2010 Overview

2010 was marked by unprecedented rising cotton prices and a challenging retail environment but it was also characterized by an increasing proliferation of brands and retailers making industry-changing, long-term commitments to adding sustainable fibers to their supply chain.  With droughts and other shortages, both in the US and in other cotton growing regions around the world, the need for more sustainably grown fibers continues to dominate the global apparel supply chain agenda.

While we do not report our earnings, we experienced growth in 2010 in both sales and profit.  Approximately 66% of the growth of new business in 2010 was characterized by some sustainable fiber.

We are also benefiting from a shift from global to local sourcing where speed to the US market and quick replenishment proves more profitable to large brands than diminishing savings and higher markdowns from other traditional apparel sourcing regions.

Management Approach

Our Management Approach to Economic and Sustainability issues is informed by our Mission Statement which includes a commitment to fiscal soundness.  We have realized significant savings from our sustainability initiatives over the last four years and continue to find ways to integrate sustainability thinking throughout daily decision making at Anvil.

We’re committed to ensuring that our CSR and sustainability initiatives demonstrate a valuable return on investment (ROI). This means that we manage our sustainability and CSR initiatives by analyzing direct corporate ROI impacts, whether through a payback analysis for a piece of new equipment or employee retention for an employee benefits program. This discipline has transformed our CSR initiatives from a philanthropic approach to a key business driver in all aspects of our business.

Economic Performance: EC1-EC4

EC1: 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

As a privately held company, Anvil does not report under this indicator. Our ByLaws specifically protect the confidentiality of our financial information.

EC2: Financial implications and other risks and opportunities for the organization’s activities due to climate change

Anvil’s Corporate Social Responsibility strategy and efforts focus on three core areas—environmental, social and product responsibility. We believe that each of these areas has been and will continue to be impacted by climate change. Anvil’s Executive Management Team regularly considers the potential adverse impact of climate change on its operations as well as the possible impact on the availability of natural resources.

With droughts and other shortages, both in the US and in other cotton growing regions around the world, the need for more sustainably grown fibers continues to dominate the global apparel supply chain agenda.  We have specifically disclosed information about this and other risks and opportunities in the Strategy and Analysis Section of this 2011 CSR Progress Report. As a privately held company, Anvil does not report financial information.

EC3: Coverage of the organization’s defined benefit plan obligations

Anvil does not offer a defined benefit plan. Our retirement plan is a defined contribution plan.  For employees in the U.S., a 401(k) savings plan is provided where Anvil matches 100% of the employee’s first 3% contribution and 50% of the employee’s next 3% contribution. During a portion of 2009, Anvil suspended matching due to the economic downturn. Matching has since been reinstated in 2010.

EC4: Significant financial assistance received from government

Anvil does not receive significant financial assistance from government other than the tax incentives associated with investments in manufacturing equipment and facilities, employment, or engaging in manufacturing, research and development; this is commonly made available to manufacturers by federal, state and local governments around the world.

Market Presence: EC5-EC7

EC5: Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation

In Central America, all of Anvil’s employees are paid above the local minimum wage and it is estimated that 70% to 80% of our total Central American workforce is paid in a range of 30% to 38% above the applicable minimum wage.

In the United States, Anvil’s employees are paid above the local minimum wage and it is estimated to be approximately 30% to 60% above the minimum wage.

Our plans are to deploy human resource information system that better tracks this information going forward.

EC6: Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation

Anvil has made a significant commitment to purchase available U.S. grown organic cotton for the AnvilOrganic® t-shirt product line before seeking foreign supplies.  This commitment has contributed to Anvil becoming a top purchaser of US grown organic cotton.  For the last three years, Anvil was also a top buyer of transitional cotton or cotton in conversion to organic farming methods.  Our conventional cotton is also substantially all grown in the United States.

Other areas where we source locally or regionally where a local supply is not available include thread, packaging materials, and technology.  Currently, of the total estimated annualized spending by our three Central American operations which represent our significant locations, 83% is spent locally on a weighted average basis.

EC7: Procedures for local hiring and proportion of Senior Management hired from the local community at significant locations of operation

It is Anvil’s strategy to hire the best candidate for each position. Anvil’s Senior Management in locations of significant operation are predominantly hired from the local community. Local is defined by Anvil as the region or state where the operation is located.  While we do not have a specific policy on this, it is a practice of our human resource function in each region where we operate to first seek to promote from within the organization and hire locally.

In addition, we launched an extensive professional development employee training program under the AnvilSustainableManufacturing (ASM) initiative which continues today.  See Labor section for additional information.

The majority of Anvil’s Senior Managers in Central America are from Central America and it is Anvil’s goal to continue to offer positions first  to the pool of candidates from the local or regional community. We estimate that over 90% of our Senior Management is hired from the local country.  In 2010, we added additional regional management to our manufacturing team.

Indirect Economic Impacts: EC8-EC9

EC8: Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro-bono engagement

Anvil’s operations and activities have a significant economic impact in the communities where they are located.  In addition to local employment, Anvil’s business supports a wide range of local services such as transportation, food service, material inputs, packaging suppliers and subcontractors.

Anvil supports several community initiatives that are designed to “improve the health and well-being of its employees and change communities.” These programs include educational programs and school improvements and job retraining programs. Read more about these programs in the Society section, under “Community”.

Anvil’s investment and services for the public include tens of thousands of donated t-shirts for fund-raising, including certain annual programs we support: national telethons benefiting physically challenged children, organizations promoting environmental awareness and remediation, organizations supporting family farms, health initiatives and relief agencies.

See below EC9 for additional job training for the community.

EC9: Understanding and describing significant indirect economic impacts, including the extent of impacts

Our operations employ over 4,200 people and support a much wider network of people who work in our supply chain.  When we conducted our product life cycle assessments, we analyzed the number of people it takes to make a t-shirt – not just our employees – but in our entire supply chain, starting with all the people who work for the companies that supply our cotton farmers with seed, equipment and other inputs or services all way through to the sales person in the store that sells our t-shirt to a consumer.  We conducted an informal inquiry of our supply chain to see how many people were involved in each step of the manufacturing process.  It’s a long list of dedicated people who craft a single t-shirt.

How to measure the indirect economic impact to this network of people and communities is a much more difficult endeavor.  We hope to be in a position to report our progress in this area in future updates to this Report.

One area where we have worked on improving our indirect economic impact is in the area of wages and the payment of a “living wage” or , in the case of our cut and sew facilities, a negotiated wage under a collective bargaining agreement.

Another area is the payment of a premium to the Farmers that convert from conventional to organic farming practices.  In 2010, the latter premium was tested during unprecedented cotton prices but we continued to pay a premium to our organic farmers above conventional cotton prices.  We were able to do this only in collaboration with the Texas Organic Cotton Marketing Cooperative.   We continue to analyze the economic positive impact of an organic farm over a conventional farm to that local community and continue to believe that organic farming can provide a better return for farmers albeit we recognize organic farming requires more attention, paperwork and labor.

While we do not performed formal impact studies in these areas, we are starting to do evaluate the impact of our expanded community job training program which started in 2008 and expanded in 2009 and 2010. The results of the training were positive although we did not have as much participation as we had projected.  In total 103 participants learned a skill by logging in a total of 4,540 training hours.

Community Job Training Program in its Third Year.