exits are
Monatliche Überstunden bei Vina Duke
We again profited from the experience of the FWF in June
2014, when two independent auditors checked the successful
implementation of the measures for improvement in the oldest
factory 3. Additionally an expert trained the staff in workplace
safety and protective equipment.
(FACTORY 1/2 AND FACTORY 3)*
100
92
80
now equipped with emergency lights, the canteen operator
holds a valid hygiene and food safety certificate and noise
and lighting are now regularly checked. All factories have a
nurse as well as trained First Aid teams. At all three factories
in Vietnam a local expert company was hired to check (and if
required repair) the electricity system regularly (monthly, respectively every three months).
73
63
67
59
60
59
60
56,5
52,5
40
1
Maximum
2
Mode
3
Minimum
38
30,5
20
15,5
What are the working hours at our production
partner Duke?
The normal working hours are Monday to Saturday from
7.30-16.30; overtime is from 16.30-18.00 (1,5 hours)
or from 16.30-20.00 (3.5 hours OT plus 30 min. dinner
break).
Maximum: The highest overtime number during that month.
Mode: The most frequent overtime number during that month.
Minimum: The lowest overtime number during that month.
The randomly selected employees worked a maximum of 92 excessive work hours in January 2011, but a minimum
of 67 overtime hours. Most of the randomly selected employees worked 73 excessive hours in January 2011.
1
2
3
0
2011
2012
2013
2014
* Random sample of workers from different departments (e.g. sewing, packing and cutting)
25
5.DEUTER MONITORING 2013/2014
7
Safe and healthy working conditions
A safe and hygienic working environment shall be provided. Appropriate attention shall be paid to occupational hazards specific to this branch of the industry
and assure that a safe and hygienic work environment is provided for. Effective
regulations shall be implemented to prevent accidents and minimise health risks
as much as possible.
15 employees participated in the “Health and Safety“ training
in June 2014. They were schooled in factory security guidelines, fire drills, First-Aid skills as well as the preparation of
an emergency evacuation plan. A special emphasis was put
on the identification of potentially dangerous situations in the
factory building and on performing safety audits including the
evaluation and setting-up of a correction plan. The participants had the chance to put theory into practice: they created
a presentation, discussed the tasks in work groups, and conducted an OHS audit with the support of a safety expert. At
the HOC MONG site inspection already corrected measures
were re-checked and there were new defects detected: some
emergency exit signs and emergency lights were missing, one
of the escape routes was blocked, and an electricity cable was
wrongly connected. The audit team further found a locked exit
door. All defects can be resolved relatively easy and should be
avoided in the future by internal safety audits. Positive aspects
that were noted for the HOC MON production site: sufficient
supply of fire extinguishers and emergency plans.
The Duke safety team has grown in numbers and it will conduct so-called “Safety Checks” on a regular basis, which will
significantly enhance the safety level in the sites.
Physical abuse, threats of physical abuse, unusual punishments or discipline, sexual and other harassment, and intimidation by the employer is strictly prohibited.
26
5.DEUTER MONITORING 2013/2014
5.3.2China
In June 2014 the first two-day field audit was conducted at our
sleeping bag manufacturer Bellmart in Xiamen. The FWF team
of three experienced Chinese auditors monitored the implementation of the Code of Labour Practice.
The auditors had already been in contact with several workers
prior to the actual audit. They lead interviews about various
aspects of the CoLP. Thus they gained a good factory insight
before the audit and were able to identify points to especially
focus on during the actual monitoring.
Further interviews were conducted during the audits – with
the workers as well as with various members of the management. Documents inspected included records of working hours,
wage accounting, documentation of fire drills, etc. Escape routes, emergency exit signs, personal protective equipment etc.
were checked during a factory tour.
The factory management was cooperative and positive to support the audit team. Bellmart provided whatever information
requested to review and was open to any enquiries.
The FWF report shows that Bellmart and Deuter have already
made important steps in successfully implementing the Codes,
yet there is still room for improvement.
Hardly any non-compliances were registered in the following
areas: freely chosen employment, discrimination, safe and
healthy working conditions and legally binding employment.
There were no cases of child labour and the employment of all
juvenile workers (above 16 years) follows the FWF regulations.
Despite many positive outcomes there is also room
for improvement at Bellmart:
Freedom of association:
Freedom of association is a rather difficult topic in China. Although Bellmart explicitly recognizes the right of worker’s assembly (e.g. for collective wage bargaining) the staff has not
yet shown any interest. This was still the case after the WEP
(Worker Empowerment) training held in April 2013, which included points such as collective wage bargaining and forming
an independent worker committee.
Overtime:
In China – just as in Vietnam – overtime work is a difficult issue within the textile industry. The audit showed that the FWF
standard of 60 hours per week on 6 week days maximum has
not always been adhered.
With only few exceptions during peak seasons the workers had
at least one day off in a week – as regulated in the CoLP.
Weekly working hours ranged between 63 and 66 hours in
average. All overtime hours were voluntary with no production quota imposed. To further reduce overtime, to relieve the
factory and optimize capacities Bellmart has decided to build
a new production site.
At Deuter we have also made important steps to support overtime reduction by modifying planning strategies. We see overtime reduction as a long-term project and we already strongly
profit from the experience gained from the successful overtime
reduction at our partner Duke.
27
5.DEUTER MONITORING 2013/2014
Living wages:
As common within the industry, Bellmart works with a mixed
wage structure combining basic wage, non-monetary benefits,
bonuses and piece rate wages.
The audit showed that Bellmart pays above the legal minimum
wage and that it is guaranteed for all workers. Additionally
bonuses are paid for attendance, return after Chinese New
Year, and subsidies for rent etc. are paid. Bellmart also offers
free lunch in the factory canteen.
Additionally workers get piece rate as well as overtime bonuses. Thus workers with high efficiency and good quality can
achieve a good income.
The following 40 hour/week chart shows the wage variation
– yet this is no indication of wage discrimination, but actually
depends on worker’s efficiency and skills. Workers can achieve
wages of up to 500€ for 40 hours. If you add overtime work
the average monthly wage ranges above the Asian Floor Wage
and is partly even significantly higher.
Rather problematic, however, is the wage continuation during
public holidays as well as leave payments (depending on period of employment). So far the payments have not been following the national regulations, a point to be established in
the coming years.
28
5.DEUTER MONITORING 2013/2014
The following 40 hour/week chart shows the wage variation
– yet this is no indication of wage discrimination, but actually
depends on worker’s efficiency and skills. Workers can achieve wages of up to almost 3000 RMB/ Month based on 40
hours weektime (Bonus payments included). If you add overtime work the average monthly wage ranges around the Asian
Floor Wage and is partly even higher.
What is the wage situation at our production
partner in Vietnam?
The wage consists of a time rate, piece rate (based on
group performance and skill level) and fringe benefits like
for example transportation, special area allowance, or
attendance bonus.
Inspection
Packing
Sewing
Hand work
Kingtai Industrial (Xiamen) Co. Ltd (Bellmart) - regular and benefits
Cutting
Rather problematic, however, is the wage continuation during
public holidays as well as leave payments (depending on period of employment). So far the payments have been based on
the basic wage ( minimum wage) and do not include additional payments. regulations, a point to be established in the
coming years.
3132 Yuan 1Asian Floor Wage
2997
3.000 Yuan
2880
2744
2726
2384
2363
2282
2.000 Yuan
1977
2097
1894
2290 Yuan 1Average wage migrants
1927
1791
1320 Yuan 1Poverty Line
1.000 Yuan
0
1) Defined by local goverment (effective as of 1 Aug 2013) (as of: August 2013)
2) National average for 8 hour working day for migrant workers (National Bureau of Statistics of China) (as of: May 2013)
3) Asian Floor Wage as 2013 (as of: November 2012)
29
5.DEUTER MONITORING 2013/2014
5.4 Training measures
Audits alone are not enough to achieve long-term improvement of labour conditions. They are mere ‘snap-shots’. Our key
focus is therefore the implementation of the CAP: we believe
this will ensure substantial improvement and initiate a learning
effect on all levels.
Another central aspect is further education and training. On
the one hand, of course, for our production partners Duke and
Bellmart: many of the topics and concepts are still relatively
new for them. But also at our head offices in Germany, where
we want to increase the know-how and reach a higher level
of awareness. We want every employee to reflect the effects
of our actions und decisions. For example, the consequences
of short notice design changes or a sudden increase of the
quantity for Asia.
Internal CR trainings always include the FWF Code of
Conduct.
CR trainings were held for:
•all Deuter employees (introduction for new staff members, regular information update at company meetings)
•specific departments (e.g. sales, international sales,
logistics, marketing)
•Deuter importers
In 2013 we held our first workshop specifically for all trainees.
We focused on three aspects: economical, ecological, and social sustainability. The working conditions in our supply chain
were again the main topic.
In June 2013 the FWF held a Workplace Education Program
(WEP) at our production partner Bellmart in China. Aim of
the parallel staff and management training was to educate
on the rights and obligations at the workplace and to improve
structures of communication. The training was conducted by
experienced FWF coaches at the factories.
In November 2013 two employees of our production partner
Duke attended the training “Decent Work Works for Business,
Viet Nam” of the Ethical Trade Initiative (ETI) Norway. This
was already the second ETI Norway training that our partner
has attended.
30
FW
F-T
ra
i ni
ng
s
Wor
ki
ng t
im e
6.KEY FOCUS AND CHALLENGES 2014/15
6.1 Key Focus: Safe Working Conditions
The issue of safe working conditions at our Asian production
partners will remain a key focus in 2014/15. Over the past years
we conducted an OHS check in Vietnam and a first FWF audit
in China. After inspecting the safe working conditions in two
factories we will now start with the implementation of required
improvements and if necessary the establishment of new processes and structures.
Further, we will build on the experience we were able to draw
from the OHS trainings and evaluate whether we will continue
with the OHS trainings and if in which form.
6.2 Challenges
The topic of living wages will also play a major role next
year – and quite possibly in the years to come. The
ges
Living Wa
study “Living Wage Engineering” conducted jointly by
the FWF and the EOG underlines the complexity and implementation challenges of this issue. How can we measure
the living wage for a certain region? How will wage increase
affect the retail pricing? How can we assure that higher prices will actually improve the wage of the factory
workers? How does wage increase affect the wage
structure in the factories and the local competition?
Which alternatives can we develop to the practice
“compounding price escalation”? Many questions!
And the list could be continued.
There are no simple answers and solutions for us as a company
that is responsible for the workers in the factories as well as for
our suppliers and our own employees worldwide. It is therefore
crucial to continue developing strategies which help implementing effective, sustainable improvements.
The audit at our production partner Bellmart in China partly
showed excessive overtime in the production, in particular during
peak seasons. This is another highly complex issue we need to
address. Overtime is inextricably linked to wage structures and
– a point also observed in the audit – is in general welcomed by
the workers to earn more money. We therefore have to work on
solutions in cooperation with other clients of this production site
and the Bellmart’s management.
31
DEUTER SPORT GmbH
Daimlerstreet 23, 86368 Gersthofen, Germany
Tel. +49 (0) 821/ 49 87 327
Fax: +49 (0) 821/ 49 87 339
www.deuter.com
32