IKEA has apologized upon its discovery that it profited from the use of East German prison laborers. The problem was uncovered by Ernst & Young following a request
from IKEA that the audit firm conduct an investigation into the labor practices of IKEA’s contractors. The audit found that prisoners were required to meet production quotas. Failure to meet those quotas resulted in the prisoners being locked in a dark cellar or bound by their hands and feet to their beds. IKEA expressed its “deepest regret.â€
For the first time in its history, American Airlines used outside contractors to reconfigure its cabins. Most airlines are in the process of reconfiguring in order to allow more leg room for some seats, which, in turn, can bring greater revenue. Those contractors, however, were not familiar with the stringent FAA requirements for attaching seats. As a result, four flights had seats come loose and another flight grounded after problems with the seats were discovered. American offered varying explanations: (1) the clamps used were defective; (2) soda and dirt in the tracks prevented the clamps from working properly; and (3) design defects. A final release in the form of explanations to mechanics said that there had been incorrect installation. The contractors, of course, deny culpability.
The use of external contractors is a minefield. If the cost seems too good to be true, it is. Find out who the contractor is and explore the contractor’s facilities. Learn who’s
doing what and how. Using contractors who do not have the necessary pre-job briefings or who do not understand industry standards and your company  standards can be a risky proposition. Grounded planes put a bigger dent in the budget than the difference in cost between external contractors and the use of employees with the necessary expertise and knowledge base. Brand damage from the use of prison labor can be crippling. Cost is one part of the decisions on contracting out company functions.
