Gap, Inc. faces shareholders, activists

By Mary Perea, The Associated Press
Saturday May 11, 2002

Workers from Latin America decry conditions at Gap factories 


ALBUQUERQUE, N.M. — After promising better results to shareholders, Gap Inc. management adjourned the company’s annual meeting Friday amid tight security before addressing a small group of workers complaining about conditions in factories outside the United States. 

Representatives of the San Francisco-based clothing retailer took questions from factory workers from Guatemala, El Salvador and South Africa who criticized working conditions at factories from which Gap buys clothes. 

The factory workers, who introduced themselves as shareholders, complained about employee abuse, poor working conditions and very low pay. 

“I’m very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us,” said worker Maria Luz Panameno, speaking in Spanish. “Gap has abandoned us.” 

The plant where she worked in El Salvador has closed, she said. The plant was not owned by Gap, but produced clothes for the company. 

“It seems like the Gap is punishing us for standing up for our rights,” Panameno said. 

Lauri Shanahan, a senior vice president for Gap, told the workers Gap wants to work with them to resolve issues. Discussing the El Salvador plant, Shanahan said Gap officials “share your concerns and have worked tirelessly about two years with this factory.” 

“We don’t own these factories,” Shanahan said, saying such factories produce clothes for other companies in addition to Gap. 

Gap has compliance teams that monitor such factories, she said. A team was monitoring that factory, and the factory decided to pull out of El Salvador, she said. 

Earlier, Gap management promised shareholders to do better after reporting a 17 percent yearly decline in sales. The company on Thursday reported sales of $962 million for the four-week period that ended May 4, compared with sales of $1.2 billion for the same period last year. 

“Our results for 2001 are particularly disappointing,” said Heidi Kunz, chief financial officer for the San Francisco-based company. 

Millard Drexler, Gap’s chief executive officer, said the company is making management changes such as strengthening merchandising leadership and separating the company’s U.S. and international businesses to allow more focus on each. 

“We’ve come off of the most difficult year in our company’s history, and we’ve learned a lot,” Drexler said. 

Gap also is returning to the products that made it famous — khaki and denim, Drexler said. 

Kunz said Gap could not keep up with store growth over the last few years. 

“We shut off the new store pipeline a few months ago,” she said, adding it will not reopen until the company regains momentum.