... Suppliers to Puma, adidas, GAP, United Colors of Benetton, Oxylane (
Decathlon), .... in Kuala Lumpur Stock Exchange, and publishes its Financial
Report in.
CORPORATE SUSTAINABILITY REPORT 2011
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Table Content Strategy and Analysis Organization Profile
Reporting Parameters
Statement from CEO Key Impacts, Risk and Opportunities Name of the organization Primary Brands and Products and Service Operational Structure of the Organization Location of Organization’s Headquarter Number and Name of Countries Where the Organization Operates Nature of Ownership and Legal Form Marker Served Scale of Reporting Organization Significant Changes Regarding Size, Structure and Ownership Awards Received During t Reporting Period Reporting Period Date of Most Recent Previous Report Reporting Cycle Contact Point for Questions Queries Process for Defining Report Content Boundary of Report Specific Limitations on Scope and Boundary Basis of Reporting on Issues Affecting Comparability Data Measurement Techniques, Bases of Calculations and NonApplication or Diversion Restatement of information Significant Changes in Scope, Boundary and Measurement Methods GRI Content Index Policy and Current Practice on External Assurance
03 04 06 07 08 08 06
08 07 06 08
08 06 09 09 11 09 10 10 10
10
11 10
11 11
Governance, Commitment And Engagement
Governance Structure of the 13 Organization Chair of the Highest Governance 13 Body & Executive Officer Number of Highest Governance 13 Body (HGB) – Independent/ Non-executive Members Mechanisms for Shareholders & 15 Employees Providing Direction & Recommendations to HGB Linkage Between Compensations 18 for Member of HGB, Senior Managers and Organization Performance Processes for HGB to ensure 14 Conflicts of Interest are Avoided Processes for Determining 14 Qualification and Expertise of Highest Governance Body Mission and Vision, COC and 12 Principals Procedures for HGB for 14 Overseeing Performances, Adherence to Compliances Processes for Evaluating 14 HGB Own Performance Precautionary Approaches 15 and Principals Addressed by Organization Organization Subscriptions or 18 Endorsement to External Charter, Principles or Initiatives Membership in Association, 18 Position Held and Participation In Projects List of Stakeholder Group 21 Basis for Identification and 20 Selection of Stakeholders Approaches to Stakeholders 21 Engagement Key topics raised by Stakeholders 22 & Organization Response Puma Relationship 25 Approach Economic Aspects 26 - 33 Disclosures Social Aspects 34 - 51 Environmental Aspect 52 - 63 GRI G3 Application Level B & Economic, Social & 64 Environmental Aspects and KPIs 65 Appendixes
66-75
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Chief Executive Officer Statement PCCS Group and its subsidiary JIT Textiles Limited has progressed considerably in overall business performance which was matched by positive developments in our sustainability agenda. At PCCS Group – JIT Textiles Ltd, we take a long-term systematic approach to sustainability objectives. In 2010/2011 period, we developed roadmaps with specific action plans to achieve our 20102011 strategic sustainability KPIs in partnership with our key customers. We further improved our natural resource utilization, and re-aligned several operational decisions in line with our sustainability philosophy. During the last two years, our progress in achieving savings in energy and water were well documented. In addition to successful Energy Saving programs, we also implemented fuel saving measures in transportation and logistics system. As a result we achieved substantial savings in diesel consumption. We were also able to quickly share best practices in energy saving within the PCCS Group.
CEO : John Cha
Our audit scores in CSR, Technical Quality, Sustainability and Safety from annual audits conducted by key customers recorded huge improvements and were rated among top in Asia. We participated fully with our key customers in compliance with EU‟s initiatives on Restricted Substances List and Kid‟s Safety Program. In 2011, we helped to develop a bio-degradable plastic bag for our garments. Through 2009-2012, we have intensified our localization process in our human resources development. Through various training and human resource development programs, increasing number of local staff were able to make vertical progression in their careers within the PCCS Group. As a result, we are now less dependent on expatriates to fill in managerial and supervisory positions in the company. JIT Textiles Limited has pioneered a workers‟ welfare program in Cambodia. Through our unique in-house “Jouy K‟nier” (Self-Help) Program, workers were able to enjoy welfare benefits far better than those provided by the local Labor Law. We firmly believe our commitment to sustainability makes us a stronger business and will help to ensure PCCS Group and JIT Textiles Limited will always be able to contribute to the society they are operating in. John Cha Chief Executive Officer Oct 2012
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Key Impacts, Risks and Opportunities JIT Textiles Ltd (JIT) sustainability challenges (risks) and opportunities associated with the business goals and operations are identified, prioritized and managed using our Company Risk Management Procedure: Consider issues raised by our key stakeholders and international benchmarks for sustainability performance These findings are reported to our Head of Departments Committee periodically and inform of our strategic planning and operating plan processes. There are 7 general aspects: Aspects
Challenges
Opportunities
Impacts
1. Global Macro Economic risks
Managing global macroeconomic risks including Natural resources Raw material pricing volatility EU economy slum Currency fluctuations
Applying management system and Fluctuating governance processes effectively to ensure sales volume Current and emerging risks are identified, Cost Impacts assessed and managed within our risk appetites and Opportunities are leveraged.
2. Environmental Impacts of Operations
Regulatory and stakeholder expectations for operations with low environmental impacts.
Reduction of environmental impacts Sustainability On manufacturing processes and products cost regarding to create new competitive advantage and environmental protection Reduce costs.
3. Changing Customer Tastes
Changing consumer tastes towards sustainable finishing products
Be a leader in garment industry Additional cost to meet the Creating new areas of competitive customers‟ advantage through supply chain tastes partnerships and product life cycle assessment capabilities Maintaining sustainable value for our customers.
4. Community Support for our Operations
Meeting social responsibility requirements in return getting community support for our operations
To build effective partnerships and seek Social constructive dialogue with the responsibility communities in which we operate. cost
5. Occupational Health and Safety
Regulatory and stakeholder expectations for occupational health and safety standard
To become internationally recognized for Sustainability Our safe work practices cost regarding occupational Sharing our expertise with our suppliers health and and customers safety Helping customers and suppliers achieve their own corporate social responsibility goals.
6. Risk in Emerging Markets
Managing the political, cultural and social risks associated with our growth in emerging markets
Positively influence the development of Cost of countries in the emerging markets into which maintaining we are expanding competitive Delivering employment opportunities advantage in orders Supporting local communities, (Competition Contributing to the countries‟ economies from and demonstrating good governance and Myanmar) supply chain integrity.
7. Climate change
Melting of icebergs Rising of seawater level Widening of Ozone layer Extreme weather conditions worldwide.
Reducing the greenhouse gas intensity of Sustainability our processes and products to help cost regarding protect the environment. environmental protection
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Besides the 7 general aspects above mentioned, there are 2 major threats faced by JIT during the year and the impacts can be summarized as follows:
From 1st of January, 2011, EU (European Union) further extended its GSP (Generalized System of Preference) tax privilege to Cambodia garment manufacturers for all materials imported from overseas which subsequently converted to finished goods and exported to EU countries, meaning tax saving ranging 10% to 18% to EU buyers.
Lured by the exotic trade privilege, investors saw Cambodia as a new garment investment heaven, made up their decision fast by closing down or shifting some of the factories in other regions of the world, especially China when the labor cost was so high to make garment industry volatile and unviable, and set up new factories in Cambodia especially in the vicinity of Phnom Penh city. The existing factories in Cambodia took the opportunities to enlarge their current production scale or even build new factories for their expansions. Such influx of new investment or expansion would inevitable caused labor shortage in the market.
Garment factories started to complete for both skillful and new labors to fill up the employment vacancy. In order to retain existing workers and attract new comers for business growth and expansion (Total workforce: 2010: 2,500 & 2011: 3,200), JIT resorted increment both in salary and allowances to fulfill our business goal.
Consequently, the monthly basic wage plus allowances alone have increased from US$71 to US$87, representing 23% rise. The total wages (direct and indirect) shoot up 26% or US$1,435,500 partly due to basic wage and allowances increment at the same time increased the total workforce by about 700 workers and the rests by overtime claims. Besides, JIT offered competitive remuneration by practicing the skill grading system to workers whose monthly basic salary was higher than US$61 and enjoying incentives based on productivity outputs.
Such sharp rise in remuneration resulted in the adverse consequence of low net profit margin of mere 1% level in 2011, and the Company expected the government would further increase the national minimum wage in the coming years. The estimated profit of US$500,000 in the earlier year forecast was far outran by the wage increment of US$1,435,500. The lifting of EU (European Union) sanctions against Myanmar is bound to have an impact on the Cambodian garment sector. The EU announced earlier that it was lifting sanctions against the country. Japan and Canada have made similar announcements very recently.
L A B O R C O S T M Y A N M A R
The Cambodian garment industry will certainly be affected after EU sanctions against Myanmar are abolished, but the extent of the effect was not known because the details of the EU suspension of sanctions against Myanmar were not announced yet.
The impact on local apparel companies in Cambodia will not be felt soon and that, for the time being at least, the local garment industry will not move to Myanmar.
What if EU, Japan, Canada and other western countries finally announce the lifting of sanctions, we can expect a new round of investment in Myanmar by which customers may pull away some orders from Cambodia to this country in near future. Cambodia garment sector could be badly hit when more factories start operating in Myanmar and EU enforces GSP system in two to three years‟ time.
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Organizational Profile Highlights Strategic Suppliers to Puma, adidas, GAP, United Colors of Benetton, Oxylane (Decathlon), ECI and Li Ning - world class apparel companies, based on our repeated performance as a prominent supplier in terms of quality garment supply and compliance programs. Li Ning, a China renowned brand, placed order in JIT for producing its garments for the first time in 2011. Operation Expansion by opening up 10 more Sewing Lines.
Name and Principal Activity of JIT JIT Textiles Limited (JIT) is a rapidly growing company located in Phnom Penh city, the capital of Kingdom of Cambodia. Our principal activity is the manufacturing of sportswear of which is supported by the provision of branding services of renowned world class apparel companies. We manufacture knitted & woven garments comprising T-Shirts, Polo, Jacket, Hoody, Jog Pants and active wears fit for men, women and children of all ages
Location and Country of Operation Address: National Road #4, Sangkat Chom Chau, Khan Darngkor, Phnom Penh city
Location: 7 Km in the western direction of Phnom Penh International Airport. JIT only operates on this premise in Cambodia.
Within a very short period of time, the Company has earned a solid reputation globally in the readymade garment sectors, producing over 4 million pieces in 2011
Scale of JIT as at 31-Dec-2011 2
Land area – 20,380 M
Building covered areas – 19,220 M2 Building blocks – 4 major blocks (1 corporate office and 3 production blocks)
Reporting Period This is our second annual Sustainability Report, following the path that JIT incorporated in 2007 as a Cambodia supplier of 12 renowned world class apparel companies.
2011 report will highlight the scenario of sustainability initiatives in scope of its economic, social and environmental performances throughout the year i.e. 1-Jan2011 to 31-Dec-2011
It contains information linked to last year sustainability concerns where applicable plus additional KPIs with respective disclosures of Management Approaches.
Total workforce – 3,206 employees Production - 4.5 million pieces (Capacity: 6 million pieces)
Facilities - Cutting, sewing, packing and In-house embellishment (heat transfer, printing & embroidery)
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Sales by Brands
No# Brands 2010 – 6 2011 – 12 Up 100%
New customers like Li Ning, The S Group, Gander Mountain, Perry, ECI and Casino (Graph 1) were introduced in 2011 partly due to the effect of GSP (Generalized System of Preference) tax privilege introduced by EU. Another reason was to fill up the gap during low season of the year so as to smoothen the production level
Due to ever rising labor cost in China, Li Ning order started to move out from China and JIT was the first factory producing its product in Cambodia. Other new brands followed suit by placing orders in JIT hoping to further develop more styles and increase orders beyond 2011
As an international leading garment manufacturer, our sales regions covered North America, EU including UK, Japan, Australia, New Zealand and Asia countries.
Market Distributions
Graph 2 - Market Distribution by Region 2010 - 2011
Graph 2 shows Sales to EU and “Others” region increased by 5% and 2% respectively where customers placed more EU orders instead of USA ones was due to the GSP tax privilege ranging 10 to 18% depending on the types of garment products imported to EU countries.
Percentage
80%
75% 70%
60% 40%
20% 13%
20%
The recent trade treaty, which was quite similar to GSP, signed between ASEAN countries and Japan on ASEAN + Japan AFT Agreement (Free Tax Agreement) was another reason boosting 2% increment in “Others” region
2010 2011 12% 10%
0% EU
USA
Other
Year
Graph 1 - Sales Ratio by Brands 2010 - 2011
40% 55%
2010
3% 1%
1%
1%
1%
2%
1%
1%
7% 5%
5% 1%
2011 10% 6%
60% 50% 40% 30% 20% 10% 0%
35% 25%
Percentage
Other includes East Asia, Canada, Australia, New Zealand and Asia countries
Year
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Operational Structure of JIT The structure of PCCS Group is shown below where JIT is 100% control of the holding company PCCS GROUP BHD. The Holding Company, PCCS Group Berhad (Ltd), is located and registered in Malaysia and listed in Kuala Lumpur Stock Exchange (BURSA Malaysia) since 1995. JIT is incorporated in Cambodia in 2007 as part of group expansion of overseas business activities. It is a legal and separate entity registered in the country of Cambodia with Incorporation Registration No#: 1326/08E The operations in the production floor can be grouped as follows:
Sample Garment Development – JIT is capable of sample garment making from the beginning, based on customer‟s technical design requirement, up to the last stage of development and Bulk production – JIT performs CMT (Cut-Make-Trim) manufacturing process for the renowned brands above mentioned.
PCCS Group Structure PCCS Group Bhd (Holding Company)
JIT Textiles Limited
Shem Yee Garments Sdn. Bhd.
Jusca Development Sdn. Bhd
Global Apparels Limited
Beauty Electronic Embroidery Center Sdn. Bhd
Beauty Apparels (Cambodia) Ltd
Beauty Silk Screen(M) Sdn. Bhd.
JIT Embroidery Limited
SA One Garment Ltd
Perusahaan Chan Choo Sing Sdn.Bhd
Other subsidiaries
Beauty Silk Screen Limited
Significant Changes There are no significant changes from previous reporting period regarding the structure and legal ownership of JIT except the followings:
Size of operation – Additional of 10 new sewing lines of about 40 workers per line comprising sewing ironing and packing operators, QC staff and line leader totaling 400 workers in sewing section Manpower recruitment - Total workforce of 3,206 employees, an increment of 700 (including the 400 above mentioned) workers at the end of 2011 when compared to last year‟s.
Awards
JIT did not receive any award during the year of 2011
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Reporting Parameters Highlights JIT is a subsidiary of PCCS Group Berhad (Ltd), a public listed company in Kuala Lumpur Stock Exchange, and publishes its Financial Report in accordance to International Accounting Standard and KL Stock Exchange Regulations
Most Recent Report and Reporting Cycle We started our first Sustainability Report in 2010 covering relevant information fro2m 1-Jan-2010 to 31Dec-2010 for the purpose of enhancing communication with our stakeholders and ever increasing demand of corporate reporting transparency and decided to report on a yearly basis. This is the second Sustainability Report of JIT, covering relevant information throughout the Year of 2011, after taking accounts of materiality assessment that influenced it, which also included additional information relevant to the Global Reporting Initiative (GRI) or where JIT deemed appropriate.
Process of Defining Report Content Purpose of Report We need to emphasize the fundamental purposes of this sustainability report as each of them relates to:
our concern on the global climate change, our attention to the implementation of sustainable development, our emphasis towards Corporate Social Responsibility (CSR) and
our
commitment to the business transparency, social contribution and controlling pollution within the premises for conservation of the environment.
Core Aspects JIT continues publishing this report which adheres to the Global Reporting Initiative (GRI) guidelines (G3) as the basic structure, which breaks down into five core aspects:
Governance, Economic performances, Corporation Social Responsibility, Environmental performances and In-depth coverage on certain related issues.
These five aspects resonate with the disclosed indicators on sustainability.
Consideration for Report Creation Process
Identify the business goals, objectives, target the main aspects relating to this report Identify the connectivity parties, i.e. our reporting stakeholders to determine their interests and influences over our business operation and management. Selections of aspects as prioritized by stakeholders and Performance Indicators associated with these aspects by applying materiality, inclusiveness and completeness principals and respective disclosures of Management Approaches (DMA) in relation to KPIs that we have selected and Monitoring the collecting of relevant information for the selected indicators by applying the comparability, reliability, accuracy, clarity, timeliness and balance principals.
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Scope and Boundary of Report PCCS Group – Narrative on Group structure and legal formality JIT – Covers all aspects of JIT operations which includes: Waste Collection – Information on the recycled wastes Customers – Information pertaining to sale and supply chain activities and Fabric, accessories and packing suppliers which are our strategic supply chain partners
Besides these, general information pertaining to garments industry in Cambodia would be disclosed accordingly to help readers understand better the business situation of the Company.
Limitations on Scope and Boundary Even though steps have been taken to ensure full disclosure and transparency, we are unable to disclose all information due to the following limitations:
Only key stakeholders were selected meaning we were unable to disclose certain aspects and performance indicators raised by the other stakeholders Certain data or information are unavailable for comparison due to its completeness and relevancy to this GRI report
Basis of Reporting on Issues Affecting Comparability As JIT did not have any subsidiary company and did not involve in joint venture business, leased facilities, outsourced operation with any other company, the basis of reporting which might significantly affects its comparability for the years of 2010 and 2011 did not exist.
Significant Changes There was no significant change from previous reporting period in the scope, boundary or measurement methods applied in the report.
Measurement Techniques and Basis of Calculation During the report creation process, we followed the disclosure requirement and measurement techniques or methods recommended by GRI Reporting Guidelines and simple linear calculation process was applied throughout this report. Where such techniques and methods were not available, we applied the international acceptable standards of techniques and measurement. If such standards were not available, we applied our internal standards based on our assumptions. In both cases, disclosure would be made in the relevant sections of this report.
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Reporting Performance Indicators
Total KPIs 2010 – 11 2011 – 24 Up 118%
Economic KPIs 2010 – 02 2011 – 02 Sustained
Social KPIs 2010 – 03 2011 – 11 Up 267%
Environmental KPIs 2010 – 06 2011 – 11 Up 83%
We reported 24 Performance KPIs based on the GRI G3 (Global Reporting Initiatives) guidelines after taking into consideration of the requests by some of our stakeholders and others which were needed internally for better understanding and discussion. Even though there were 13 new KPIs being reported for the first time in 2011, we managed to collect all the data and information in each respect for comparison and providing relevant information to the readers of this report.
External Assurance for the Report The Company decided to follow the GRI G3 guidelines with self-declared Level B. JIT has no intention to obtain external assurance for this report. The GRI Content Index is disclosed on Page 64 for reference.
Restatement
There was no restatement in the 2011 Sustainability Report.
Contact Window & Request for Feedback Producing a Sustainability Report not only is an arduous task but also requires countless hours of data collection, collation and analysis. As such, we invite all readers for open discussion by providing us your views on the quality and usefulness of this report. While every effort has been made to ensure the accuracy of the information, anyone seeking to rely on information in this report or seeking to draw detailed conclusions from the data should contact JIT for verification and assistance. Carlsbin Ng – Sustainability Committee Officer Email:
[email protected] Tel: +85512333920 (Cambodia)
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Governance Commitment and Engagement Highlights GMAC Member of Garment Manufacturer Association in Cambodia (GMAC) since 2007. One of JIT A.G.M. is the Exco member of the Association. Member of Fair Factories Cambodia (FFC) under the External Charter of ILO (Internal Labor Organization) The sustainability goals and objectives of JIT is in line with the following customers: Puma Sustainability Target 2011-2015 which launched in 2011 by Developing Sustainability Projects and Target Plans (SPTP) from 2010 baseline year adidas Sustainability Plan 2011-2015 which also launched in 2011 and monitored the progress through internet EMeReT System (Environmental Metric Reporting Tool) from 2010 baseline year. In-house Charity - “Jouy K‟nier” (“Self-Help” in Khmer) 2010: US$8,240
Mission & Vision
Environmental Sustainability
2011:US$4,593
• Our Mission is to provide our customers with the highest quality garment with the lowest environmental impact • Our Vision is to help conserve and protect our planet‟s resources through the use of innovation and methods that maximizes operating efficiencies in all areas of our business. • JIT is committed to leading the industry in minimizing the impact of its activities on the environment. As a Company, we act in compliance with the law relating to the environment and are committed to the integration of sound environmental practices in our business decisions. We recognize the direct and indirect environmental impacts of our operations and support the principles of sustainable development.
• To be a responsible corporate entity, our corporate culture is built on respect for the society in which we operate and an inclusive perspective on our stakeholders embracing not just shareholders and staff, customers and Social business partners but the community at large. Creation of value for society, help Sustainability people in need and focus on the top priorities of the country – healthcare and education.
Economic Sustainability
Internal Code of Conduct
• Profitable growth and long-term business success ensure our commitment to sustainable economic development. Maximizing resources utilization and minimizing costs are the driving forces towards ensuring that activities and initiatives are economically viable. We practice long term gains which always has preferences over short term yields. • JIT developed internal code of conduct and principals which are in line with the statutory and customers‟ requirements
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Governance, Commitments and Engagement Board of Directors of PCCS Group The Board of Directors of PCCS Group Bhd, the holding company of JIT, remains unchanged since 2010 and consists of seven (7) members.
JIT Highest Governance Body (HGB) PCCS Group Berhad (Ltd) appoints one of its Executive Directors as CEO (Chief Executive Officer) of JIT to run the business. He is responsible for the overall managerial and operational decisions of the corporate governance of JIT, and assisted by 3 more key management members:
Board of Directors
No #
Executive Chairman & Managing Director
1
Executive Director
2
Director
2
Independent Director
2
Total
7
1 Country General Manager 2 Assistant General Managers
All four of them are considered as the HGB members of JIT. Their focus is to enhance the interests of shareholders and other key stakeholders by providing oversight of the economic, environmental and social performance of JIT. The Organization Chart shown below represents the governance structure of JIT:
CEO
Country General Manager
A. G. M. Adm & HR
A. G. M. Customer Service
Warehouse Manager
Marketing Manager
Marker & Sample Executive
QA/QC Manager
CI Manager
Production Manager
Finance & A/C Manager
Shipping Manager
Corporate governance is integral to the way we do business. It shapes our relationships with all our stakeholders, including shareholders, staff and workers, customers, suppliers and the community, and provides the framework and control systems that help us to adhere to the highest ethical standards. Our approach to governance is to foster an organization that supports individual and professional integrity and responsible behavior in all facets of our business. We aspire to the highest standards of behavior from employees. This can only be achieved through responsible leadership, accountability and a governance structure that is well communicated throughout the organization.
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Qualification and Experiences CEO and 3 other members of Highest Governance Body (HGB) are selected and employed by the PCCS Group‟s Board of Directors based on their extensive knowledge of the JIT‟s industry or experiences in financial reporting and risk management.
CEO holds a Master Degree in MBA (Finance) and Degree in Environmental
MBA Environmental & Social Degree
and Social Study with more than 30 years of experiences as Lean Consultant.
Conflict of Interest To ensure full disclosure and transparency, all members of HGB, managers and Head of Departments are required to report any potential conflicts of interest to the Company.
Already inbuilt conflict of interest into Employment Manual as an important element of the Employment Policy and Procedure, each employee should be abided by in full while providing employment service to the Company.
Identification and Management of Performances, Risks and Opportunities and Adherence of Compliances The HGB for overseeing the organization‟s identification and management of economic, environmental and social performance, including relevant risks and opportunities, and adherence of compliance with internationally agreed standards, codes of conduct and principals becomes part of its managerial functions to keep the Company economically viable and sustainable. Procedure is in place by setting and communicating performance standards including goals and objectives and expectations, observing and providing feedback, and conducting appraisals enables JIT to achieve the best results through identifying and managing these performances and adhering compliances. Well-established executive, audit and compliance and human resources also ensure that their responsibilities are upheld and executed to the highest level. Should assessment is required; SWOT analysis is applied to evaluate the risks and opportunities.
Highest Governance Body (HGB) Performance Evaluation The HGB performance evaluation process, including goal setting, performance measurement, regular performance feedback, employee recognition, and documentation of employee progress, is set by the Board of Directors (BoD) of PCCS Group to ensure the successes both in JIT business operation and members of HGB achievements on a yearly basis.
The performance appraisal is part of that process and provides an excellent opportunity for BoD to communicate with the HGB members about past performance, evaluate their job satisfaction, and make plans for JIT future performance.
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Precautionary Approach to Risk Management A response to the organization‟s approach to risk management in operational planning or the development and introduction of new products can be summarized as follows:
Identification and prioritization of risks, Reporting of these findings to our Head of Departments Committee periodically and inform of our strategic planning and operating plan processes, Execution of programs and monitoring of planned activities to mitigate the risk level
Evaluation of the effectiveness of the plans and review for future actions Mechanism for Shareholders and Employees Providing Direction & Recommendation The concerns of the stakeholders, especially the shareholders and employees in providing direction and recommendations, are well deal with by the Highest Governance Body (HGB) of JIT and other committees as elaborated in the coming statements through direct involvement in operational activities and the channels of communication. Direction and recommendation from shareholders and employees can be conveyed to the parties below mentioned by many ways such as agenda tabled for discussion in the meetings. Outcomes of the discussion pertaining to issues raised by shareholders and employees will be addressed by with solutions and relevant remedial actions.
Direction and Recommendation to Group Level PCCS Group Berhad (Ltd) holds Annual General Meeting in Malaysia where all shareholders decide on matters relating to the overall business and management of the Group companies. The intention and expectation of the shareholders were conveyed to Board of Directors (BoD) during the meeting. The BoD conducts regular board meeting, based on the strategy set in Annual General Meeting, to oversee the overall operation and management of all subsidiaries within the Group and supervises the HGB members to carry out managerial and operational decision makings in the interest of JIT.
JIT Factory-wide Level The HGB members They hold weekly senior management meeting to formulate policy, objectives and goals, make decisions regarding the business strategies and targets formally set, monitor the running of business, analyzed and review the business outcomes.
The Head of Departments Committee (HODC) HODC holds weekly meeting to discuss the daily business activities and operations of the Company where its sub-committee, Sustainability Advisory Committee (SAC) (formerly known as Sustainability Committee) reports directly to HOD Committee on events pertaining to sustainability.
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By Functional Committee Level Sustainability Advisory Committee
Health, Safety & Environmental Committee
Corporate Social Responsibility Committee
In-house Charity Fund
Labor Union
2010: 4 – 1 2011: 4 – 1
2010: 7 – 10 2011: 8 – 12
2010: 5 – 5 2011: 5 – 5
2010: 0 – 3 2011: 0 – 3
2010: 0 – 15 2011: 0 – 15
Sustained
Mgmt Up 14% Empe Up 20%
Sustained
Sustained
Sustained
No# of Management (Mgmt) and Employee (Empe) Members Sustainability Advisory Committee (SAC) While SAC is responsible for the sustainability activities, its implementation and development programs is further assisted by sub-committees namely HSE, HR, LEAN and CRS, each with specific functions related to their fields of specializations. The representatives from each sit in the SAC meeting on the monthly basis.
Board of Directors
Reports
CEO
Reports
Head of Departments Committee (HODC) Reports
Sustainability Advisory Committee (SAC)
Reports
Health, Safety & Environment Committee ( HSEC)
Reports
Human Resource (HR) Department
Reports
Corporate Social Responsibility Committee (CSRC)
Reports
LEAN Department
Health, Safety and Environmental Committee (HSEC) It is a sub-committee of the SAC, which has general oversight responsibility for compliance:
Oversee the company‟s implementation of compliance programs, policies and procedure that are designed to be responsive to the various compliance and regulatory risks facing the company Assist the SAC in fulfilling its oversight responsibility for the Company‟s compliance, policies and procedures
Members comprise of personnel both from management and local employees with 50% and 50% proportion respectively (2010: 50% to 50%). It holds monthly meeting to discuss the related issues.
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Corporate Social Responsibility Committee (CSRC) CSR policy functions as a built-in, self-regulation mechanism whereby monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. The goal of CSR is to embrace responsibility for the Company‟s actions and encourages a positive impact through its activities on the environment, consumers and all stakeholders.
The major projects which the Committee is currently running are the In-house Social Charity Fund and customers CSR audit sustainability. The ratio of management to local workers is 50% to 50% (2010: 50% to 50%) and the Committee meets on a quarterly basis and report to SAC accordingly.
CSRC Ratio Mgmt – Employee 2010: 50% - 50% 2011: 50% - 50%
In-house Social Charity Fund It is named as “Jouy K‟nier” (“Self-Help” in Khmer) and provides charitable fund to the employees since 2010 in the following circumstances:
Donations 2010: US$8,240 2011: US$4,593
Natural disasters like flood and fire suffered by families of employees, Injury & sickness suffered by employees, Death of immediate family members of the employees and New born babies of employees
From the Employee Survey feedback, charitable foundation is useful for strengthening factory reputation and relationship among employees. JIT has set a good example by engaging in charitable project directly and determining conditions of providing assistance to employees when needed. It strives to provide better service in this respect so that the welfare of the employees would be further enhanced in future. Social Charity Fund distributed: 2010: US$8,240, 2011: US$4,593. For more detail information, please refer Table A in the Appendixes. The fund paid was contributed and shared equally by JIT and the Labor Union whose cash collected are from its members. Even though the cash amount distributed in 2011 was lower than last year, we strongly believed that all employees were aware of such fund and the claim entitlements.
Labor Union Labor union named United Labor Union is formed under the local legislation. It is an independent body formed by the employees of the Company taking charge of the welfare and rights of the Union‟s members. Union members take part in trainings, both conducted internally or by
external consultants, on HR and union topics so that the minimum statutory and customers requirements are made known to them. The union conducts meeting with management on a monthly basis.
Union members 2010: 2,140 (85.45%) 2011: 2,350 (87.92%) of total workforce
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Informal dialogues For informal issues-based discussions with Line Leaders and Supervisors in all departments of JIT, HOD (Head of Department) conducts regular meetings to listen to the needs of employees and take initiatives to make improvements. Issues raised by the employees or complaints received from employees‟ suggestion box are brought to the meeting to openly discuss and corrective actions taken to mitigate or settled accordingly.
Linkage between Compensations for HGB, Managers and JIT’s Performance
As JIT is 100% owned by PCCS Group Bhd, the holding company is entitled to any dividend which is proposed by the Board of Directors, and approved by shareholders during the Annual General Meeting. There was no dividend declared in 2010 and 2011
Members of HGB and managers obtained their respective remunerations and fringe benefits based the employment contracts signed between JIT. Bonus will be given based on the overall financial performance of JIT on the yearly basis. JIT did not specifically allocate certain amount of cash as compensation to them in respect of social and environmental performances that they achieved.
Subscription or Endorsement to External Charter JIT is a member of Fair Factory Cambodia (FFC) under the Endorsement to External Charter of ILO (Internal Labor Organization) since 2007. Under this endorsement agreement, FFC conducts compliance audit twice a year on unannounced basis. JIT participated in certain training courses conducted by FFC so that the latest developments and update information on labor, legislations, code of conducts, principles and standards were followed up and closely adhered to.
GMAC Membership and Position Held JIT is a member of Garment Manufacturer Association in Cambodia (GMAC) since 2007 up-to-date and enjoys some of the prominent benefits:
Obtaining first hand information of government and relevant authority via GMAC Active in negotiation with governmental bodies via GMAC so that the interest of members is protected.
GMAC EXCO – Deputy Chairman
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GMAC EXCO Member One of JIT Assistant General Managers, Mr. YT Choon is the Deputy Chairman of GMAC since 2009 until up-to-date. Being an EXCO member in GMAC, he is actively involves in the followings:
Trade facilitations which involve Ministry of Commerce, Council of Development of Cambodia and Custom Trade Department, a sub-unit of Ministry of Finance. Industrial Relations which involve ILO, National Labor Union and Ministry of Labor, Financial arrangements between members and the Ministry of Finance, especially on the tax matters (corporate and employee) Negotiation on the construction of National Garment Institute – Donation of US$3 million from France Promoting Cambodia as a garment sourcing center. GMAC organized a forum in Japan, 2008 Encouraging fabric mills to invest in Cambodia. GMAC organized a forum in DongGuang city, China, 2011 Training programs – GMAC is collaborating with JODC (Japan Overseas Development Corporation) on paper pattern design course to local Khmers
Exhibitions Act as a co-organizer for a series of trade fairs such as SASFA Global Forum Seminar in Phnom Penh & Workshop and Cambodia Trade Fair in Siam Reap The activities that JIT participated in 2011 were as follows:
Garment Trade Fair in New Delhi Cambodia Trade Fair in Phnom Penh
….
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Identification of Stakeholders and Selection for Engagement Goals Setting
Sales Growth
2011 Target
5%
2010 Based Yr.
Based on 2010 Sales
Energy Saving
CO2 Emission Reduction
Waste Reduction
Water Saving
No# of Stakeholders
20%
20%
10%
15%
2011: 7 2011: 7 Sustained
Based on Per Piece of Garment Produced
Based on Per Worker
The process of identification, selection and engaging of stakeholders is done by SAC and HESC committees during report preparation stage. They start liaising with relevant departments, meeting stakeholders and governmental bodies‟ representatives to identify business goals, aspects and related indicators that are relevant and appropriate to the report by considering factors:
Usefulness, reliability, materiality and inclusiveness of stakeholders Sustainability context, completeness of data/information needed to be collected and represented. Expectations and interest of the organization and stakeholders which are equally important when deciding the content of the report.
The process of identification of business goals, aspects and performance indicators includes:
Using various approaches such as relevancy of business goals; prioritize stakeholders, principal of materiality, stakeholder inclusiveness, completeness and sustainability context. The business goals and types of positive and negative impacts associated with possible actions counter-balance the negative impacts.
Business Goals and Targets Settings JIT‟s key business goals and targets set, taking 2010 as the baseline year, with related stakeholders can be summarized as follows:
2011 Sales Growth – 5% (2010: 2%) Energy Saving – 20% both for direct and indirect energy sources based on per piece of garment produced CO2 Reduction – 20% on the direct and indirect energy used in JIT based on the conversion rate on quantity or volume of emissions and effluents Waste Reduction - Encourage the recycle of by-products and wastes by 10% based on total materials Water Saving – 15% based on consumption per employee Full compliances on statutory and regulatory and customer‟s requirements covering economic, social and environmental aspects and impacts. Target: Zero fine Quality Policy – The Company is committed to understand, meet, and when possible, exceed customer‟s requirements through the continuous improvement of our processes and dedicated to delivering defect-free product on-time at the most competitive price possible
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Engagement Methods The potential stakeholders were identified when we defined the business goals and main aspects. To determine the level of engagement, we analyzed the rate of “Influence” and “Control” to these stakeholders and vice versa. Our stakeholders provide a diverse range of perspectives and we maintain various formal management systems to engage with, listen to and learn from them. We take their feedback seriously, and when appropriate and relevant to our business, incorporate it into our thinking and planning. To prioritize our stakeholders and their concerns, we set the engagement plan, taking into considerations of the following aspects:
significant/strong influences and/or, significant impacts on the economic, environmental and social issues between us, the relevance of the stakeholders‟ relationship both direct & indirect to our business and the importance of the particular issue being raised
1
Employees
2
Shareholders
3
Government – Ministry of Labor, Tax Department & Ministry of Environment
4
Customers
5
Waste Collectors
6
Suppliers
7
Local Community
Table 1
After brainstorming process, those stakeholders with significant impacts both positive and negative outcomes were selected by taking the factors above mentioned into consideration, the higher the total score, the stronger is the connection and the final list of stakeholders is shown in Table 1 which are similar to 2010 for sustainability report creation. Like 2010 where the sustainability engagement team continued contacting and communicating with the selected stakeholders on our intention to engage them again in 2011. Feedback from above stakeholders revealed that they were willing to be engaged again for 2011 GRI report creation. In the events when a particular stakeholder group is in a large group such as employee and local community, different approaches had been applied to collect information to ensure the accuracy and reliability of them. In cases of certain limitation of approaching the issues, we interpreted the aspects into simple and practical issues to help our stakeholders understand more easily hence providing relevant information in return. The members of Sustainability Advisory Committee have done the engagement activities with potential stakeholders their concerns on our business operations as well as main aspects of the report by the following ways:
face to face interview, telephone enquiry, direct dialogue, extract of data and information and analysis, email correspondence and questionnaires
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Determination of Materiality and Reporting Indicators Prioritized stakeholders Aspects chosen by stakeholders List of aspect to be reported
For this Report content, we have carried out the tests of reporting principals including Materiality, Inclusiveness, Completeness, Sustainability Context and the steps taken can be summarized in the Engagement Process Flow on the right Prioritization of stakeholders together with inclusiveness, list of aspects chosen by stakeholders and to be reported have been disclosed and explained in the foregoing statements. The following principals are equally important:
Materiality List of indicators associated with aspects Materiality test List of indicators to be reported Completeness test Engagement Process Flow
After considering the potential core indicators and associated main aspects, we applied the materiality tests by answering several relevant test questions for each indicator. First 24 highest scored indicators were selected for GRI Reporting creation purpose. Those indicators with adverse effects were considered if those would affect our performances. Subsequently, JIT would implement corrective actions to check such drawbacks.
Completeness We applied completeness tests to the following issues to ensure that the contents reflect our significant aspects and allow our stakeholders to review our performance:
Inclusiveness of entities which our Company has control and influences over them or to be controlled by them Providing sufficient information concerning to stakeholders concerns or company impacts Reporting on significant events or impacts
Stakeholders’ Feedback – Key Concerns Governmental Bodies
1. Tax Department - It mentioned that not only JIT (the Company) paid the monthly employee tax amount on time by withholding individual employee tax portion but also disclosed the income of individual employee on the gross amount, meaning the Company is obliged by the legislative requirements to withhold tax and set a good example for other factories to fully comply in Cambodia. JIT has regular face-to-face meeting or through email with Tax Department officers pertaining to updating of tax information.
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2. Ministry of Labor - It emphasized that the Company should continue providing high quality working condition to all employees. Knowing that the total workforce has increased to 3,200 employees, the Company has continuously playing greater role in providing job opportunities to the residents surrounding the Factory as well to the rural workers despite the fact the basic salary has increased by about 25% since last year due to the influx of foreign businessmen investing in Cambodia at the beginning of 2011. The Company has to submit certain reports to the Ministry and meet them on a monthly basis hence labor issues can be brought to discuss freely.
3. Ministry of Environment - It stressed the importance of meeting the minimum legislative and regulatory requirements of environmental protection. Based on the audit reports done half-yearly, JIT passed all regulatory tests such as drinking water content, machinery and equipment operation standards, water treatment discharge, noise and heat levels. In addition, JIT achieved best practices in Energy, Water and wastes reduction by more than 30% in 2011 comparing to 2010 performances. During closing meeting, the Ministry officers discussed directly with us on the matters to be improved in each audit.
Customers 4. As part of the supply chain, customers support and encourage JIT in sustainable compliance practices in order to maintain the world leading garments manufacturer status concerning product and conservation of environment. Puma has upgraded JIT CSR (Corporate Social Responsibility) status from B+ to A grade in S.A.F.E. audit in 2011.
Suppliers 5. The feedback from existing suppliers still concentrated in strengthening the business partnership in material supply chain. Non ASEAN countries suppliers admitted that they have grabbed the chance by trading big quantity of materials throughout the year due to EU (European Union) further extends the GSP (Generalized System of Preference) trade privilege to Cambodia manufacturing sectors. All fabric suppliers have to come to JIT for the types, quantity and quality of fabric for the new sample garments development in each season.
6. Community Hawkers Local Community hawker‟s sales increased by 25% (between 100,000 to 240,000 riel or US$25 – US$60) when compared to last year. Approximate earnings of 60,000 to 120,000 riel (US$15 to US$30). The sales volume was higher than last year because JIT split the lunch break into two sessions, i.e. one at 10:15am and another at 11:00 am as the total numbers of workers has increased considerably. 90% of the hawkers admitted that they relied heavily on the income earned from here to support their family lives.
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Employees 7. Employees‟ Survey conducted in 2011 summarized the following key points: Employees’ Survey Summary Areas of Significant improvements discussions A Occupational Health & Safety Working Noise reduction - Constructed concrete building to install the conditions – generator located about 15 meters away from the nearest production Noise, Heat, floor. In 2010, the generator is located 3 to 5 meters away from the Ventilations Electrical and Embroidery Departments. Decibel: 2010: 93 2011:65 (Acceptable level: 75 and below) Heat reduction – Using shelters made of fabric mesh to block the directly contact of sunshine to production floors. Exhaust fans used in water curtain cooling system of which take away the heat from the production floor are covered with hollow cylinder-shape fabric to prevent sunlight. Extending the function of water curtain cooling system by additional 2 hours per day from 8:30 am to 4:30 pm. {Normally from 9:30 am to 3:30 pm } Temperature: 2010: 32OC, 2011: 29OC B High risks Shifted the Printing Ink Chemical Room out of production floor and areas allow having chemical ink for single day‟s consumption only in the Design Room. The exposure of hazardous chemical to printing workers has greatly reduced. C Day Care Double the current size of the Day Care Center plus a playground for Center the children of the JIT employees to stay more comfortably. D Recycled Constructed a concrete store to keep recycled wastes for the Waste Store protection of the environment.
Satisfaction Level 2010 2011 79% 87%
75%
90%
78%
95%
JIT management conducts monthly meetings with the Labor Union and Shop Stewards on workers welfare and concerns.
Shareholders 8. The importance of profit to a business is that JIT knows exactly what can be spent to make the business prospers and makes sure that we can develop our merchandise and services to make them better to attract more customers to the business. Other benefits derived from profit in business includes but not limited to:
It helps in the development of the company position in the market, It judges the position of their management ,working involvement of workers and healthy proper accounting and It acts as a benchmark for future challenge of the Company and long-term stable business development and expansion so that the revenue generated can be further distributed to all relevant stakeholders.
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Obtaining Grade A in PUMA S.A.F.E. audit rating with score of 96.96% in 2011
Sustaining Grade A in Technical audit conducted by Puma for two consecutive years with same score of 96% in 20102011
All these years, we are pride of ourselves in our ability in providing Puma the branding services it required in a cost and brand-concious manner JIT materializes the corporation vision which focuses on top quality, cost effectiveness, excellent customer service and on time delivery in our sustainable products Total Puma garments made 2010 – 2.11 million pieces, 2011 – 2.49 million pieces Puma Sustainability Program 2011-2015 - Monitor the progress through E-KPI Measurement System (internet Enablon System)
Vincent Ng, Cambodian boy starts drawing World Cat
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Economic Economic Management Approach Profitable growth and long-term business success ensure our commitment to sustainable development. Transparent, honest and fair business dealing helps position JIT to realize opportunities for our continuous growth and outperform our stakeholders‟ expectations. By demonstrating good governance, sensible risk taking and transparency in communication, business continuity and expansion is most effective when it is integrated with business processes and organizational management systems. JIT continues allocating an appropriate proportion of its fund or profit generated into environmental protection expenditures and investments which we believe that the short term spending brings greater long term gains to the Company. GRI Report published annually is one of the many ways of JIT in providing information regarding economic performance and market presence of the Company. JIT offers competitive benefits to our stakeholders which are better than that of similar industries of the country in most cases, making it an attractive garment manufacturer in Cambodia. By demonstrating good governance, sensible risk taking and transparency in communication, business continuity and expansion is most effective when it is integrated with business processes and organizational management systems.
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Economic Highlights 2011, Cambodia continued to be granted by European Union (EU) the privilege of Generalized System of Preference (GSP) where all materials imported from overseas, irrespective of countries of origin, will enjoy tax relief for buyers importing garments in EU countries. Sales increased by 57 % from 2.90 million in 2010 to 4.55 million pieces in 2011 with more efficient materials utilization rate and natural resources usages. Continue using PUMA-approved environmentally friendly CHT inks for all screen printing panels.
Deployment of Lean Manufacturing System to maintain sustainability growth and expansion as well as making it another profitable year in 2011
Doing Business in Cambodia Doing business in Cambodia was becoming more competitive than before due to the shortage of labor and ever rising labor cost. Global rising labor and material costs, especially in China, had resulted many foreign investors to look for alternatives for production base and selected Cambodia as one of their choices. Cambodia has become a popular prospect for foreign investment, with regional investors, such as China, Malaysia and South Korea, seeking to capitalize on emerging business opportunities. Since then, garments factories competed among each other both for skillful as well as new workers to fill up their job vacancies. The garment and footwear industry has been the main magnet for foreign investment since 1993. However, in recent years, other sectors of the economy have been catching up, including tourism, construction, telecommunication, extractive industries and exploration of mineral resources. Investment opportunities in Cambodia are plentiful and substantial for both local and foreign investors. It is the newest investment destination in the region especially the GSP tax privilege system strengthened by EU. It has become even more attractive after the Royal Government devoted more attention to strengthening political stability and the rule of law, and mobilizing all available resources for greater economic development. All these add to the acute labor shortage in the country.
Major Steps Taken in Sustaining Business Growth Major steps have been taken in 2011 to check the ever increasing labor cost while striving to sustain business growth and expansion. During the year, the Company continuously practicing Lean Manufacturing System which focused on the following aspects:
Incoming materials and production management - Close monitoring processes on procurement, accessories & fabric consumptions, reduce defective parts to the minimum level during production,
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Quality – emphasis on the upgrading of quality standard Efficiency – focus on daily productivity as well as documentation process efficiencies to increase output and practice over shipment of finished goods if allowed by customers and Waste Reduction – Physical and process wastes are 2 major areas where all workers have to take steps to mitigate or eliminate them aiming at shortening lead time, improving quality and saving cost. Non-production overheads – Tightening the expenditures by removing repetitive activities of same nature, reduced frequency and timings and spending based on approved amount. Requested an average 10% increase in CM price but customers only approved about 5% which was reflected in the FOB price of the finished garments.
Some of the prominent outcomes of such implementation can be summarized as follows (refer to Financial Overview 2010-2011 below):
Cost saving of around 4% in procurement and control of materials amounting to US$715,500, Overheads saving by 3% amounting to US$135,100, The balance of estimated US$850,000 was from the increased FOB price
In short, Lean initiatives implementation is inevitably one of the key factors to the success in maintaining sustainable growth and expansion as well as making it another profitable year to JIT operation. It‟s of great challenge to the Company as well as to all staff and workers in achieving higher target set for 2012 as the expansion actions are essential to meet the requirements and expectations of our stakeholders.
FINANCIAL OVERVIEW OF 2010-2011 Summary of 2011 financial results by referring to Graph 3 below: Sales Profit Production Volume
In general, 2011 business was good with quite constant production volume to fill-up the monthly capacity throughout the year Sales orders in pieces increased tremendously by 57% and it was able to be absorbed by production floors after successful recruitment of workers Increase in FOB sale price by 13% was lower than the target of 20% set previously due to competitive selling price set by the customers
Materials Wages
Rising material costs by 13% and labor shortage have become great challenge to operate apparel manufacturing factory profitability in Cambodia When labor shortage problem existed, JIT increased basic wage which was higher than the National minimum amount and extra allowances to maintain the labor force resulting 28% and 22% rises for direct and indirectly wages respectively
Uncertainty is perhaps the biggest challenge facing apparel industry in future. The economic situation in Europe and US, swings in garment prices, acute labor shortage and rising operating costs, all add up to a worrying year. There may be opportunities to increase productivity and reduce non-value added activities to create competitive advantage for JIT to sustain growth and expansion in the coming years.
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Graph 3: Revenue and its Distribution
Percentage
Major Corporate & Financial Ratios 2010 V.S. 2011 100% 50% 0%
Percentage
62%
82%
13%
13%
28%
57% 22%
Sales
Profit Margin
Profit
Raw Materials
Direct Wages
13%
62%
82%
13%
28%
Indirect wages 22%
28%
Sales in million pieces
Total workforce
57%
28%
Note: For more details, please refer to Table B in Appendixes.
Comparison of Business Forecast and Actual Outcomes By comparing the targets set in the first GRI Report, 2010, Graph 4 displayed the forecasted figures against actual outcome of the financial situation:
Sales volume was 6% short of forecasted figure due to the actual average FOB price slightly lower than expected. Forecast sale in 2012: US$30 million (2010: US$28.5 million) increased by 5% value retained (profit) slummed by 40% mainly due to rising direct and indirect labor cost and partially due to rising material cost. Forecast labor cost in 2012: 25% of Turnover (2011: 24%)
Percentage
Economic
2011 Business Forecast V.s. Actual Expenditure 40% 30% 20% 10% 0% -10% -20% -30% -40% -50%
Sales in pieces shot up by 34% due to GSP (Generalized System of Preference by EU) effect. Forecast manufacturing pieces in 2012: 5.5 million pieces, (2011: 4.55 pieces) 22% increase.
Percentage
Sales
Profit
Sales in pieces
Workforce
-6%
-40%
34%
18%
Graph 4: 2011 Business Forecast Vs. Actual
Due to expansion of 10 sewing lines. More manpower was needed. JIT expects to maintain same number of workers in 2012 (2011: 3,200 workers)
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Market Presence & Localization of Manpower The balance between the employment of right people and machinery is one of the fundamental principal if one Company wishes to carry out its production efficiently. The Recruitment Procedure emphasizes on the prioritization in selection of local citizens during new intake process with no racial and gender discrimination. We continue strengthening the collaboration between stakeholders, especially the local community where most of our workers stay in so that they are able to work in JIT factory as near to their residences as possible In addition, JIT has gained confidence from the renowned buyers to be the strategy supplier in this respect which is also in line with the government objective to prioritize local citizens in the recruitment process. Graph 5 displays workforce diversification as at 31-Dec-2010 & 2011 in the Company Khmer workers have increased by 1.32%, representing 716 employees whereas expatriates reduced slightly from 96 to 84 persons. The company management was confident that the trend of hiring local supervisors and middle management level personnel was positive and in lined with the Ministry of Labor who represents the governmental body in ensuring fair recruitment process is being exercised and fully support in searching of local manpower. Despite the fierce manpower recruitment competition both from existing and new factories surrounding JIT, statistical data showed that 78% of the total workforce remained working with us after one year of development. Many approaches have been applied by HR Department with the assistance of Head of Departments to upgrade the skill and competence level of employees BY providing trainings and disseminating relevant knowledge, skill and techniques to the exiting workers, some new faces were being promoted to the managerial level. They have shown their capabilities in their respective fields of expertise. This reflects the eagerness of the Senior Management to localize workers working in management positions.
Percentage
Graph 5 -Workforce by Nationality 2010 - 2011 120% 100% 80% 60% 40% 20% 0%
Khmers Chinese 2010
2011
Khmers
96.18%
97.50%
Chinese
2.46%
1.35%
Malaysians
0.96%
0.82%
Filipinos
0.32%
0.27%
Hongkies
0.08%
0.03%
0
0.03%
Indonesian
Malaysians Filipinos Hongkies Indonesian
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In general, there are some improvements in localization of management posts. The Company plans to increase at least one local manager in 2012 Graph 6 below shows a promising result, especially the supervisory and technical level locals with 78% and 334% improvements respectively. The Ministry of Labor encourages the Company continues training local workers in order to take up the posts previously occupied by expatriates such as HOD (Head of Department), executives, supervisors and leaders
6: Workforce by Employment Type at 31-Dec-2010 & 2011
Workforce by Employment Type Ratio 31-Dec-2010 V.s. 2011 400% 350% Percentage
300% 250% 200% 150% 100%
50% 0% Percentage
Managerial
Supervisory
Technical
Clerical
Operational
Sub-total
0%
78%
334%
33%
14%
30%
Note: For more details, please refer to Table C in Appendixes.
Total Environmental Protection Expenditures and Investments by Type and Reinvestment JIT has numerous environmental protection projects in hand since its incorporation in 2007. By tracking and analyzing the expenditures and investments over a period of time, these data allows us to judge the value of complex organizational or technological investments for improving environmental performance. The Sustainability Advisory Committee and our Finance and Accounts Department have developed a set of environmental management accounting system that tracks multiple categories of information including reinvestment strategy. Both parties review the progress of the projects on a yearly basis and decide what should be done for the following years. This indicator focuses on waste disposal, emissions treatment, remediation costs, as well as prevention and environmental management costs. Pictures shown on next page are some of the environmental protection initiatives carried out in JIT and the details on the categories and benefits are disclosed in Tables D & E in the Appendixes.
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1. Spiral staircase sliding slope
2. Cooling System Water Curtain
3. Aboveground Water Tanks
4. “Totoo” car
Benefits The accumulated net financial benefit from 2007 to 2011 as shown in Graph 7 below was US$113,400 (Saving US$299,100 - Investment/Expenses US$185,700) and the balance can be utilized for future improvements especially in renewable energy investment. While we believe that our collective commitment to environmental initiatives, we continue our investments so that benefits to employees and JIT factory is greater from the past.
Graph 7: Expenditure and Investments Vs. Savings and Re-investment Summary
USD
Expenditure & Investment V.s. Saving and Reinvestment 2007 - 2012 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 -20,000 -40,000
Balance B/F
2007 Year
2008
2009
2,010
2011
2012 ( Foreca st )
0
-29,800
5,700
24,500
60,800
113,400
Investment/ Expenses US$
66,900
11,400
43,600
31,200
32,600
113,400
Saving US$
37,100
46,900
62,400
67,500
85,200
93,500
Balance C/F
-29,800
5,700
24,500
60,800
113,400
93,500
Balance B/F
Investment/ Expenses US$ Saving US$ Balance C/F
Note: For more details, please refer to Tables D & E in the Appendixes. Expenses mentioned in Graph 7 include prevention and environmental management costs, regulatory treatment and testing costs but excluding fines for non-compliance with environmental regulation.
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2012 Improvement Projects JIT reinvests on environmental protection projects from the surplus generated from the current practice. As the effort to protect the environment is an endless process, we take the initiatives to continuous meet or exceed all the environmental legislation that relates to the Company:
Renewable energy- solar generated lights as street lights for exterior space, Re-invest in cooling system as the fixture has reached the full 5 years of depreciation, Replacing polybags with fabric bags to store cut-panels in Cutting Section.
Significant Fines and Non-Monetary Sanction
The level of non-compliance within the organization helps to indicate the ability of management to ensure that operations conform to certain performance parameters. From an economic perspective, ensuring compliance helps to reduce financial risks that occur either directly through fines or indirectly through impacts on reputation.
The strength of an organization‟s compliance record can also affect its ability to expand operations or gain permits. The strength of an organization‟s compliance record can also affect its ability to expand operations or gain permits. Transparency in reporting encouraged JIT to report fines and nonmonetary sanctions in terms of the focus of laws. Since its incorporation in 2007, JIT has not identified any non-compliance with laws or regulations therefore no monetary fines or nonmonetary sanctions being imposed by any party so far.
Significant fines for non-compliance with laws and regulations concerning the provision and use of products and services. In order to avoid fines in respect to this section, all Head of Departments are taking charge of the relevant statutory and regulatory compliances by closely monitoring to ensure full compliance at all times.
Similarly, JIT has not identified any non-compliance with laws or regulations concerning the provision and use of products and services therefore no monetary fines being imposed by any party so far since 2007
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Social Social Management Approach JIT regards itself as an active member of the society so that we are committed to acting in the best interests of our employees and the community people who live and work near our Factory. After all, we benefit from highly motivated and wellqualified employees, satisfied customers and good relations with our stakeholders that are based on mutual trust. To be a responsible corporate entity, we create value for society and all employees in the best practice of: JIT is committed to providing a happy, safe and healthy working environment for all employees. We constantly engage and develop our employees to the full extent by providing a diverse and equal work opportunity to them in order to attract and retain the best individuals for our continuous growth, JIT helps employees in need through our “Jouy K‟nier” (“Self-Help” in Khmer) donations and focus on the top priorities of the country – healthcare and education, JIT constantly conducts open and constructive dialogue with our communities relating to economic, social and environmental aspects and impacts, JIT does not discriminate on the basis of gender, ethnicity personal characteristics or belief and JIT is not involved in activities including child labor forced labor, discrimination and other activities that it believes are ethically questionable.
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Social Highlights Employee population of 3,200 staff and workers, of which 97.5% are Khmers meaning providing employment to local citizens Successfully recruited additional 700 workers in 2011 despite the acute labor shortage situation in Cambodia Continuous trainings to ensure that our industry has access to well-trained and competent staff and workers to keep pace of ever increasing quality demand of buyers. 2010: 1,987 and 2011: 2,133 employees trained Met Minimum National Minimum Wage but imbalance did exist in the highest basic pay by employee type by gender
Cost savings in Quality Inspection System by Customer Certified Internal Quality Auditors and localization of manpower
Cambodia National Minimum Wage Cambodia has a government-mandated minimum wage where no worker in Cambodia can be paid less than this amount. Labor is one of the most important resources of the Company. By reflecting our sound labor policy, JIT continuously provides trainings to upgrade the skill, techniques, education and counseling to our employees. We respect employees as our strategic internal partner and collaborate closely with them. We care of them through wage, incentives and benefit payments which are above the Cambodia minimum wage standard as one of many moves to re-affirm their contributions. Graph 8 shows that the minimum wage per month increased by 23% within one year and this became the major economic impact to the Company.
Graph 8: Comparison of Monthly Minimum National Wage 2010-2011
USD
Comparison of Monthly Minimum National Wage 2010-2011 100 80 60 40 20 0
87 71
61 61
2010 5 Basic Salary
7
Attendance Allowance
5
8
Seniority Allowance
0
5
Health Care Allowance
0
6
Transport Allowance
2011 Total
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Rate of Revenue Distribution ( Based on Sales 100%) 2010 - 2011
0.60% 1.00%
0.80% 0.70%
1.30% 1.20%
99.40% 99%
2011
21.20% 18.40%
0.10% 0.10%
4.40% 4.70%
17.10% 19.40%
120% 100% 80% 60% 40% 20% 0%
54.50% 54.50%
2010
Graph 9: Rate of Revenue Distribution 2010-2011 From the data shown in Graph 9 above, nearly one quarter 24.1% (2010: 21.5%) of the revenue generated is used to pay off employees‟ wages and related benefits. Even though the basic wage increased by 23% when compared to last year value, the proportion of direct wage against total turnover shot up by 2.3% only partly due to the efficient production processes resulting greater output with less overtimes. The average take-home pay of local employees has gradually increased throughout the year, showing a positive trend of distribution of direct economic value generated from the Company to them. They are valuable resources of the Company not only meeting the production efficiency but also fostering a culture of continuous upholding quality standard of the finished goods. In return, the average take-home pay including OT increased by 10% in Dec-2011 (US$150) when compared to Dec-2010 (US$137). The government of Cambodia periodically reviews the minimum national wage of employee to ensure the amount of take-home pay is sufficient to cover the living expenses of the employee. In general, it would consider and adjust the minimum wage or other wage-related benefits level in every four (4) years‟ interval and the next round of such increment is expected to be in 2013 when Cambodia is having its National Election.
Labor Turnover In order to remain competitive in human resource management, JIT has targeted an average employee turnover rate of less than 4% this year and fortunately we managed to achieve it at 3.64% as per Graph 10 below.
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High labor turnover could be caused by many factors: Inadequate wage levels leading to employees moving to competitors; Poor morale and low motivation within the workforce; Recruiting and selecting the wrong employees in the first place, meaning they leave to seek more suitable employment and A buoyant local labor market offering more (and perhaps more attractive) opportunities to employees. When HR management is concerned, we try our best to retain as many employees as possible so that the HR management problem can be kept to a minimum level. The labor turnover and absenteeism rates could be high in the following circumstances:
Khmer New Year in April every year when all take leaves back for the annual celebration. Most of the factories close down for a whole week despite the fact that April is the peak season for JIT, Ploughing season in May as most of the employees are from rural farming families, Ancestor Praying Festival by which most of the factories close down for another week and Harvesting season in October-November.
Employees tend to be restless few days before and after the events mentioned above, making the production departments difficult to plan their production schedule. Employee resignation cases are high during Khmer New Year and Ancestor Praying Festival when they are absent for the whole week and bound to have some not coming back to work at all. The ways which our Company has already taken to reduce the labor turnover included the following actions:
Create a compensation policy (including pay tied to performance and variable pay) that supports the mission and culture of the organization, Base promotions on performance and Demonstrate commitment to the employee‟s long-term development, help employees take advantage of learning opportunities
The result of above actions was encouraging by getting a lower rate at 3.64% when compared to 4.63% (Graph 10) last year.
Graph 10: Turnover Rate by Age 2010 & 2011
Turnover Rate by Age 2010 - 2011 (%) 4.63%
5.00%
3.64%
4.00% 3.00% 2.00%
2.35%
2.28% 2.10%
Avg. 2010
1.54%
Avg. 2011
1.00% 0.00% Age >25
Age 18 to ≤ 25
Total
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Turnover Rate by Age Group The turnover rate by age for aged group >25 was improving by reducing from 2.35% to 1.54% in Graph 10 above, mainly due to the fact that, from the Employee Survey Feedback, the majority of this age group enjoyed a fairly constant monthly income therefore decided to stay back and continued working. There were 21% of the employees who left the Company but joint back after a short period of time outside and some of the reasons why they preferred JIT were the good working condition and prompt payment of salary.
Turnover Rate by Region 2010 - 2011 (%) 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
4.63% 3.64% 2.65%
1.00%
Avg. 2010
1.92%
1.72%
Avg. 2011 0.74%
0.25% Phnom Penh city
Kandal province
Out of Kandal
Total
Graph 11: Turnover Rate by Region 2010-2011
Turnover Rate by Region JIT is located in Kandal province which is about 20 KM from Phnom Penh city and the origin of the employees can be classified as coming from:
Phnom Penh city Kandal province out of Kandal province
Employees from “Out of Kandal” region represented the highest rate of labor turnover. Cambodia has never exported rice to any overseas countries until very lately when China bought 100 tons from the Ministry of Agriculture at the end of 2011. Very recent news talked about Japan and EU is interested in importing rice from Cambodia too meaning the prospect of agriculture is bright and promising. If those countries open up their markets for this commodity, more workers will shift their jobs to agricultural sectors. From the trend of 1.92% in 2010 increased to 2.65% in 2011 (Graph 11) could more or less confirm that such employment shift was becoming more and more obvious.
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Graph 12: Turnover Rate by Gender 2010 & 2011
Turnover Rate by Gender 2010 - 2011 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
4.63%
3.64% 3.15% 2.82% Avg. 2010
1.81%
Avg. 2011 0.49%
Male
Female
Total
Turnover Rate by Gender Graph 12 shows that male workers turnover rate was as low at 0.49% (2010: 1.81%) because they did not have many choices in career opportunities as most of the garment factories were monopolized by female counterparts. Once they got to be employed, they tended to be more loyal to their employers, feeling that getting a job in garment factory weren‟t an easy chance at all.
Trainings to Employees Since 2009, JIT set up CCS Academy Center for the purpose of upgrading the skill, techniques and education standard for employees. The reasons of providing a verity of training to employees are:
When a performance appraisal indicates performance improvement is needed; As part of an overall professional development program; To “benchmark‟ the status of improvement so far in a performance improvement effort; As part of succession planning to help an employee be eligible for a planned change in role in the organization; To “pilot”, or test, the operation of new performance management system; To train about a specific topic (e.g. safety training is critical where working with heavy equipment, hazardous chemical, repetitive activities, can be useful with practical advice for avoiding assaults).
The CCS Academy Center is monitored by the Training Committee consisting of 7 trainers appointed by management to take charge of the training management throughout the year. The Committee meets on monthly basis to formulate the Policy, Mission and Objectives of the trainings including related functions like Program Development, Quality Control, Course Management and Training Specialists. The Committee not only handles internal trainings but also needs to liaise with external consultants to meet the training targets.
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The general benefits derived from employee training and development includes:
Increased job satisfaction and morale among employees; Increased employee motivation; Increased efficiencies in processes, resulting in financial gain; Increased capacity to adopt new technologies and methods; Increased innovation in strategies and products; Reduced employee turnover; Enhanced company image; Risk management.
The approach to collect training needs were similar to previous years where CI (Continuous Improvement) Department started collecting all training needs forms from each department, complied and tabled for Sustainable Advisory Committee meeting and approval. Basically, the trainings can be classified into 2 major categories:
Internal training – These trainings are conducted by internal trainers appointed by the management in their respective fields of expertise. On average, there are 20 participants in each class for 1-2 hours of training per session. Courses covers Fire Drill, Fire Fighting & Safety, QA/QC Inspections, Occupational health and safety, Admin on local laws & regulations, Lean & Compliances with handouts prepared internally or extracted and summarized from governmental bodies, clients manuals & standards and consultants‟ handouts and
External training - This includes external consultations covering topics from governmental bodies like local laws and regulations enforcement, fire prevention and precaution lessons from fire brigade department, Lean fulfillments, ISOs and clients‟ Compliances. Both internal and external trainings include shop floor practical exercises.
Graph 13: Training Needs Analysis 2010 & 2011
Hours
Training Needs Analysis 2010 - 2011 (Hours) 400 350 300 250 200 150 100 50 0
Fire Drill & Safety
Admin
Lean
Complianc e & SEA
HR
ISO 9001
QC
Total
2010 Internal Approved
12
0
200
10
0
0
0
222
2010 External Approved
16
66
60
44
8
56
72
322
2011 Internal Approved
16
6
160
40
0
0
0
222
2011 External Approved
14
85
48
60
20
30
85
342
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In 2011, the total approved training course was 564 hours in Graph 13 (2010: 544) against 596 budgeted hours (2010: 675). The total approved hours in these two years remained quite constant but hours approved for various departments varied quite considerably as those needs were necessary to meet customers, regulatory bodies as well as internal requirements. From Graph 14, the budgeted external training fee of US$20,000 in year 2011 (2010:19,000) has almost spent up at US$19,800 for external trainers. On the other hand, according to the assumption that the free charged by internal trainers was US$10.00 per hour (2010: US$6/hr), the actual internal training cost was US$2,800 (2010: US$1,750).
Graph 14: Training Budget vs. Actual Spending 2011
US$
Training Budget vs Actual Spending 2011 25,000 20,000 15,000 10,000 5,000 -
Internal Training
External Training
Total(US$)
Actual
2,800
19,800
22,600
Budget
2,000
20,000
22,000
Throughout the year, the average hours of training per year per employee in 2011 were 5.79 hours (2010: 6.89 hours) as per Graph 15 shown below. From the data, some 33% (2010: 25%) of the total employees are not trained by us due to the following reasons:
Joining and resigning the Company before getting a chance to be trained and Certain categories of workers are not taking into consideration due to budgetary constraints. The net intake of 700 workers has widely distributed to various departments meaning the chance to get training is lower than before. Benefit derived from the training was around US$60,000 in 2011 (2010: US$50,000).
In view of the drawbacks, several steps which include hiring additional 3 local trainers and providing more relevant topics have been taken to widen the scope of trainings so as to cover wider categories of workers. The Company plans to maintain at least average 5 hours of training per year per Employees by Employee Category in future.
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Graph 15: Average Hours of Training/Year/Employees by Employee Category 2010 & 2011
Average Training Hour 2010 2011 7
6.89
Total Training Hours 2010 2011 19,000
18,565
18,500
6.5
18,000 5.79
6
17,500
5.5
17,000
5
16,500 2010
17,266
2010
2011
2011
Total Training Hour
Average Training Hour
Note: For more details, please refer to Table F in the Appendixes.
Certified QAs/Technicians Trainings As JIT is a 100% export oriented factory, quality of the garments is our prime concern without compromise due to the fact that the cost of compensation can be higher than the FOB price of the garments once rejected and needed to be shipped back to Cambodia. By knowing this potential risk of claims, our valued customers Puma and adidas have been providing QC/QA trainings to allow our local staff to perform final inspection in our final Inspection room. In 2011, adidas further strengthened its Quality Control System by introducing the Certified Factory Technician for inspecting the sample garments at the development stages. There are 5 development stages for sample making and each stage needs to pass the quality standard before the bulk production can be finalized and commercialized. All these trainings and activities formed part of the quality improvement plans between the Company and both buyers where finished garments are inspected by JIT qualified QAs before shipment to overseas markets. Table 2 shows the numbers of the trained certified personnel.
Table 2: Certified QA/Technician List No#
Buyers
Certifications
1 2 3
Puma adidas adidas
Nominated Certified QA Certified Factory Auditor Certified Factory Technician Total
2010 No# staff 3 4 7
2011 No# staff 3 5 2 10
Ratio Sustained 25% 200%
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Localization of Supervisory Level Employees Another remarkable improvement in HR management, besides the workforce by employment type in Graph 6 on Pg 27 as mentioned in Economic Section earlier, is the localization of supervisory level employees comprising executives, supervisors and leaders (sewing, QC/QA, cutting, ironing & packing). Previous years showed quite a number of expatriate supervisors taking charge of the production sections owing to lack of skill and techniques in handling supervisory tasks by local Khmers. Another reason in scaling down the number of expatriates was the ever increasing labor cost faced by the Company when employing those incurring additional expenditures such as visa, meal & accommodation, travelling and work permit which could be totally omitted when they were replaced by locals. This year, management and HODs (Head of Department) continued conducting intensive courses to upgrading the management skill and techniques of local potential employees into the daily operation of their respective departments. After one and a half year of continuous improvement activities, the results are shown in Graph 16 below:
Graph 16: Localization of Employees (Supervisory Level)
Localization of Employees 2010 - 2011 18 16 14 Axis Title
12 10 8
10 12 1
2
1
1 2
5
5
6
2010
2011
2010
2011
6 4 2 0
7 3 2010
2011
Supervisors
Sample cutting leaders
QC leaders - Sewing
0 2
0 2
2010
2011
QC leaders - Cutting
Expatriates
12
10
1
1
2
1
0
0
Local employees
3
7
2
5
5
6
2
2
JIT promoted additional 8 totaling 20 supervisor level local personnel in 2011 (2010: 12 persons), representing 66% increment. On the other hand, the number of expatriates has been reduced from 15 to 12 persons. As the total saving of US$24,000 was the result of localization of employee practices in 2011 (2010: US$52,000), we continued providing trainings to upgrade the skill, techniques and working experiences of locals so that they were capable of taking over the tasks handled by expatriates eventually.
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Equal Remuneration for Women and Men Many countries have introduced legislation to enforce the principle of equal pay for work of equal value. Cambodia government enforced this principal so that all employers pay their employees not less than the minimum national wage level set by the government. Equality of remuneration is a factor in retaining employees in the workforce. Where imbalances exist, an organization runs a risk to its reputation and legal challenges on the basis of discrimination.
Graph 17: Cambodia Monthly Minimum National Wage 2010-2011
Monthly Minimum National Wage 2010 - 2011 100 90 80 70 60 50 40 30 20 10 0
87 71 61
61
5 Basic Salary (US$)
7
5
8 0
5
Attendance Seniority Allowance Health Care Allowance (US$) (US$) Allowance (US$) 2010
0
6
Transport Allowance (US$)
Total (US$)
2011
Except the transport allowance of US$6 which JIT pays as an additional fringe benefit, Graph 17 above shows the minimum wages and allowances that JIT pays to each of the employees. From the payroll record, JIT met the minimum wage and allowances requirement for both years, meaning the ratio of basic salary paid to male and female workers is 1:1 However, by referring to the highest basic salary obtained in each category of employee, the ratio differs in each of them except mechanic (US$86) and cartonning (US$81) production staff and workers as per Graph 19 shown below. For zero value in the Graph indicating no particular gender took up the posts in respect of the posts.
Production Staff In general, the ratio of highest basic salary obtained for female to male is 56.43% against 43.57% or in 1.3: 1 ratio (Graph 18) which meant that imbalance did exist in our Company for both genders in the same job position.
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Graph 18: Ratio of Highest Pay of Production Staff by Gender by Employment Type 2011
Ratio of Highest Pay by Production Staff Category of 2011
percentage (%)
120 100 80 60 40 20 0
Female Male
Cutting
CTN
Finishing
Mechani c
QA
QC
QFI
Sample
Wareho use
100
47.51
50.17
0
46.15
100
100
63.71
47.85
57.36
56.43
0
52.49
49.83
100
53.85
0
0
36.29
52.15
42.64
43.57
Sewing Sub-total
Note: For more details, please refer to Table G in the Appendixes. Production Workers Same scenario happened in production workers where the ratio of highest basic salary obtained for female to male is 56.68% against 43.32% or in 1.3: 1 ratio (Graph19 ) and the reasons of such differences for both genders existed in the same job position are as follows:
Different working experiences of workers, Number of years of services, Slight differ in job description and responsibility, The numbers of sub-ordinates under his/her supervision, Academic qualification and The result of yearly competency appraisal.
Graph 19: Ratio of Highest Pay of Production Workers by Gender by Employment Type 2011
Ratio of Highest Pay by Production Workers Caterogy of 2011 percentage (%)
120 100 80 60 40
20 0 Cutting Ironing Packing
GA
Mecha nic
QA
QC
CTN
Wareh Sewing Sample ouse
Subtotal
Grand Total
Female
44.2
51.37
100
33.44
50
100
100
50
48.59
100
57.81
57.13
56.68
Male
55.8
48.63
0
66.56
50
0
0
50
51.41
0
42.19
42.87
43.32
Note: For more details, please refer to Table H in the Appendixes.
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Future Plans In order to mitigate the situation of such imbalance in highest salary, JIT has taken the following steps for both genders:
Offering same job description and responsibility, Narrowing the gap between working skill & techniques and qualification by providing relevant trainings and supervision. Balancing the numbers of sub-ordinates under his/her supervision
Even though JIT cannot pay equally as so long as the highest basic pay is concerned in near future, a targeted ratio for 2012 is 55% against 45% (or 1.22:1 ratio) for female and male respectively.
Injury, Occupational Diseases, Lost Days, Absenteeism and Work-related Fatality Health and safety performance is a key measure of an organization‟s duty of care. Low injury and absentee rates are generally linked to positive trends in staff morale and productivity. Good health and safety management practices resulting in fewer occupational health and safety incidents is one of the most fundamental objectives of the Company. JIT recorded all cases, in accordance to the requirements set by the Ministry of Labor, of injury, occupational diseases, lost days, absenteeism and work-related fatality on a daily basis for total workforce of the Company plus the independent contractors working on-site to whom we are liable for the general safety of the working.
Basis of Calculations
We base on calendar days to calculate our Injury Rate (IR), Lost Day Rate (LDR) and Absentee Rate (AR). Lost days refer to the hours that could not be worked (and is thus „lost‟) as a consequence of a worker or workers being unable to perform their usual work because of an occupational accident or disease. The lost day count begins when the total number of hours in a single period is 4 hours and above which we consider a half day lost. A return to limited duty or alternative work for the same Company does not count as lost day.
Common Injuries
Sewing machine needles poking fingers Scissors hurting feet
Common Missed Cases
Goods Fallings Falling down due to goods obstructing walkways
Ways to Reduce Injury
Practicing safety moment to all employees factory wide Strictly follow SOP (Standard Operation Procedure) and WI (Work Instruction) in workplace Continuous Improvements in potential hazardous workplace and activities Continuous trainings on safety issues
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Statistical Facts Injury Rate (IR)
Injury Rate of 2010 - 2011 2
1.58
1.57
1.5
IR data shown on the left remained quite constant in both years 2010 and 2011 at 1.58 and 1.57 respectively
On average, there were 4 injuries cases per month, almost all on sewing machines‟ needles poking fingers, which were considered high
Throughout the year 2011, 48 cases all on female workers were recorded (2010: 51 cases) with 47 minor injuries on needles poking fingers and 1 case on scissors poking foot of sewing operators.
1 0.5 0 2010
2011
Injury rate (Female)
Injury rate (Male)
Note: For more details, please refer to Table I in Appendixes. Lost Days Rate (LDR)
Lost Day Rate of 2010 2011
LDR data shown on the right was worsen especially to male workers because JIT recruited additional 300 male workers in 2011 whose working attitudes and disciplines were not up to the expected level On average, the LDR rate of male worker is 58 compared to 38 in 2010, representing 52% higher than last year
80 Persons
40
Note: For more details, please refer to Table J in Appendixes.
Person
300
263
200
2010
100
2011
0 Absentee Absentee Rate Rate (Male) (Female)
33
0 Lost Day Rate (Female) 2010
Lost Day Rate (Male) 2011
AR data shown on the was deteriorating especially to male workers with the same reasons in LDR mentioned above
On average, the AR rate of male worker is 468 compared to 303 in 2010, representing 54% higher than last year
The average LDR for female worker was also higher by 21% when compared to last year figure (2011: 263 & 2011: 216), mainly due to lost days from sewing section
468 303 216
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Absentee Rate (AR)
Absentee Rate of 2010 2010 400
27
20
The average LDR for female worker was also higher by 22% when compared to last year figure (2011: 33 & 2011: 27), mainly due to lost days from sewing section
500
58
60
Note: For more details, please refer to Table K in the Appendixes.
Occupational and Fatality Rate There was no occupational disease and work-related fatality reported by our HR Department during the year.
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Freedom of Association or CBA (Collective Bargaining Agreement) Years Labor Union member s Total no# of workers Percentage
2010 2,140 2,506 85.40%
2011 2350 3,206 87.92%
Labor Union Membership Record 2010-2011 In accordance to the explanation in GRI guidelines, inherent in the right to freedom of association and collective bargaining is the protection of the right of workers (and employers) to organize collectively in organizations of their own choice. Freedom of association is the individual right to come together with other individuals and collectively express, promote, pursue and defend common interests. The right to freedom of association has been included in the Cambodia national constitutions and human rights instruments. Freedom of association in the sense of workers' right to organize is also recognized in JIT and it also protects collective bargaining in the conventions on freedom of association.
Labor Union The labor union named United Labor Union is legally recognized as representatives of workers in JIT. Their activities today cantered on collective bargaining over wages, benefit, and working conditions for their membership, and on representing their members in disputes with management over violation of contract provisions HR Department reported that, 87.92% (2010: 85.4%) of the employees from the Company joined the Union which represents the nominated union having CBA (Corrective Bargaining Agreement) with JIT
Union members 2010: 2,140 (85.45%) 2011: 2,350 (87.92%) of total workforce
Shop Steward Committee Shop Steward Committee acts as representative of employees from all department of the JIT It works hand in hand with the Union on matters relating to human resources, working conditions, occupational health and safety and in negotiation with JIT for the better benefits of the employees in the Company …
Significant Risks By knowing the fact that operations identified in which the right to exercise freedom of association or collective bargaining may be at significant risk, firstly JIT took the initiative to identify significant risks associated with the freedom of association and subsequently approaches were developed to mitigate them
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1. Wage Effect Risk Challenge
Labor Unions always demand higher wages, shorter hours and more extensive fringe benefits or allowances. This may bring the side-effect of increasing cost for employers, direct effect on consumer process which can cause the firm to lose customers
Opportunity
We apply production management system effectively to ensure higher portion is tie up with productivity output.
2. Working Condition Risk Challenge
Labor Union with their legal right to strike and enter into collective-bargaining agreements which can ensure that business maintains safe and equitable working conditions
Opportunity
The higher the output, the greater the incentives will be rewarded to individuals as well as to the group
JIT always complies with all applicable environmental laws and regulations in respect of protecting the environment and maintains effectively. This is essential to provide a safe and healthy working environment to the employees of the Company
3. Productivity Effect Risk Challenge
4. Investment Effect Risk Union identifies itself as “progressive” politically by Challenge claiming that union workers exhibit greater level of productivity than their non-union peers
Opportunity
Again productivity is always tie-up with actual good quality output and the JIT treats every worker fairly and pays incentives in accordance to the actual performance
A portion of the return from investment must be shared with union employees
Opportunity
Educate Labor Union on the legal status of “Separate and legal entity” to a Company, meaning any investment return belongs entirely to JIT
JIT Actions Taken to Support These Rights In order for all employees to have the equal right to exercise freedom of association or collective bargaining, JIT management allows them:
To form their own unions, selection of their own union committee members and shop stewards To express, promote, pursue and defend their common interests without interference.
In addition, JIT also supports these rights across the organization‟s range of operations. The Company sets up:
Employee Survey Procedure Employees‟ Suggestion System (ESS) as channels for the employees to furnish constructive suggestions, dialogue and discussion with the management.
JIT supports these rights across the Company in the following ways:
Setting up Labor Union and Shop Stewards Meeting Rooms for their related activities and JIT does not interfere into their activities as long as they carried out in a legal manner.
To take a balance between JIT and labor: Our company has figured out the better way to make the most goods at the lowest cost while employees work safely and happily, often in the best interest of the health and working condition.
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Risks and Elimination of Child Labor Social Responsible Conduct In accordance to the explanation in GRI guidelines, the abolition of child labor is a key principle and objective of major human rights declarations and legislation, and is subject to ILO Conventions 138 and 182.
The presence and effective implementation of policies on child labor are a basic expectation of socially responsible conduct Children should go to school to pursue their education. Employment of children in any work that deprives children of their childhood interferes with their ability to attend regular school, and that is mentally, physically, socially or morally dangerous and harmful.
Risks in Recruiting Child Labor During recruitment process, our HR Department is facing the potential risk of employing child labor or young workers. By having a governance structure that facilitates realistic strategies and responses to the management of child labor and its right, we are aware of our management responsibility, risk management system and internal control processes to check the possible occurrence of employing under aged labor. The risk associated with employment of child labor and young workers:
Employment of such group is illegal in the eyes of law. However, they still serve a major contribution to the family income in developing country even though they are not well paid off In the situation where there is inaccessibility of schools or the lack of quality education which spurs parents to enter their children in more profitable pursuits, they encourage employment of their children in young age Working children are the object of extreme exploitation in terms of toiling for long hours for minimal pay
. Actions Taken to Resolve Child Labor Problem In order to resolve the problems of child labor, our Company takes the following actions:
Prevention of any form of child labor intake. Only workers with legal and genuine documents of any two of these: Identity Card, Birth Certificate, Cambodia Family book and Election Cards will considered for intake, Sustain the minimum age standard. Our Company complies the legislative law in this respect by recruiting workers aged 18 or above Setting a clear guideline in relation to recruitment practices To be responsible in eliminating child labor
By summarizing our stand in child labor issue, JIT is not involved in activities including child labor, forced labor, discrimination and other activities that it believes are ethically questionable.
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Forced or Compulsory Labor Social Responsible Conduct
In accordance to the explanation in GRI guidelines, not to be subjected to forced or compulsory labor is considered a fundamental human right and is a provision of the UN Universal Declaration of Human Rights and subject to ILO Core Conventions 29 & 105.
This type of labor can exist in a variety of forms and the data provided will indicate the reporting organization‟s challenges in contributing to the abolition of forced and compulsory labor.
Possibility of Force and Compulsory Labor HR Department constantly involve in checking and monitoring the possible act of forced or compulsory labor in our Factory. All work and service which is extracted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily is considered as forced or compulsory labor work. The risk associated with such act includes:
Economic aspects of immigration – Immigrants are prone to this act when they are faced with basic living requirement by getting any work for survival Wage trends – Some organization use higher pay to exploit workers to increase output, without noticing that this act is to the detriment of employee working conditions Emerging industry – During the influx of investment, the markets need a huge supply of labor to fill up the vacant positions to meet the demands of the market, causing forced or compulsory labor services to rush out the products to resolve the acute supply Legal risk – forced labor is illegal in most countries and breaking notional law may carry civil and/or criminal sanctions for a company Reputation and commercial risks – even where allegations of complicity for not result in legal action, companies can still face a range of non-legal risks if perceived to be complicit in using forced labor
Actions Taken to Resolve the Risk of Forced or Compulsory Labor In order to resolve the risk assessment of forced labor, JIT has taken the following steps:
Compliance with national laws on forced labor, Not engaging in or supporting worker exploitation amounting to forced labor, To be responsible in eliminating force labor, Not retaining personal documents or importance possessions of any workers and Giving worker the right to terminate employment freely and voluntarily.
By summarizing our stand in this respect, JIT is not involved in activities including child labor, forced labor, discrimination and other activities that it believes are ethically questionable.
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Environment Environmental Management Approach JIT is committed to leading the industry in minimizing the impact of its activities on the environment. As a company, we act in compliance with the law relating to the environment and are committed to the integration of sound environmental practices in our business decisions. We recognize the direct and indirect environmental impacts of our operations and support the principles of sustainable development. The key points of our strategic approach to achieve these in JIT are: Meet or exceed all the environmental legislation that relates to the Company Minimize the waste produced in all parts of our business Minimize the toxic emissions through the selection and use of materials and the source of power requirement Actively promote recycling both internally and amongst our customers and suppliers Support the integration of environmental considerations and objectives into our business decisions Seek to conserve natural resources by ensuring responsible use of energy, water and materials Raise the awareness of environmental issues among our staff and enlist their support in improving the Company‟s performance Continue to review the environmental impacts of our business to identify and, where practicable set ourselves improvement targets and monitor progress To evaluate proposed new equipment, materials, procedures and systems for environmental impact, before introducing them
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Environmental Highlights Recycle waste materials wherever possible, and in a manner that has a socio-economic impact on all members in our community Continually applying Lean Production System to increased productivity and improved quality of products, resulting reductions in Energy and Water costs per product manufactured by more than 30% in 2011 comparing to 2010 performances CO2 emission is lesser by 19% in terms of total weight by converting the direct and indirect energy and CO2 Footprint per piece of garment produced was reduced by 49.8% in 2011
Environment The Company complies with all applicable environmental laws and regulations in respect of protecting the environment and maintains procedures for notifying local authorities in the event of an environmental accident resulting from the operation. This is essential to provide, besides meeting the local legislations and regulations, a safe and healthy working environment to the employees of the Company.
Environment Management System We have developed our Environmental Management System which follows the methodology of Plan-DoCheck-Act of ISO14001 program implementation. For the benefit of stakeholders, this instrument will definitely help us to guarantee our consistent compliance and enhance sustainability. The project of Environmental Management Plan that carried out included:
Controlling and planning of raw materials usage and consumptions; Electric energy managements: establish a system of electricity usage to control the usage of lighting and equipment‟s; reallocation of electricity supply area; and tried to use energy saving appliances; Educate employees saving energy and water, as well as revile training, maintenance of facilities and equipment; Formulated low carbon and greenhouse gases emission reduction plan and calculated the emission of the green gas; Management of office paper usage; Water purification installation at Printing Section; Ensure the orderly emission of living waste water; Establish ad environmental emergency plan, and organized emergency responses and preparation; Set up and formulate our e-KPI; Develop programs to create awareness of employees in controlling pollution within the premises for conservation of the environment and Set up control system to check the consumption and reduction of wastages in respect of power, energy, water, wastes, effluent and emissions.
In additional, our stakeholders require and expect our environmental practices leading to producing finished goods as “sustainable” as possible, meaning the goods must be environmental friendly and harmless to the end-users.
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Materials, Waste & Disposal According to the goal planning of sustainable development, energy sourcing and environment protection is one of the important programs of JIT in 2011. Firstly, according to the 3R practice - reduce, reuse and recycle, our company measured the amount of the raw materials, scraps and wastes and the percentage of recycled materials usage, emission of pollutant, energy consumption, carbon dioxide emission, etc
Materials The Company uses a wide range of materials and consumables for the manufacturing of garments. The production process is CMT (Cut-Make-Pack) meaning readymade fabric rolls and accessories are purchased, almost all from overseas, for converting into garments. Even though the material suppliers are nominated by our buyers, we still have to request the suppliers to furnish the restricted substances list (RSL) for the materials purchased.
Waste and Disposal By practicing effective production system and procedures, the quantity or volume of emissions, effluents and waste can be controlled to a sustainable level. Meanwhile, the management also encourages the recycle of by-products and wastes to the full extent. Understanding of the problems involved in ultimate disposal of waste should enable the various Head of Departments to respond to the need for proper segregation, packaging, labeling and documentation of waste.
Hazardous Waste
Regulatory Requirements
Hazardous waste is defines as “a waste with properties that make it dangerous or potentially harmful to human health or the environment”. A hazardous waste is waste that poses substantial or potential threat to public health or the environment.
The Ministry of Environment conducts inspection for certifications pertaining to environmental issues on a half yearly basis.
Waste management is the collection, transport, processing or disposal, managing and monitoring of waste materials. Hazardous wastes include sewing machine oil, lubricants, broken fluorescent tubes, ink cartridges, scrap metal & sewing machine needles and used batteries. Waste collection is observed and monitored by assigned staff and security guard to ensure it is properly treated by the staff of service providers. Waste management is a distinct practice from resource recovery which focuses on delaying the rate of consumption of natural resource. All wastes material, whether they are solid, liquid, gaseous or radioactive fall within the remit of waste management.
The company has contracted SAROM TRADING by signing contract in disposing the Company waste both hazardous and non-hazardous except those recycled materials. It is the only waste service provider authorized by The Ministry of Environment in waste collecting and disposing in Phnom Penh. There is a special treatment i.e. infectious and normal medical waste from our clinic. The clinic‟s doctor and nurses need to strictly control the waste and packed with proper labeling before passing to the General Hospital of Phnom Penh for disposal.
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Non-Hazardous Waste The control of the waste isn‟t as strict as those of hazardous waste. Due to large quantity, we have internal disposing procedure to adhere to:
Sorting of wastes at the points of collection, Food leftover is sold for animal feeding, Reduce the normal wastage allowance of fabric and accessories by at least 1% (normal 3%) Continuously training to employees to conserve consumables and materials, Replacing polybags with fabric bags which used to store cut-panels in Cutting Department, Recycled wastes as mentioned in Table 3 on Page 56 below are sold either for manufacturing of secondary qualified products or re-process and purchase back as recycled inputs and, Other domestic wastes are collected and transported to the treatment station by licensed service provider. Disposal methods are burning and land filling.
Comparison Ratio – Materials Purchased Vs. Recycled Wastes Graph 20 below shows the following improvements:
Recycled waste increased from 7.24% in 2010 to 8.96% in 2011 partly due to better segregation of wastes from domestic waste of 8.05% (2010: 17.19%) Total recycled and domestic wastes also has been reduced drastically from 24.43% to 17.01%
Graph 20: Proportion of Domestic & Recycled Wastes Vs. Total Material Purchased in 2010-11
2010 & 2011 Proportion of Domestic & Recycled Wastes Vs. Total Materials Purchased 120.00%
Percentage
100.00%
100.00%
100.00%
80.00% 60.00% 2010 40.00%
2011 17.19%
20.00% 0.00% 2010 2011
7.24% 8.96% Total material waste 100.00% kg 2,206,472 100.00% kg 3,499,223
Total recycled waste 7.24%kg 159,833 8.96%kg 313,587
8.05% Domestic wastes 17.19% kg 379,186 281,688 8.05% kg
55
Recycled Wastes and Resale Value Table 3 below shows the materials purchased and resale by weight in kg with the resale value. Even though the resale price is low, it was part of the Company‟s environmental protection initiatives to practice 3R principal - reduce, reuse and recycle. Data collected on waste generation figures over these years indicated the level of progress the Company has made toward waste reduction efforts. It could also indicate potential improvements in process efficiency and productivity. From a financial perspective, the reduction of waste contributes directly to lower costs for materials, processing and disposal.
Table 3: Category of Material Purchased, Recycled Weight & Resale Value 2010-2011 2010 Material Purchases (Kg) Recycled (Kg) % Disposal Price (US$) Disposal Methods 2011 Material Purchases (Kg) Recycled (Kg) % Disposal Price (US$) Disposal Methods
Fabric
Cartons
1,761,186
127,534
126,177
4,697
7.16%
3.68%
Cupboar d tube
Stationery Paper
Marker Paper
120
7,581
1,014
5,049
15,231
84
159,833
100%
13.81%
24.65%
30.58%
70%
7.24%
1,523
42
11,539
B*
24,605
10.43%
4.37%
16,013 A*
240,011
Total
49,799
A*
260,422
Accessory
20,479
1,834
563,607
Sewing Machine
7,343
8,140
2,495,907
Polybag
C*
2,206,472
D*
8,394
35,500
61,960
63
7,667
1,006
5,079
14,770
38
313,587
100%
11.98%
14.31%
23.84%
60.32%
8.96%
1,477
19
19,345
1,836 B*
C*
333,792
3,499,223
D*
A* = Left -over cut-piece sold as rags for manufacturing of secondary qualified products B* = Sold to corrugated carton factory for transformation into “medium” layer paper and resell to JIT C* = Sold to paper mill to re-process and re-sell to JIT D* = Sold to paper mill as lubricant to corrugated machines
Table 4: Types of Waste in 2010 - 2011 Year 2010 2011
Recycled waste 159,833 (29.65%) 313,587 (52.67%)
Domestic waste 379,186 (70.33%) 281,688 (47.31%)
Hazardous waste 123 (0.02%) 134 (0.02%)
Total (Kg) 539,142 (100%) 595,409 (100%)
Table 4 shows the proportion of each type of waste that the Company generated throughout the years. The proportion of domestic waste has dropped drastically from 70.33% in 2010 to 47.31% in 2011 mainly due to the effective segregation of recycled waste from the domestic one.
56
Energy Energy, which include direct and indirect source, is one of the most essential factors of production in a factory. Energy consumption has a direct effect on operational costs and is subject to the influence of fluctuations in energy supply and prices. JIT uses 3 types of energy: Steam, Diesel and Electricity.
Indirect Energy - Steam Steam which considers as indirect energy is used for pressing process and the source is bought from Harta Packaging Ltd located next to JIT. The steam is conveyed through an insulated flow pipe to our production floor.
Insulated Steam Pipe
Steam Recycled System
The existing steam recycle and insulation piping systems allow the steam temperature to be maintained between 160-1800C and recycle throughout the whole production hours resulting energy and cost savings.
Graph 21: Cost of Steam Purchased 2010-2011
Total Cost of Steam 2010-2011 100,000
79,471
USD
80,000 60,000
2010
40,000 20,000
2011
11,711
0 Year
Graph 21 shows the total cost of US$79,471 for the steam purchased in 2011 from adjacent factory Harta Packaging Ltd (Harta). This amount was about 6 times higher than 2010 figure of US$11,711 because it charged us in full based for the total hours of steam supplied to JIT. Previous year‟s charge was on those hours where the steam was entirely used by us, normally during over time period when Harta did not work for it. Since Harta waived the 2010 claims, the cost and volume of steam consumed were incomparable for analysis.
57
Indirect Energy – Electricity and Electricity Generated from Generator (Diesel) Another common type of energy is electricity which is used to supply current to the machines and lighting of premises. Table E: Expenditure and Investments vs. Savings and Re-investment Summary in the Appendixes explains the types of environmental protection projects that our Company has so far carried out to reduce the green house effect and CO 2 emission which relates to the consumption of electricity. During electricity cut-off from local governmental authority, we used generator which consumes diesel to produce current for the production factory-wide. The current generated from there becomes an indirect energy source as part of the whole electricity supply to the Company.
Indirect Energy Saving Initiatives The Sustainability Advisory Committee (SAC) takes the initiatives to reduce indirect energy consumption since 2007 in the following ways:
Install any fixture and equipment which bring reduction in indirect energy consumption, Replacement of existing facilities with more energy efficient parts or technology innovation, Reduction of non valued added activities or waste in relation to indirect energy consumptions
The SAC Committee tabled the proposal, after conducting the feasibility study, for the management approval. Once the project is approved, implementation and monitoring of such kaizen activities is taken over by the Health, Safety and Environment Committee. SAC Committee analyses and evaluates the effectively of the project and take corrective actions in the coming years.
Continuous Indirect Energy Saving Projects Based on the concepts above mentioned, we have the following projects which aim at reducing the indirect energy consumptions:
Water Curtain Cooling System - Installed water curtains in Cutting, Sewing, Printing & Embroidery Sections which has a lifespan of 5 years (i.e. 5 years depreciation) and needs to reinvestment at the end of its usage Changing T8 to T5 fluorescent tubes factory-wide – Our Company decides to change the entirely floor‟s lights by selecting a particular department/office bock on a yearly basis Replacing energy efficient sewing motors – Those old and spoilt sewing motors will be replaced by the automatic current generated motor, meaning the sewing machine consume electricity Green Logistic linking Sewing Departments and Finishing Warehouse – Energy free by constructing the spiral staircase and sliding slope from the production floors which slide the finished goods cartons to Finishing Warehouse directly Installation of transformer to stabilize the government supply of electricity and at the same relieves the workload of generator which is triple costly than the government supplied electricity.
The information on cost saving against its investment/expenditures and reinvestment schedule can be obtained from Table E: Expenditure and Investments vs. Savings and Re-investment Summary in the Appendixes.
58
Graph 22: Cost of Electricity and Dieselgenerated Electricity Purchased 2010-2011
Graph 23: Electricity (including Dieselgenerated Electricity) Consumption in KW per Piece of Product Produced 2010-2011
Electricity Consumption in KW per Piece Produced 2010 - 2011
Cost of Electricity and Dieselgenerated Electricity Purchased 2010 - 2011 500,000 KW/piece
US$
400,000 300,000 200,000
100,000 0
Electricity
Diesel
Total
2010
289,450
163,127
452,577
2011
321,810
55,608
377,418
JIT produced 4.55 million pieces of garments in 2011 (2010: 2.90 million pieces) which was 57% higher than last year but the total electricity consumption as listed above was actually lesser by 16.6% in term of the cash value spent.
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0
1.62
0.75
Average 2010
Average 2011
The electricity, in kilowatt, consumed to produce a single piece of garment also shows a positive trend in 2011 (0.75 Kw), i.e. consumed lesser by 53.7% when compared to 2010 1.62 Kw.
Direct Energy – Diesel Generally, energy consumption has a direct effect on operational costs and exposure to fluctuations in energy supply and prices. JIT has shown its ability to use energy efficiently and the result can be revealed by calculating the amount of energy we consumed in the following Tables. The approach that we used to reduce the consumption of direct energy is similar to that explained in the foregoing section on Indirect Energy – Electricity and Electricity generated from Generator (Diesel) on Page 58 We managed to make some changes which indicated our efforts to minimize the environmental impacts:
Diesel is used in our factory for vehicles, trucks, “Totoo” cars and generator. We practiced car pool system by setting up PCCS Intercompany Bus Schedule. Under this arrangement, we send passengers, i.e. Company staff and workers in group from JIT premise to the other 3 factories within the group at 7:30am, 9:30am and 12:30pm daily and schedule the returned trips one hour later from the times mentioned here. Staff and workers can go to and back from their specific destination with ease.
By having a centralized material warehousing management system, all trucks are stationed in JIT. When shipment in containers arrived, the trucks are instructed to load fully and distribute the goods to other factories within PCCS Group in one trip if possible in order to save the time and diesel cost.
The information on cost saving against its investment/expenditures can be obtained from Table E: Expenditure and Investments vs. Savings and Re-investment Summary in the Appendixes.
59
Graph 24: Total Diesel Consumption 20102011
Graph 25: Diesel Consumption in Liter per Piece of Product Produced 2010-2011
Total Diesel Consumption 2010 2011 (Liters) 120,000
103,726
100,000
0.0400
80,000
0.0300
60,000 31,530
Litre
2010
40,000
2011
0.0100
0
0.0000 2011
Referring to the information in Graph 24 below, the total amounts of consumption in 2010 was 103,726 liters but 2011 cost was reduced by 69.6% to 31,530 liters
0.0365
0.0200
20,000 2010
Diesel Consumption in Litre/Pieces 2010-2011
2010 0.0069
2011
Year
In terms of direct energy spent in producing per piece of garment manufactured in JIT, the data for 2010 and 2011 were 0.0365 liter and 0.0069 liter respectively, showing an improvement of 81%
Future Plan JIT plans to use “Totoo” cars instead of trucks to carry goods or materials in small quantity with flexible travelling schedule within the companies of PCCS Group in 2011.
Water and Rain Water Water is a crucial part of production in our factory. Water consumption has a direct effect on opearational costs, and it is subjuct to the influence of fluctuation in water supply and prices. Further, the amounts and quality of discharge waster waste affect the balance of ecology and environment. By progressively improving the quality of discharged water and/or reducing volumes, one has the potential to reduce its impact on the surrounding environment. Unmanaged discharge of effluents with a high chemical or can have a significant impact on receiving waters. This, in turn, can affect the quality of the water supply available to the Company and its relationship with communities and other water users.
Rain Water The Company collects rain water from May to Dec each year during which is the raining season in Cambodia. Rain water is collected and stored in the underground water tank with storage capacity of 110,000 liters and 6 units of aboveground water tanks of 6,000 liters each totaling 146,000 liters. Rain water collected is mainly used for household cleaning, Company car washing, sanitary flush, and gardening and to great extent as recycled water to the water curtain cooling system but not for human drinking and personal cleaning.
The information on cost saving against its investment/expenditures in relation to rain water can be obtained from Table E: Expenditure and Investments vs. Savings and Re-investment Summary in the Appendixes
60
Graph 26: Water (Including Rain Water) Consumption 2010-2011
Graph 27: Water Consumption in Liter per Employee Per Year 2010-2011
Water Consumption (Including Rain Water) 2010 - 2011
Water Consumption in Liter Per Employee Per Year 2010 - 2011
20,000
10,000
15,000
8,000
10,000 5,000 -
Litre
Meter cubic
25,000
Water Purchase( m3)
Rain Water(m3 )
Total
2010
18,000
4,716
22,716
2011
16,477
6,849
23,326
Graph 26 above shows that a total of 6,849 M3 of rain water was collected representing a cost saving of US$6,900 (28%).
Besides rain water, a total of 16,477 M3of tapped water was purchased from the local municipal council costing US$17,000.
The proportion of tapped water has reduced by 7% (2010: 79%, 2011: 72%) of which was substituted by rain water.
9,065 7,276
6,000 2010
4,000
2011
2,000 0 Year
As water is mainly used for household cleaning and human drinking, the measurement unit used to calculate the saving should be the total number of employees against the total quantity of garments produced in a year.
In terms of water (municipal and rain water) spent per employee, the data for 2010 and 2011 were 9,065 liters and 7,276 liters per annum respectively, showing an improvement of 19%
Future Plan As part of the environmental protection plan, the Company will further invest in water tanks of 10,000 liters each to collect more rain water with forecasted saving of another 19% in 2012.
Water Treatment In order to comply with the local regulatory requirements, JIT installed a unit of water treatment plant costing US$15,000 in Printing Section in 2010. It purifies the printing ink water before discharging to the public sewerage system. The total usage of water for this unit is 1,240 M3 (2010: 1,350M3) and about 85% were discharged to the public sewerage system.
61
The purifying process needs to comply with Standard Operating Procedure (SOP) in order to maintain a qualified chemical content in the water and sludge. SAROM TRADING is the only waste service provider authorized by The Ministry of Environment to whom the sludge can be disposed off accordingly. The Ministry of Environment comes to collect the treatment water sample for testing as part of their half yearly routine practice. The result of the test for 2011 is detailed in Table 5 below: -
Table 5: Printing Water Test Analysis No 1 2 3 4 5 6
Parameter
Unit Result Standard Method Equipment pH 8.16 5-9 pH-EC & TDS meter Total Suspended Solid (TSS) mg/1 36.00 < 120 Method 2540 D Biochemical Oxygen Demand (BOD) mg/1 25.72 < 80 Method 5210 B Chemical Oxygen Demand (COD) mg/1 48.91 < 100 Method 5220 B Oil & Grease mg/1 1.64 < 15 Method 5520 D Ammonia (NH3) mg/1 0.48 < 7 Photometer
The result from the analysis report showed that standard requirements set by the ministry have been met which proved that the water treatment plant was functioning in good condition.
Overall Performances The foregoing statements explain individual types of expenditures and saving which has significant impacts to environment. Now let us summarize all the costs of direct and indirect energy and water in one table for quick reference purposes.
Graph 28: Total Cost US$ – Electricity (including diesel-generated electricity), Diesel and Water (excluding Rain Water) 2010-2011
Graph 29: Total Cost (all Electricity + Diesel + Water) Per Piece of Garments Produced 2010-2011
Total Cost of Electricity (including diesel-generated electricity), Diesel and Water (excluding Rain Water)
Total Cost (all Electricity + Diesel + Water) per Piece of Garment Produced
457,954
460,000
0.2 0.15
436,603
US$
US$
450,000
440,000
Total cost
0.11
0.1 0.05
430,000 420,000
0.19
2010
2011
436,603
457,954
0 Total cost
2010
2011
0.19
0.11
JIT produced 2,899,156 and 4,551,353 pieces of garments in 2010 and 2011 respectively. This represents an increment of 57% Graph 28 shows that 2011 total cost of direct & indirect energy and water is slightly 4.8% higher than last year Taking the yearly total cost listed from Graph 29 above, 2010 figure shows the cost of making a piece of garment is US$0.19 whereas 2011 is US$0.11, a 42% improvement over the last year figure Please take note that the cost of steam was not taking into account for comparison purpose as the 2010 figures on Page 57 did not reflect the true cost of it
62
Future Plan The Sustainability Advisory Committee not only sustains the current energy and water saving projects but also ventures into renewable energy sources in 2012 onwards
Greenhouse Gas Emission Greenhouse gas emissions are the main cause of climate change. Different national and international regulations and incentive systems (such as trading climate certificates) aim to control the volume and reward the reduction of greenhouse gas emissions. When monitored comprehensively, emissions can be reduced effectively. The environmental footprint of the Company is shaped in part by our choice of energy sources. In line with the Environmental and Sustainability Policy and objective of JIT, we have selected energy-efficient materials, services and production capabilities applicable to our Company to mitigate the effect the greenhouse gas emission.
Measures We have identified the sources of emission and steps have been taken to reduce or control them. The major common greenhouse emissions in our factory are as follows with respective corrective measures taken to reduce its effects:
Direct energy – Diesel used for transportation, etc. with initiatives taken. Please refer to explanations on Page 59, Indirect energy – Electricity and diesel-generated electricity used in all types of machinery , equipment, apparatus and electrical appliances such as Fabric auto-cutter, air compressors used in pressing or air-conditioning system, sewing machines and lighting system. The initiatives taken to reduce the emission are explained in Table E: Expenditure and Investments vs. Savings and Re-investment Summary in the Appendixes. Heat from the steam used for pressing process – We purchased a portion of the whole steam generated from Harta Packaging Ltd daily
Conversion Factors We applied the conversion rate of 1 liter of diesel to 2.75 kilograms of CO 2 emission in our computation.
For electricity computation, 1 kilowatt of electricity to 0.78 kilograms of CO 2 is the rate that we used for calculation. This was based on rate used by the Ministry of Science & Technology in Sri Lanka
Table 6: Total CO2 Emission 2010-2011 Year 2010 2011
Diesel
285,247 86,708
Electricity (include dieseldiesel generated electricity)
2,873,593 2,454,291
Total (Kg) 3,158,840 2,540,999
Kg/Piece 1.111 0.558
Table 6 displays the total CO2 emission by JIT where the 2011 figure was lesser by 19.6% (3,158,840 Kg in 2010 reduced to 2,540,999 Kg in 2011)
The weight in Kg of the CO2 per piece of garment produced was reduced by 49.8% (from 1.111 Kg down to 0.558 Kg)
63
GRI G3 Application Level B Requirements The Company decides to follow the GRI G3 guidelines with self-declared Level B. The following table provides a summary of the GRI‟s requirements as well as quick reference to our self-assessment of compliance to the B Level.
Report on: 1.1 2.1 - 2.10 3.1 - 3.8, 3.10 - 3.12 4.1 - 4.4, 4.14 - 4.15
G3 Perform ance Indicators & Sector Supplem ent Perform ance Indicators Approach Disclosures
OUTPUT
Not Required G3 Managerm ent Approach Disclosures
C+
Report on a minimum of 10 Performance Indicators. Including at least one from each of: Economic, Social and Environmental
B
B+
Report on all criteria listed for Level C plus: 1.2 3.9, 3.13 4.5 - 4.13, 4.16 - 4.17
Management Approach Disclosures for each Indicator Category
Report on a minimum of 20 Performance Indicators, at least one from each of Economic, Environmental, Human Rights, Labor, Society, Product Reponsibility.
A
A+
Same as requirement for Level B
Management Approach Disclosures for each Indicator Category
Report on each core G3 and Sector Supplement* Indicator with due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission.
Report Externally Assured
C
Report Externally Assured
OUTPUT
G3 Profile Disclosures
OUTPUT
Standard Disclosures
Application Level
Report Externally Assured
Report
*Sector supplement in final version
64
GRI Performance Indicators
Economic Performance Indicators
Economic
Aspects
Indicators code
EN3 EN4
Indirect energy consumption by primary source.
EN7
Initiatives to reduce indirect energy consumption and reductions achieved. Total water withdrawal by source. Total direct and indirect greenhouse gas emissions by weight. Initiatives to reduce greenhouse gas Emissions and reductions achieved. Total water discharge by quality and destination. Total weight of waste by type and disposal method. Total environmental protection expenditures and investments by type. Total workforce by employment types, employment contract and region
EC1
Market Presence
EC7 EN1
Environmental Performance Indicators Society & Product Responsibilities Performance Indicators
Human Rights Performance Indicators
Labor Practices and Decent Work Performance Indicators
Environment Social
Energy
EN2
Water
EN8 EN16
Emissions, Effluents, And Waste
EN18
Overall
EN30
EN21 EN22
LA1 Employment LA2 Labor Management Relations Occupational Health and Safety Training and education Equal Remuneration For Women and Men
Freedom of Association and Collective Bargaining
LA4
Percentage of agreements.
employees
covered
by
collective
bargaining
30 & 43 55 – 56 56 59 - 60 57 - 59 31-33 & 62 60 – 61 63 63 61 - 62 54 - 56 31 -33 30 & 31 37 - 39 48
Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities by region.
46 – 47
LA10
Average hours of training per year per employee by employee category.
39 – 42
Ratio of basic salary of men to women by employee category.
39 – 41
Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.
48 – 49
Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor. Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor. Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with laws and regulations.
50
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services
33
LA14
HR5
HR6
Forced and Compulsory Labor
HR7
Compliance
Total number and rate of employee turnover by age group, gender, and region.
29 & 36
LA7
Child Labor
Compliance
Page
Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation Materials used by weight or volume. Percentage of materials used that are recycled Input materials. Direct energy consumption by primary energy source.
Economic Performance
Materials
Descriptions
SO8
PR9
51 33
65
Appendixes For better understanding of this Corporate Sustainability Report, the following tables should be read together as they form the integral part of the whole report.
Table A: In-house Social Charitable Fund Received by Employees 2011 (Pg 17)
2010 Condolence (US$60/case) Sickness (Case by Case basis) Maternity (US$20/case) Disaster (Us$100/case) Total (US$)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
240
60
300
360
300
300
120
240
180
120
120
170
310
380
170
280
260
760
630
590
30
210
210
4,000
240
120
120
280
320
480
240
1,800
820
680
1,000
870
100 1.15
470
810
450
100 8,240
410
370
680
530
Dec
Total (US$) 2,340
2011 Condolence (US$60/case) Sickness (Case by Case basis) Maternity (US$20/case) Disaster (Us$100/case) Total (US$)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total (US$)
60
60
120
60
60
240
180
120
120
60
60
60
1,200
170
200
100
120
30
110
80
90
78
110
45
40
1,173
60
120
140
160
220
120
220
160
120
300
300
100
2,020
380
100 460
370
100 418
200
200 4,593
290
340
310
470
480
470
405
Table B: Major Corporate & Financial Ratios 2010-2011 (Pg 29) Descriptions
2010 US$
A)
Sales Operating Costs Raw Materials Direct Wages Indirect wages Charity Fund Expenses (Direct &indirect) Depreciation Bank Loan in%
B) C) D)
Economic Value Distributed Economic Value Retained Sales in million pieces Equity to Debt Ratio Total workforce as at Dec
US$ 25,351,600
2011 US$
US$ 28,541,600
15,556,500 5,535,200 1,351,700 4,600 5,252,400 338,300 203,200
13,808,200 4,338,900 1,112,500 8,200 5,387,500 339,000 192,200 25,186,500 165,100 2.90 1: 1.1 2,506
Ratios 2011 vs. 2010 % 13% 13% 28% 22% -3%
28,241,900 299,700 4.55 1: 0.9 3,206
99% vs. Sales 1% vs. Sales 57% 18% 28%
66
Table C: Workforce by Employment Type at 31-Dec-2010 & 2011 (Pg 31) 2010 Level
Khmers
Managerial Supervisory Executives, Leaders & Supervisors Technical – Marker, QC/QA & Sample Development Clerical Operational Sub-total Grand total
2011
Ratios
Expatriates
Khmers
Expatriates
Khmers
3
15
3
117
42
208
28
78%
85
14
369
16
334%
98
16
130
11
33%
2,107 2,410 2,506
9 96
2,412 3,122
17 84
12 Sustained
3,206
Table D: Summary of the Environmental Protection Projects – Part 1/3 (Pg 32) Projects
Information from Major benefits July-2007 (commencement of production operation) to Dec-2011
Water tanks to collect rain water
Constructed 1 underground water tank (110,000 liters) and installed 6 units of aboveground water tanks (total 36,000 liters) Installed 1 unit of water purifying plant in Printing Section
Water treatment
Cooling System
Installed water curtains in Cutting, Sewing, Printing & Embroidery Sections
Changing T8 to T5 lamps
Changing fluorescent tubes factory-wide
Sewing motors replacement
Replacing energy efficient sewing motor s
Mitigate the use of municipal water & cost saving from purchasing municipal water Tapped rain water during raining season from May-Dec for cleaning, using recycled water in water curtain cooling system & sanitary flush Act as reservoir for fire emergency case Meeting statutory requirements Water discharged to the public sewerage system meets BOD and COD standards Proper handling and disposal of chemical wastes This system replaces the central air-conditioning system Cost saving in electricity consumptions by using exhaust fans and motors for recycled water to take away heat from the production floors Temperature maintained at 270C to 290C (Average 320C without such cooling system) Increase brightness 500 – 700 lux (before 400 - 500 lux) Temperature further reduced by 10C Cost saving by using lower wattage T5 light tubes 25W (T8 = 36W) Saving 100watt (new motor 250 watt compared to the old type 350w), consume electricity the moment the sewing machine start operating Generate less heat
No# Yrs of Depreciation 20
10
5
8
8
JIT applies straight line basis for the depreciation of the fixed assets purchased in Table D
67
Table D: Summary of the Environmental Protection Projects – Part 2/3 (Pg 32) Projects
Information from July- Major benefits 2007 (commencement of production operation) to Dec-2011
Green logistic finished goods
Installed the spiral staircase and sliding slope from the production floors and slide the finished goods cartons to Finishing Warehouse directly PCCS Group i) Running intercompany bus intercompany schedule transport ii) “Totoo” cars services schedules
Waste management
Solar Energy
Recycled wastes such as left over cut-pieces, papers, cartons, polybags, domestic waste, etc and segregation of hazardous wastes Budget on Street Light
Water tanks to collect rain water
Constructed 1 underground water tank (110,000 liters) and installed 6 units of aboveground water tanks (total 36,000 liters)
Water treatment
Installed 1 unit of water purifying plant in Printing Section
Cooling System
Installed water curtains in Cutting, Sewing, Printing & Embroidery Sections
Changing T8 to T5 lamps
Changing fluorescent tubes factory-wide
No# Yrs of Depreciation
Energy free by sliding down the finished goods cartons Saving in labor cost Cost saving in using no cargo lifts
20
Saving in diesel consumptions by running daily group bus schedule to & fro JIT, SA One Garments Ltd & Beauty Apparels Ltd (PCCS intercompany) for sending workers at 7:30am, 9:30am & 12:30pm and back to JIT one hour later each form the above destinations Saving in diesel consumption by using “Totoo” cars instead of trucks to send goods (such as cutpanels, cartons, accessories) from one factory to another within PCCS Group Less CO2 emission Side income by selling recycled and reused wastes such as paper, carton, polybag, thread spool cones Control of disposal of wastes in a proper manner
5
Plan to purchase solar generated LED lights to replace the existing florescence lights on the exterior walls of Cutting Section Mitigate the use of municipal water & cost saving from purchasing municipal water Tapped rain water during raining season from May-Dec for cleaning, using recycled water in water curtain cooling system & sanitary flush Act as reservoir for fire emergency case Meeting statutory requirements Water discharged to the public sewerage system meets BOD and COD standards Proper handling and disposal of chemical wastes This system replaces the central air-conditioning system Cost saving in electricity consumptions by using exhaust fans and motors for recycled water to take away heat from the production floors Temperature maintained at 270C to 290C (Average 320C without such cooling system) Increase brightness 500 – 700 lux (before 400 500 lux) Temperature further reduced by 10C Cost saving by using lower wattage T5 light tubes 25W (T8 = 36W)
2012 Budget 20
10
5
8
JIT applies straight line basis for the depreciation of the fixed assets purchased in Table D
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Table D: Summary of the Environmental Protection Projects – Part 3/3 (Pg 32) Projects
Information from Major benefits July-2007 (commencement of production operation) to Dec-2011
Sewing motors replacement
Replacing energy efficient i) sewing motor s
Saving 100watt (new motor 250 watt compared to the old type 350w), consume electricity the moment the sewing machine start operating ii) Generate less heat Green logistic Installed the spiral i) Energy free by sliding down the finished goods cartons finished staircase and sliding ii) Saving in labor cost goods slope from the production iii) Cost saving in using no cargo lifts floors and slide the finished goods cartons to Finishing Warehouse directly PCCS Group iii) Running intercompany i) Saving in diesel consumptions by running daily group intercompany bus schedule bus schedule to & fro JIT, SA One Garments Ltd & transport iv) “Totoo” cars services Beauty Apparels Ltd (PCCS intercompany) for sending schedules workers at 7:30am, 9:30am & 12:30pm and back to JIT one hour later each form the above destinations ii) Saving in diesel consumption by using “Totoo” cars instead of trucks to send goods (such as cut-panels, cartons, accessories) from one factory to another within PCCS Group iii) Less CO2 emission Waste Recycled wastes such as i) Side income by selling recycled and reused wastes management left over cut-pieces, such as paper, carton, polybag, thread spool cones papers, cartons, ii) Control of disposal of wastes in a proper manner polybags, domestic waste, etc and segregation of hazardous wastes Solar Energy Budget on Street Light Plan to purchase solar generated LED lights to replace the existing florescence lights on the exterior walls of Cutting Section
No# Yrs of Depreciation 8
20
5
2012 Budget
JIT applies straight line basis for the depreciation of the fixed assets purchased in Table D
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Table E: Expenditure and investments Vs. Savings and Re-investment Summary (Pg 32) KPI Projects Dimensions
2007 2008 m Investment/ Saving Invest / Saving Expenses US$ Expenses US$ US$ US$ Water tanks to 17,500 3,800 3,800 Water collect rain water 45,200 25,000 25,000 Electricity Cooling System Changing T8 to 2,900 5,200 T5 lamps Sewing motors 3,700 3,000 replacement Green logistic finished goods Waste 4,200 8,300 4,800 9,900 Wastes management 11,400 46,900 Total A = 66,900 B = 37,100 -29,800 Balance B/F = C -29,800 5,700 Balance C/F = B – A + C
2009 Invest / Saving Expenses US$ US$ 3,800
KPI Projects Dimensions
2012 (Forecast) Investm / Saving Expenses US$ US$ 3,000 5,700
2010 2011 Investment/ Saving Investm / Saving Expenses US$ Expenses US$ US$ US$ Water tanks to 3,800 10,500 4,700 Water collect rain water Water 15,000 500 treatment 25,000 25,000 Electricity Cooling System Changing T8 to 2,000 8,000 1,100 6,600 T5 lamps Sewing motors 8,800 12,600 15,100 19,400 replacement Green logistic 6,600 6,600 finished goods PCCS Group 3,600 Diesel intercompany transport Waste 5,400 11,500 5,400 19,300 Wastes management Renewable Solar Energy (3 months) Energy 32,600 85,200 Total A = 31,200 B = 67,500 24,500 60,800 Balance B/F = C 60,800 113,400 Balance C/F = B – A + C
m
2,100
25,000 9,200
6,700
8,400
30,000
6,600
4,800
9,400
43,600
62,400 5,700 24,500
500 50,000 3,200
25,000 6,000
15,300
24,600 6,600
16,000
6,000
5,400
19,000
20,000
600
113,400
93,500 113,400 93,500
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Table F: Average Hours of Training per Year per Employees by Employee Categories 20102011 (Pg 41)
2010 No#
Employee Category
1 2 3 4 5 6
Management Executives Supervisors Leaders QC/QA Staff Floor Workers Subtotal employees trained (75%) Employees not being trained (25%) Total
Number Employees Trained 18 9 43 58 238 1,621
Total Training Hours 99 97 491 1,017 3,056 12,506
Average Training Hour 7.26 10.78 11.42 17.53 12.84 7.71
1,987 519 2.506
17,266
6.89
2011 No#
Employee Category
1 2 3 4 5 6
Management Executives Supervisors Leaders QC/QA Staff Floor Workers Subtotal employees trained (67%) Employees not being trained (33%) Total
Number Employees Trained 15 32 80 124 385 1,497
Total Training Hours 105 110 500 1,250 3,200 13,400
Average Training Hour 7.00 3.44 6.25 10.08 8.31 8.95
2,133 1,073 3,206
18,565
5.79
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Table G: Summary of Employees by Category and Highest Basic Salary Paid 2011 (Pg 45) No#
Descriptions
Female
Male
2011 Total Female
Male
Total
Production Staff US$
US$
1 Cutting CTN Finishing Mechanic QA QC QFI Sample Warehouse Sewing Sub-total
231 191 151 0 210 155 80 230 211 230 1,689
US$ 0 211 150 166 245 0 0 131 230 171 1,304
231 402 301 166 455 155 80 361 441 401 2,993
% 100.00 47.51 50.17 0.00 46.15 100.00 100.00 63.71 47.85 57.36 56.43
% 0.00 52.49 49.83 100.00 53.85 0.00 0.00 36.29 52.15 42.64 43.57
% 100 100 100 100 100 100 100 100 100 100 100
Table H: Ratio of Highest Pay of Production Workers by Gender by Employment Type 2011 (Pg 45) No#
2
Descriptions Production Workers Cutting Ironing Packing GA Mechanic QA QC CTN Warehouse Sewing Sample Sub-total Grand Total
Female 80 75 86 101 86 81 81 81 86 81 111 949 2,638
Male 101 71 0 201 86 0 0 81 91 0 81 712 2,016
2011 Total Female 181 146 86 302 172 81 81 162 177 81 192 1,661 4,654
44.20 51.37 100.00 33.44 50.00 100.00 100.00 50.00 48.59 100.00 57.81 57.13 56.68
Male 55.80 48.63 0.00 66.56 50.00 0.00 0.00 50.00 51.41 0.00 42.19 42.87 43.32
Total 100 100 100 100 100 100 100 100 100 100 100 100 100
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Table I: Workers Injury Record 2010-2011 (Pg 47) 2010 Injury Rate Total Workforce Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Average
Total Working Hrs
Male
Female
Male
Female
281 279 282 271 292 296 280 283 291 285 290 304 3,433 286
2,528 2,509 2,542 2,435 2,632 2,664 2,516 2,548 2,616 2,561 2,611 2,735
58,427 53,530 60,998 56,264 60,819 61,568 60,372 58,885 60,466 59,176 60,341 63,211
525,845 481,766 548,986 506,376 547,373 554,112 543,348 529,963 544,190 532,584 543,067 568,901
30,895 2,575
714,057 59,505
6,426,511 535,543
Total Injuries Femal Male e 4 3 6 4 6 5 6 5 4 3 2 3 51 4
Injury Rate Mal Femal e e 1.52 1.25 2.19 1.58 2.19 1.80 2.21 1.89 1.47 1.13 0.74 1.05 19.01 1.58
Total Injuries Femal Male e 5 4 6 4 4 2 5 4 3 5 2 4 48 4
Injury Rate Mal Femal e e 2.02 1.83 2.28 1.57 1.53 0.74 1.90 1.49 1.17 1.97 0.82 1.54 18.86 1.57
2011 Injury Rate Total Workforce Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Average
Total Working Hrs
Male
Female
Male
Female
264 264 270 273 279 289 281 276 275 271 262 267 3,271 273
2,377 2,379 2,433 2,456 2,515 2,599 2,525 2,486 2,471 2,443 2,355 2,406 29,443 2,454
54,933 48,631 58,385 56,763 58,115 60,070 58,344 59,659 57,096 56,451 54,434 57,737 680,618 56,718
494,395 437,681 525,463 510,869 523,037 540,634 525,096 536,933 513,864 508,061 489,902 519,631 6,125,566 510,464
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Table J: Lost Days Rate 2010-2011 (Pg 47)
2010 Lost Day Rate Total Workforce Total Working Hrs Lost Day Lost Day Rate Male Female Male Female Male Female Male Female Jan 2,528 58,427 525,845 90 21 34 281 6 Feb 2,509 53,530 481,766 72 26 30 279 7 Mar 2,542 60,998 548,986 71 30 26 282 9 Apr 2,435 56,264 506,376 62 18 24 271 5 May 2,632 60,819 547,373 69 43 25 292 13 Jun 2,664 61,568 554,112 91 29 33 296 9 Jul 2,516 60,372 543,348 78 50 29 280 15 Aug 2,548 58,885 529,963 79 34 30 283 10 Sep 2,616 60,466 544,190 48 26 17 291 8 Oct 2,561 59,176 532,584 93 41 35 285 12 Nov 2,611 60,341 543,067 52 40 19 290 12 Dec 2,735 63,211 568,901 66 38 23 304 12 Total 3,433 30,895 714,057 6,426,511 118 867 394 324 Average 286 2,575 59,505 535,543 10 72 33 27 Month
2011 Lost Day Rate Total Workforce Total Working Hrs Lost Day Lost Day Rate Male Female Male Female Male Female Male Female Jan 264 2,377 54,933 494,395 15 120 55 48 Feb 264 2,379 48,631 437,681 17 155 70 71 Mar 270 2,433 58,385 525,463 19 55 65 21 Apr 273 2,456 56,763 510,869 19 83 67 32 May 279 2,515 58,115 523,037 20 59 69 22 Jun 289 2,599 60,070 540,634 15 73 50 27 Jul 281 2,525 58,344 525,096 13 94 45 36 Aug 276 2,486 59,659 536,933 10 97 34 36 Sep 275 2,471 57,096 513,864 20 182 70 71 Oct 271 2,443 56,451 508,061 19 63 67 25 Nov 262 2,355 54,434 489,902 15 52 55 21 Dec 267 2,406 57,737 519,631 16 117 55 45 Total 3,271 29,443 680,618 6,125,566 198 1,147 701 455 Average 273 2,454 56,718 510,464 17 96 58 38 Month
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Table K: Absentee Rate 2010-2011 (Pg 47)
2010 Absentee Rate Total Workforce Total Working Day Lost Day Absentee Rate Month Male Female Male Female Male Female Male Female Jan 2,528 7,303 65,731 90 164 272 281 6 Feb 2,509 6,691 60,221 72 209 237 279 7 Mar 2,542 7,625 68,623 71 236 205 282 9 Apr 2,435 7,033 63,297 62 142 194 271 5 May 2,632 7,602 68,422 69 342 202 292 13 Jun 2,664 7,696 69,264 91 234 263 296 9 Jul 2,516 7,547 67,919 78 398 228 280 15 Aug 2,548 7,361 66,245 79 272 237 283 10 Sep 2,616 7,558 68,024 48 212 140 291 8 Oct 2,561 7,397 66,573 93 324 278 285 12 Nov 2,611 7,543 67,883 52 318 153 290 12 Dec 2,735 7,901 71,113 66 304 184 304 12 Total 3,433 30,895 89,257 803,314 118 867 3,155 2,594 Average 286 2,575 7,438 66,943 10 72 263 216
2011 Absentee Rate Total Workforce Total Working Day Lost Day Absentee Rate Male Female Male Female Male Female Male Female Jan 264 2,377 6,867 61,799 15 120 437 387 Feb 264 2,379 6,079 54,710 17 155 559 567 Mar 270 2,433 7,298 65,683 19 55 521 167 Apr 273 2,456 7,095 63,859 19 83 536 258 May 279 2,515 7,264 65,380 20 59 551 179 Jun 289 2,599 7,509 67,579 15 73 400 215 Jul 281 2,525 7,293 65,637 13 94 357 286 Aug 276 2,486 7,457 67,117 10 97 268 288 Sep 275 2,471 7,137 64,233 20 182 560 565 Oct 271 2,443 7,056 63,508 19 63 539 198 Nov 262 2,355 6,804 61,238 15 52 441 170 Dec 267 2,406 7,217 64,954 16 117 443 359 Total 3,271 29,443 85,077 765,696 198 1,147 5,611 3,639 Average 273 2,454 7,090 63,808 17 96 468 303 Month
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JIT Shoot After 365 sunny & rainy days… …grows up with a tiny friend..
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