Mattel Audit

Plant Improves

Staff Report

  The Mattel Independent Monitoring Council (MIMCO) recently released results from an audit of a Mattel, Inc. manufacturing facility in Mexico, Mattel Manufacturas de Monterrey (MX3).

  The report is part of an ongoing series of audits conducted by the independent monitoring council, which reaffirms Mattel’s continued commitment to the implementation of its Global Manufacturing Principles (GMP), the company’s self-imposed global code of conduct.

  MIMCO is an independent body voluntarily established by Mattel to monitor the company’s compliance with GMP. MIMCO uses an independent monitoring system created to provide objective checks and balances to ensure standards are consistently met. MIMCO consists of three independent, highly respected experts in codes of conduct, corporate responsibility, and children’s and labor issues worldwide: Dr. S. Prakash Sethi, Dr. Paul F. McCleary, and Dr. Murray L. Weidenbaum. Dr. Sethi is chairman of the council.

  During MIMCO’s initial audit of MX3 in November of 2000, the independent monitoring group found that the facility was not in overall compliance with Mattel’s GMP standards. Due to the seriousness of its findings, MIMCO scheduled a follow-up audit within 60 days of the initial audit to ensure that the issues were being properly addressed. In February 2001, the MX3 facility was re-audited and found to meet or exceed GMP standards, as well as applicable country laws.

  “While the initial audit uncovered serious inadequacies and shortcomings at the MX3 facility, I applaud Mattel’s immediate and cooperative response in the remediation of the deficiencies,” said Dr. S. Prakash Sethi, chairman of MIMCO and university distinguished professor, Zicklin School of Business, Baruch College. “Mattel’s decision to implement a voluntary and independent monitoring program positioned the company as the industry leader. Mattel continues to set the standard for their contemporaries when it comes to the transparency surrounding their manufacturing facilities and the monitoring process.”

  “We recognize that this report does not reflect favorably on the performance of our MX3 facility. The plant’s performance was unacceptable and we have taken immediate action to remedy the situation,” said Tom Debrowski, executive vice president of worldwide operations for Mattel. “We have reaffirmed our commitment to GMP and have included compliance to GMP standards as part of the operations department’s goals and objectives. This allows for internal measurability, as well as additional accountability for managers and their staff.”

  MIMCO has indicated that it would make a surprise visit to the facility to ensure that improvements made to date are being maintained and continuously improved. “We welcome such a visit and are confident that MIMCO would be satisfied with the progress at the facility,” said Debrowski.

  The MX3 compensation structure meets and exceeds all of the relevant provisions of the Mexican labor law with regard to wages, overtime, and benefits, as well as Mattel’s GMP standards. With regard to overtime, workers were unanimous in reporting that overtime was voluntary, sick time was allowable and that employees punch their own time cards. An overwhelming majority of interviewed workers (90 percent) indicated that to the best of their knowledge, MX3 employs workers only over the age of 16. This was also confirmed through an audit of the payroll and personnel files.

  During its initial site inspection and worker interviews, MIMCO concluded that the working conditions on the assembly lines were unacceptable as workers were asked to stand for as long as eight hours per shift. In response to MIMCO’s findings, MX3 immediately conducted an industrial engineering and environmental, health and safety (EHS) study on assembly line working conditions. At the time of the re-audit, 50 percent of the positions in question were re-designated to allow sitting, with stress mats provided for the remaining standing positions.

  During MIMCO’s initial site inspection, the team also concluded that the general maintenance of the facility, including the molding, storage, painting, kitchen and bathroom areas, was unacceptable and well below GMP standards. During its site inspection, MIMCO also noted that employees did not consistently utilize personal protection equipment nor follow applicable safety standards when servicing machinery; storing materials and utilizing forklifts.             Since the time of the initial audit, MX3 management has made significant upgrades and improvements to all areas of concern. In addition, MX3 management has increased the frequency and level of employee training programs, with special attention to plant regulations, including the correct procedures for maintaining and servicing machinery; the use of personal protection equipment and overall safety.

  Employee interviews indicated there was a need to improve communications between employees and plant management. To address the situation, MIMCO recommended that MX3 take a more “systematic and concerted effort” to communicate with employees. Since the time of the initial audit, MX3 has developed and implemented aggressive training programs for supervisors and employees that focus on effective communication, as well as the role of GMP at the plant. Plant management has also initiated weekly meetings, which are held with small employee groups to discuss issues and solicit employee suggestions.   “Again, I commend Mattel for having the courage to be so forthcoming with not only the issues surrounding their manufacturing facility in Mexico, but also for the energy and intensity with which senior management addressed our concerns,” said Sethi. “This is a prime example of an independent monitoring program that works.”

  The first series of MIMCO audit reports were released in November 1999 documenting Mattel’s owned-and-operated manufacturing facilities in Asia. The second series of reports, released in May 2000, detailed two Mattel facilities in Mexico. In May 2001, MIMCO released follow-up audits of two plants in China and one facility in Mexico, as well as an initial audit of a newly constructed facility in China.

  Mattel’s Global Manufacturing Principles (GMP), launched in November 1997, are the cornerstone of the company’s ongoing commitment to responsible manufacturing practices around the world. Adherence to GMP seeks to ensure that wages, working and living conditions, employee access to management is just and fair, as well as to assure protection of the environment.