Knights Apparel, a privately held, Spartansburg, South Carolina, clothing company is the leading supplier of college logo apparel to American universities. Knights works closely with the Worker Rights Consortium, a group of 186 universities that lobbies for fair treatment for workers in the plants that produce college-logo goods. Knights contracts with 30 factories worldwide. One of those plants, Alta Gracia in the Dominican Republic, is a Knights experiment in social responsibility. Knights is paying Alta Gracia workers a “living wage” of about $2.83 per hour while the Dominican minimum wage is about 85 cents per hour. The factory was remodeled, including ergonomic chairs for workers and bright lighting. Unionization is permitted, and workers are treated with respect. T-shirts cost about $4.80 to produce, about 20 percent more than if Knights paid the minimum wage. Knights sells the shirts at $8 wholesale, and the normal retail price is about $18. Knights will achieve a lower than usual profit margin on the Alta Gracia apparel. The big question is whether customers will pay as much for the Knights clothing as for premium brands like Nike that are similarly priced.
Would you forgo the Nike clothing of similar price and quality to support the Alta Gracia brand? Explain.