CullmanTimes.com - Cullman, Alabama

National News

May 13, 2013

Leaving Bangladesh? Not an easy choice for brands

NEW YORK — Bangladesh offers the global garment industry something unique: Millions of workers who quickly churn out huge amounts of well-made underwear, jeans and T-shirts for the lowest wages in the world.

But since a building collapse April 24 killed at least 1,100 garment workers in Bangladesh in one of the deadliest industrial tragedies in history, the country has gone from one of the industry's greatest assets to one of its biggest liabilities.

"The risk factors have jumped off the charts," said Julie Hughes, president of the U.S. Association of Importers of Textiles and Apparel, a trade group that represents retailers who import garments. "This is worse than what anyone had imagined."

Working conditions in Bangladesh's garment industry long have been known to be grim, a result of government corruption, desperation for jobs, and industry indifference. But the scale of this tragedy has raised alarm among executives and customers.

The Facebook pages of Joe Fresh, Mango and Benetton, a few of the brands whose clothing or production documents were found in the rubble of the collapsed building, are peppered with angry comments from shoppers. Some warn they're going to shop elsewhere now.

Retailers are also facing street protests. In the U.S., university chapters of United Students Against Sweatshops are helping to stage demonstrations against Gap in more than a dozen cities including Seattle, Los Angeles and New York. The group plans to target other retailers it believes are not committed to stricter standards for Bangladeshi factories.

The rising death toll may force Western brands to make a choice: Stay and work to improve conditions. Or leave and face higher costs, similar or worse worker conditions in other low-wage countries and criticism for abandoning a poor nation where per-capita income is just $1,940 per year.

Most retailers have vowed to stay and promised to work for change. Wal-Mart and the Swedish retailer H&M, the top two producers of clothing in Bangladesh, have said they have no plans to leave. Other big chains such as The Children's Place, Mango, J.C. Penney, Gap, Benetton and Sears have said the same.

"Today's economy is global, and it is not a question of if a company like H&M should be present in developing countries," said Anna Eriksson, an H&M spokeswoman. "It is a question of how we do it."

But for some, the risk of being in Bangladesh has become too great. The Walt Disney Co. announced this month that it is stopping production of its branded goods in Bangladesh.

"These are complicated global issues, and there is no one-size-fits-all solution," Bob Chapek, president of Disney Consumer Products, said in a statement.

Industry experts predict others will quietly reduce their dependence on the country.

"Almost everybody is going to cut back on what they are sourcing from Bangladesh," Hughes said. "Not today, but by a year from now our imports are going to fall. The question is how much."

But it's not easy for retailers who make their clothes in Bangladesh to simply leave.

There is no shortage of cheap labor or available garment factories around the world. But it takes months or even years to establish relationships with new factories that retailers can trust to turn out large volumes of garments to their specifications on time.

Even if retailers move their business to other low-cost countries, they still face threats to their reputations.

Of the major garment-manufacturing countries, Bangladesh's working conditions pose the highest risk to brands, according to Maplecroft, a risk analysis firm based in Bath, England. But Bangladesh ranks somewhat better than many low-cost countries on other labor issues, such as child labor and forced labor.

According to Maplecroft's Labor Rights and Protection Index, which measures the overall risk of association with violations of labor rights, Bangladesh is the 17th-riskiest country in the world — and less risky than such garment-producing leaders as China, Pakistan, Indonesia and India.

Another reason it's hard for retailers to leave is that Bangladesh is one of the few places in the world that has enough workers, manufacturing capacity and experience to provide what retailers demand: High volume, low prices, good quality and predictable service.

The garment industry in Bangladesh is the third-biggest exporter of clothes in the world, after China and Italy. There are 5,000 factories in the country and 3.6 million garment workers. Manufacturers have easy access to cheap raw materials, and the country's political situation has been relatively stable.

And its garment workers command the lowest wages — by far — in the world. The average worker in Bangladesh earns the equivalent of 24 cents an hour, compared with 45 cents in Cambodia, 52 cents in Pakistan, 53 cents in Vietnam and $1.26 in China, according to the Worker Rights Consortium, a worker advocacy group.

On Sunday a Bangladesh cabinet minister said the government plans to raise the minimum wage for garment workers, and a new minimum wage board will issue recommendations within three months.

Between 15 and 25 percent of the wholesale cost of a garment is for labor. Unlike raw material costs, which can vary, labor is the only major cost that retailers can control.

"It's a country built for commodity products," said Janet Fox, who arranged garment manufacturing overseas for J.C. Penney and Under Armour and now works as a consultant. "It's not a highly skilled labor force, but they can make the basics."

Bangladesh has long been a major garment producer, but in recent years its production has soared.

For decades, the global garment trade was controlled with a quota system called the Multi Fibre Arrangement that limited production from developing countries to protect higher-wage workers in developed countries.

When the system ended in 2005, retailers flocked to Bangladesh because of its low wages. Manufacturers scrambled to increase the size of their factories.

Land is scarce in Bangladesh, one of the world's most densely populated countries. It packs 163 million people, about half the population of the U.S., into an area about the size of the state of Iowa. So the Bangladesh government, desperate to boost employment, looked the other way as companies converted unsuitable buildings into factories or crammed far too many workers and equipment into small spaces, creating fire hazards, labor activists say.

Since 2005, at least 1,800 workers have been killed in the Bangladeshi garment industry in factory fires and building collapses, according to research by the advocacy group International Labor Rights Forum.

In November, 112 workers were killed in a garment factory in Dhaka, the Bangladeshi capital. The factory lacked emergency exits, and its owner said only three floors of the eight-story building were legally built. Clothes destined for Disney, Wal-Mart and Sears were found among the building's remains, though Disney has denied its suppliers used the factory.

But as horrific as that fire was, it wasn't as bad as the April 24 collapse, the garment industry's worst disaster. The eight-story Rana Plaza building housing five garment factories collapsed 15 miles north of Dhaka at the beginning of a workday.

The building wasn't designed to hold factories, and three stories had been added illegally. Most of the victims were crushed by massive blocks of concrete and mortar falling on them.

Then as the death toll was climbing, a fire broke out at a sweater manufacturer Wednesday in Dhaka, killing eight people including a senior police officer, a Bangladeshi politician and a top clothing industrial official.

Only a few companies, including Britain's Primark and Canada's Loblaw Inc., which owns the Joe Fresh clothing line, have acknowledged that suppliers were making clothes for them at the Rana Plaza site and have promised to compensate workers and their families. Loblaw's CEO said suppliers were making clothes for as many as 30 brands and retailers at the site.

Benetton labels were found at the site, and the Italian fashion brand acknowledged that one of its suppliers had used one of the factories. The company said that before the collapse, the factory had been removed from its list of approved factories.

Mango, whose production documents were found in the ruins, has said it was planning to produce there but hadn't started.

Clothing retailers often depend on a web of contractors and sub-contractors to produce goods for them. Fabric will be made at one factory, buttons at another, and the item will be sewn together somewhere else. Large orders are often placed with one contractor, who then farms out the work to several smaller factories.

Retailers said they have strict standards that they require their suppliers to follow, but they know little or nothing about conditions at individual factories that make their clothes because there are so many of them.

But retailers are very familiar with the general conditions in the countries where they do business, and their importance to local economies means they can push for improvements. Labor groups and other activists have said last month's tragedy is just the most extreme evidence that brands haven't done nearly enough to protect workers.

The retail industry hasn't released estimates on how much it would cost to upgrade Bangladeshi factories to Western standards. But the Worker Rights Consortium puts the cost at $1.5 billion to $3 billion. If the money was spent over five years, it would be 1.5 to 3 percent of the $95 billion expected to be spent on clothes manufacturing over that time. Put another way, it's 10 cents added onto the cost of a T-shirt.

There are limits to what companies can do to improve conditions, though, said Matthew Amengual, a professor at the MIT Sloan School of Management who studies labor regulation and enforcement in developing countries. "Companies have a very important role to play, but they can't do it just by auditing their supply chain," he said.

The collapse of the factory in Bangladesh showed how safety issues in the country are in some ways too ingrained and complex for companies to monitor and change. It is much easier for a company to push for more fire extinguishers or make sure fire exits aren't locked than to judge the structural integrity of thousands of factories.

Experts said if big retailers and the Bangladesh government don't work together to improve standards and enforce them, more production will gradually move out of the country.

"There are huge risks to stay if there isn't any progress," said the Rev. David Schilling, of the Interfaith Center on Corporate Responsibility, a coalition of shareholders that pushes companies to be more socially responsible.

Disney, which has said that less than 1 percent of the factories used by its contractors operate in Bangladesh, said it has told all its suppliers to stop production in the country by the end of March 2014. The company also said it would reconsider its decision if conditions improve.

Others have taken a different approach.

In the wake of the November fire, Wal-Mart, the world's largest retailer, toughened its policies with suppliers. In January, it said that it would cut ties with any factory that failed an inspection, instead of first issuing a warning.

Last month, Wal-Mart said it will be tying some of the compensation of some executives, including CEO Mike Duke, to the success of its compliance program.

Forty garment buyers, including Wal-Mart, H&M, and J.C. Penney, met with labor rights groups on April 29 in Germany to discuss how the industry could improve safety conditions in Bangladesh.

The labor groups are setting Wednesday as the deadline for brands to sign up to a legally binding plan that would require retailers to pay for needed safety improvements and allow independent inspections of the clothing factories in Bangladesh.

Only two companies — PVH, the parent company of such brands as Calvin Klein and Tommy Hilfiger, and Tchibo, a German retailer — have signed up to the plan. Gap was close to signing last fall but then backed out and announced its own plan that included hiring an independent fire safety expert to inspect factories.

Adding to the pressure on retailers, Avaaz, a human rights group with 21 million members worldwide, has garnered more than 900,000 signatures on a petition pushing Gap and H&M to commit to the proposal.

"We would rather see companies stay in Bangladesh to compel and fund the renovations that are necessary to turn these deathtraps into safe buildings," said Scott Nova, executive director at the Worker Rights Consortium.

Farid Hossain in Dhaka, Bangladesh, contributed to this story.

 

1
Text Only
National News
  • Fort Hood (UPDATED) Officials: 4 dead, including gunman, at Fort Hood

    A gunman opened fire Wednesday at Fort Hood in an attack that left four dead, including the shooter, law enforcement officials said.
    One of the officials, citing official internal U.S. Justice Department updates, said 14 others were hurt. The officials spoke on condition of anonymity because they were not authorized to release information by name.

    April 2, 2014 1 Photo

  • mfp file Hoffner Fired coach unjustly accused of visiting porn sites

    The president of Minnesota State University-Mankato accused a football coach of looking at Internet porn on a work computer before firing him, an arbitrator has revealed. The official said the claim could not be supported, and the coach shouldn't have been fired.

    April 11, 2014 1 Photo

  • High School Stabbings 4 students seriously hurt in Pa. school stabbings

    A student armed with a knife went on a stabbing and slashing spree at a high school near Pittsburgh on Wednesday morning, leaving as many as 20 people injured, including four students who suffered serious wounds, authorities said.

    April 9, 2014 2 Photos

  • Obit Ultimate Warrior Former pro wrestler Ultimate Warrior dies at 54

    James Hellwig, better known as former pro wrestler The Ultimate Warrior, has died, the WWE said. He was 54.

    April 9, 2014 1 Photo

  • news_amazonfiretv.jpg Amazon introduces Fire TV to challenge Apple in living rooms

    Amazon.com Chief Executive Officer Jeff Bezos is stepping up efforts to win over customers in their living rooms with a $99 TV box for watching digitally delivered shows and movies, challenging Apple's TV device.

    April 3, 2014 1 Photo

  • Washington Mudslide Death toll in Washington mudslide rises to 30

    As medical examiners painstakingly piece together the identities and lives of the 30 people known killed when a mudslide wiped out a small Washington community, one mystery troubles them.

    April 3, 2014 1 Photo

  • APTOPIX Fort Hood Fort Hood gunman sought mental health treatment

    An Iraq War veteran being treated for mental illness was the gunman who opened fire at Fort Hood, killing three people and wounding 16 others before committing suicide, in an attack on the same Texas military base where more than a dozen people were slain in 2009, authorities said.

    April 3, 2014 1 Photo

  • Supreme Court Campaign Big donors may give even more under court’s ruling

    The Supreme Court ruling Wednesday erasing a long-standing limit on campaign donations will allow a small number of very wealthy donors to give even more than is currently the case, according to students of the complex campaign finance system, and could strengthen the establishment in both parties.

    April 2, 2014 1 Photo

  • Former McDonald's store managers say they withheld employees' wages

    Two former McDonald's store managers, assisting with a campaign to raise pay for fast-food workers, said they helped withhold employees' wages at the restaurant chain after facing pressure to keep labor costs down.

    April 2, 2014

  • Fact Checker: 'Birth control' for something other than family planning?

    "When 99 percent of women used birth control in their lifetime and 60 percent use it for something other than family planning, it's outrageous and I think the Supreme Court will suggest that their case is ridiculous."

    April 1, 2014