The Bata

THE BATA SHOE ORGANISATION
(CEP - July/August 1996)

  The Bata Shoe Organization is the world's largest manufacturer and marketer of footwear. With activities in 60 countries and on almost every continent Bata employs over 67,000 people and operates 6,300 store around the world. The company also has 100,000 independe retailers and franchisees.
  Founded in 1894, in Zlin, Czechoslovakia by Thomas Bata, the Bata Shoe Organization moved to Canada in 1945, after its operations in Europe and the Middle East had been decimate by World War II. The core business is still family-owned.
  Although its shoes sell for less than those of U.S. athletic footwear companies such as Reebok and Nike, Bata has reputation for paying its workers and those of it contractor higher wages.
  While Bata does have a strict written policy prohibiting the use of child labor, the company does not have a formal code of conduct which specifies the labor and environmental practices that contractors in developing countries must adhere to. By contrast, some of Bata's competitors, including Nike and Reebok, have written policies which specify the necessary environmental and labor conditions under which their products are to be made. Nike and Reebok conduct audits of all contractors, in an effort to assure compliance with the codes.

The Population and Community Development Association

Founded in 1974, Thailand' s Population Development and Community Association, or PDA, recognizing that aid and government funding are drying up, is establishing partnerships with the private sector.
In 1988, the PDA launched the Thai Business Initiative in Rural Development (TBIRD), aimed at mobilizing the private sector to provide skills and business expertise to rural communities in need. Villagers receive marketing expertise, financial resources, and training to promote job creation, in an effort to prevent rural-urban migration. According to TBIRD, "the most valuable asset that a company can contribute is its people. They have initiative, creativity, and a base of knowledge, all of which enhance the success of a village enterprise. Employees bring a wealth of knowledge and fresh ideas to bear on the question of how to make both people and land more productive." Under TBIRD, Thai and multinational companies adopt rural villages. Over 35 companies have adopted rural villages and are sharing their expertise with local groups. On page four are some examples of private sector programs organized in conjunction with the PDA:

Bata Thailand and TBIRD: A Shoe-ln

  One of the first multinational companies to establish itself in Thailand, Bata has had a presence there for 60 years. The Bata Shoe Company of Thailand began working with TBIRD in 1990. The collaboration began with a survey of Ban Nong Bod, a village of 1,000 people in the Buri Ram province. Khun Suchart Suksom, a Technical Development Manager at Bata, met with representatives from the village, facilitated by TBIRD. The group decided that it would be beneficial to develop a sewing program, whereby villagers would be trained and employed to sew shoes.
  Bata developed a workshop for villagers interested in sewing and chose five of the most productive participants to come to Bangkok for training. These five women were trained at the Singer TBIRD Centre and then received an additional four months of training in Bata's factory in Bangkok. Upon returning to Buri Ram province, the women taught another 15 women the sewing techniques they had learned.
  In 1992, Bata supported the development of a sewing cooperative in the Buri Ram province. Funding was provided - a 5.7 million Baht loan from a revolving fund created under a separate project of the PDA - by the Canadian International Development Agency.
  One of the key factors for the success of this program is that it builds on previous PDA programs. The factory workers were chosen not randomly, but from a successful sewing cooperative which had been nurtured by PDA. Known as the Ban Singh Subdistrict Co-operative, the group was already well established with a strong esprit de corps, a significant amount of training and well-developed agricultural programs. This solid preparation provided the co-op with the infrastructure and cohesion to own the factory in Buri Rarn.
  The first factory, employing 35 people, was such a success that Bata set up another three, employing a total of 140 individuals and manufacturing over 8,000 shoe uppers each day. Three quarters of the workers are reverse migrants, i.e. they were born in Buri Ram, migrat ed to the cities in search of work, and have returned to the province to form part of the cooperative. According to Bengt Gunarsson, the Managing Director of Bata Thailand, the facilities in the Buri Ram province have allowed Bata to increase its production capabili ties by 35,000 shoes per day.
  Workers at the Bata factory are paid per upper, receiving between 118 and 180 Baht per day, which often exceeds the province's minimum wage. While workers earn less than they would in Bangkok, the cost of living is a fraction of that in the urban areas, and rather than commute, they live near the factory. Workers can remain close to their families, avoiding dislocation.
  According to Mr. Gunnarsson: "The added satis faction in all of this is that these villages might not survive other wise. Without programs like TBIRD's, which provide people with real jobs and decent incomes, villagers would be forced to seek uncertain work elsewhere. Now the situation is such that the villagers buy the materials from Bata and they are in business for themselves.
  Participation in TBIRD brings several advantages to member companies. Employees report an increased sense of pride in their company through their contributions to rural development. In several cases, company employees adopt their native villages, which further heightens their sense of contribution and pride.
  Villages benefit from private sector involvement in many ways. In addition to income generation and job creation, several villages have seen a fall in rural-urban migration. Still more impressive, some provinces have also seen villagers return from cities to their place of origin. This "reverse migration" exceeds even the ambitious goals of the TBIRD project.   The Bata initiative is among the most promising of the TBIRD companies because, unlike initiatives which are purely charitable in nature, the Bata initiative is a win-win proposition which benefits the company and the province directly. Such a practice is likely to be maintained over the long term, whereas a charitable program might be cut off after a few years. Furthermore, it is one of the few initiatives which promotes manufacturing in rural areas.
  But, there are risks. Providing new skills is significantly beneficial only if there is a remunerative market for these skills over the long run. It is clear, however, that shoe manufacturing is a booming business for countries with low labor costs and with a growing and young population. Given the strong demand for uppers, it is unlikely that Bata would stop sourcing from Buri Ram and even if it did, other companies could take its place. A further risk lies in increasing employment in manufacturing. It can have adverse affects on local areas. For example, with higher wage rates in manufacturing, there may be disincentives to produce food, making such commodities more expensive. It is essential that groups like the PDA monitor the extent to which such fluctuations occur.
  The full extent of the net benefits of Bata's project in Thailand will be difficult to quantify. However, Bata and the PDA have crafted a useful model for cooperation between companies and NGOs for the developing world.

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