COURTESY JOHN KLINE Alta Gracia workers stand outside their factory in the Dominican Republic. John Kline (top), a professor in the School of Foreign Service, and Ed Soule, an associate professor in the McDonough School of Business, announced that Alta Gracia broke even on profits this September.
Alta Gracia workers stand outside their factory in the Dominican Republic. John Kline (top), a professor in the School of Foreign Service, and Ed Soule, an associate professor in the McDonough School of Business, announced that Alta Gracia broke even on profits this September.

Founded in 2010, Alta Gracia now produces apparel for over 800 university bookstores, including Georgetown’s. Praised for its workers’ rights-focused model, this Dominican Republic-based clothing factory is the only one in the developing world that pays employees a living wage equivalent to more than three times the minimum wage, placing a large emphasis on premium working conditions and the health, general happiness and well-being of its workers.

John Kline, professor of international business diplomacy in the School of Foreign Service and Ed Soule, associate professor in the McDonough School of Business, both served on the University’s Licensing Oversight Committee that supported the company from the beginning. The group has tracked its progress through independent research with funding provided by Georgetown, producing three separate reports over the past four-and-a-half years.

“The LOC advises university leaders on labor rights issues related to Georgetown’s trademark licensing program, which includes apparel licensees like Alta Gracia,” Cal Watson, director of Business Policy and Planning in the Office of Public Affairs, wrote in an email.

In the most recent report, released September 2014, Kline and Soule announced that Alta Gracia broke even on profit margins this year and will be ready to turn a profit next year, a revolutionary accomplishment for a young company with such an unusual business model.

According to Kline, the September report presented three interrelated stories. The first was the impact Alta Gracia has had on people’s lives, which included individual summaries of 12 to 14 individual workers. The second was how reaching profitability illustrated the viability of their business model and finally, the failure of the current system of monitoring codes.

In Kline’s initial involvement, the business faced a large amount of criticism about whether a business model built around the idea of a living wage could be feasible.

“People were saying it was an impossible task. Sitting on the licensing committee, I learned more about the failure of the current system and this offered a different approach,” Kline said. “I wanted to see what the impact was on people and whether it could be profitable.”

To produce their reports, Kline and Soule made almost 10 trips down to the factory in order to speak with workers and assess conditions and levels of productivity.

“By being involved in this from day one, we have been able to dispel some of the myths,” Soule said. “We can say that just like in every other business that we know of, when you treat people humanely and when you compensate them fairly, they are more productive.”

Joe Bozich, the current CEO of Knights Apparel, Alta Gracia’s parent company, expressed gratitude towards the work done by Kline and Soule.

“I think it is incredible that they have invested so much of their time and effort to report on the factual aspects of the AG initiative,” Bozich wrote in an email. “It is the real stories they reported on regarding the real life-changing positive impact this initiative has had on the employees and their families and the AG community.”

Kline, Soule, Bozich and Watson all expressed confidence about the future of Alta Gracia and its potential to develop and expand.

“I see it continuing to grow outside the college bookstore industry into traditional retail and other brands and properties,” Bozich wrote. “The NHL has recently licensed AG to manufacture and supply AG NHL apparel.”

While permanent change across the industry is still far away, Soule hopes Alta Gracia’s example will have profound impacts.

“It’s going to take more scale and demonstrable profits for real change to happen, but in the mean time, it’s a great story and example to counter public debate about status quo in the apparel supply chains,” Soule said.

The effect that Alta Gracia has had on the lives of workers extends far beyond the factory itself. The results of the most recent report serve to discredit myths about the clothing industry, including how factories must pay a low wage to be profitable, how effective systems are already in place and how high labor costs increase consumer cost.

“It’s walking into the factory itself, seeing the atmosphere with the music playing and the people smiling at their work and working as a team … in a workplace setting which is light and airy and safe,” Kline said. “I have in my head pictures of other factories that I have visited which are so dramatically different and it makes me happy to see that these workers have this type of opportunity. If we can play any role in telling that story that will help give other workers that opportunity, then work is more than worth it.”

The Alta Gracia model has the potential to be truly transformative to the clothing industry.

“If the model is recognized for what it’s showing, it’s going to be hard for industry executives and economists to say that paying a living wage is impossible,” Kline said. “The impact that it has is enormous in changing people’s lives for a very small additional amount of money that isn’t even passed on to the consumer and is offset by the gains in productivity, worker retention and quality control.”

In the context of Georgetown, Alta Gracia already has a large presence that is increasing with the success of the company. Students have gotten involved in a variety of capacities.

“In August, the New Student Orientation staff ordered 1,800 NSO T-shirts from Alta Gracia to distribute to all first-year students arriving on campus,” Watson wrote. “The Georgetown community should consider supporting Alta Gracia when shopping in the bookstore or online this holiday season.”

Soule praised the support University President John J. DeGioia has given to the project.

“The university has the ability to express its values through research, and it’s important that our commitment to social justice can be translated into business and research,” Soule said.

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