SAN PEDRO SULA, HONDURAS—When Wal-Mart Stores Inc. demands a lower price for the shirts and shorts it sells by the millions, the consequences are felt in a remote Chinese industrial town, at a port in Bangladesh and here in Honduras, under the corrugated metal roof of the Cosmos clothing factory.
Isabel Reyes, who has worked at the plant for 11 years, pushes fabric through her sewing machine 10 hours a day, struggling to meet the latest quota scrawled on a blackboard.
"There is always an acceleration," said Reyes, 37, who can't lift a cooking pot or hold her infant daughter without the anti-inflammatory pills she gulps down every few hours. "The goals are always increasing, but the pay stays the same."
Reyes, who earns the equivalent of $35 a week, says her bosses blame the long hours and low wages on big U.S. companies and their demands for ever-cheaper merchandise. Wal-Mart, the biggest company of them all, is the Cosmos factory's main customer.
Reyes is skeptical. Why, she asked, would a company in the richest country in the world care about a few pennies on a pair of shorts?
The answer: Wal-Mart built its empire on bargains.
The company's size and obsession with shaving costs have made it a global economic force. Its decisions affect wages, working conditions and manufacturing practices — even the price of a yard of denim — around the world.
From its headquarters in Bentonville, Ark., the company has established a network of 10,000 suppliers and constantly pressures them to lower their prices. At the same time, Wal-Mart buyers continually search the globe for still-cheaper sources of supply. The competition pits vendor against vendor, country against country.
"They control so much of retail that they can put someone into business or take someone out of business if they choose to," said Pat Danahy, a former chief executive at Cone Mills Corp. in Greensboro, N.C., one of the few surviving U.S. textile producers.
In Honduras, the pressure keeps factory managers on edge, always looking for ways to cut expenses without running afoul of labor laws or Wal-Mart's own contractor rules, which call for "reasonable employee work hours."
"I think we have reached the limit," said Shin Woo Kang, manager of the enormous Han Soll Textile Ltd. sewing plant on the outskirts of San Pedro Sula. The plant employs 1,600 workers, mostly young women. Wal-Mart is its biggest customer.
The brightly lighted factory is filled with humming machines, mounds of clothing parts and fast-moving hands. Down one production line, pieces of navy blue fabric take shape as Bobbie Brooks polo shirts, each bearing a Wal-Mart price tag of $8.63.
Kang said Wal-Mart was paying Han Soll about $3 a shirt — a few cents less than last year.
Asked what he would do if the retailer pressed for an even lower price, Kang grew quiet. "We would have to find something," he said finally. "Honestly speaking, I don't know what it is."
To cut costs, Honduran factories have reduced payrolls and become more efficient. The country produces the same amount of clothing as it did three years ago, but with 20% fewer workers, said Henry Fransen, director of the Honduran Apparel Manufacturers Assn., which represents nearly 200 export factories.
"We're earning less and producing more," he said with a laugh, "following the Wal-Mart philosophy."
That's harsh medicine for a developing country. The clothing industry is one of the few sources of decent jobs for unskilled workers in this nation of 6 million. Many of those jobs depend on Wal-Mart.
"You could be looking at a government meltdown if something were to happen to this industry," said Raja Rajan, a factory manager active in the apparel association.