Blog: How low can you go?
Leonie Barrie | 3 July 2007
Last week Hanesbrands revealed its latest round of factory closures and redundancies as it seeks to shore up its global supply chain and save money through economies of scale. Its plans include shuttering nine plants in four countries employing around 5,000 workers – with at least 2,500 jobs going in the Dominican Republic as production shifts to Central America and Thailand.
This last point, though, raises an interesting question on Seeking Alpha about Hanesbrands’ move to cheaper markets. And it doesn’t just apply to Hanesbrands of course; it’s something we hear about on an ongoing basis.
“What are we to make of any company that finds the Dominican Republic labour market too expensive? According to the CIA, the GDP per capita is about $8,400 in that country. And seeing as the company seems set on jumping on whatever country has the lowest labour costs, how long can we expect it to stay in the countries that it's going to? How long before the next round of labour cuts (and attendant "one-time" charges)?”
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