The Story of Stuff - Annie Leonard [82]
What companies like Nike, Apple, and the Gap do produce are brands, and these brands are what shoppers are buying. Nike founder Phil Knight explained, “For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product.”5 Companies spend billions on brand promotion, often not to advertise details of any actual product, but to maintain the image they want consumers to identify with their brand. As O’Rourke puts it, “When Apple sells you an iPod, it isn’t selling an MP3 player; it is selling a fashion statement.”6
Because the focus is on developing the brand, rather than on making any actual items, the place where Stuff is produced is increasingly irrelevant. In fact, the actual costs of making an item—the materials, the workers, running the factory—and then getting it to the store account for only a fraction of the price charged for that item. Most of the money goes to the brand, which means that the more costs are lowered along the supply chain, the more profit the brand holder makes.7
Because consumers play along and value the brand so highly, the balance of power along the supply chain has shifted from the manufacturers to the brands and retailers (who are sometimes but not always the same entity: at the Nike store, Nike is both brand and retailer, but if the Nike shoe is sold at Nordstrom’s, then they’re separate). It is they who now call the shots along the whole supply chain. They—not the actual manufacturers—decide what gets made, how fast, and for how much. If one manufacturer isn’t able to meet their demands, that’s fine, because there are plenty of other manufacturers ready to make the same product without complaint, often for a lower price.8 “This is the ‘treadmill’ that ensnares developing countries,” explains The Nation’s political correspondent William Greider. “If they attempt to boost wages or allow workers to organize unions or begin to deal with social concerns like health or the environment, the system punishes them. The factories move to some other country where those costs of production do not exist.”9 And David Korten writes in When Corporations Rule the World, “With each passing day it becomes more difficult [for factories] to obtain contracts from one of the mega-retailers without hiring child labor, cheating workers on overtime pay, imposing merciless quotas, and operating unsafe facilities.”10
Removing themselves from the actual production of Stuff also allows the big brand-name companies to claim a level of ignorance about conditions—they can shrug and say, “Hey, they aren’t our factories.” This frees them from the responsibility and challenges and costs inherent in running real factories that employ real workers around the world.
All of these developments led O’Rourke to call this the “mean lean” system.
And that’s only the half of the new leanness. The other half is lean retail. Like lean manufacturing, lean retail also seeks to cut costs at every turn. The ways to do this include all the obvious: lower workers’ salaries in stores and refuse to provide health care benefits; stifle union organizing; and build gigantic stores in the suburbs where real estate is cheap, rather than in city centers where shoppers could access the store via public transportation.
But the biggest way to cut costs associated with retail is to eliminate inventory. In the lean retail model, inventory is the ultimate waste. Traditionally, inventory was costly because it incurred storage expenses and consisted of materials temporarily not on the market.