subscribe: Posts | Comments | Email

More Discourse in the Aftermath of the Bangladesh Factory Building Collapse

2 comments

It has been six days after a tragic building collapse involving multiple garment factories in Bangladesh. The death toll continues to rise as hopes of finding any remaining survivors is fading. The final death toll could be staggering.

We again join other voices in the shock and sadness of this incident.

Our Supply Chain Matters initial commentary this latest incident noted an environment of see no evil, tell no evil among retailers and other contractors for apparel sourced across Bangladesh.  We joined other voices in urging the apparel industry to initiate a serious call to action regarding current global sourcing practices and supplier standards.

Since that time, business and global media has provided much more attention to conditions and challenges involving the apparel industry and its current sourcing practices. On Tuesday of this week, the Wall Street Journal published an article (paid subscription or free metered view) that indicated that the factory owners involved in the recent building collapse were under enormous pressures to produce orders because ongoing political unrest and work stoppages has scared off buyers. It quoted the Bangladesh Garment Manufacturers and Exporters Association as indicating that $500 million in orders had been lost as a result of the earlier turmoil. It described how retailers and customers, as in previous incidents, were denying that valid orders ever existed for the subject factories.  Italy’s Benetton Group initially denied any connection to a destroyed factory but later had to acknowledge a relationship after labor groups found labeled clothing and production documents in the damaged building. Other global based retailers and customers were also mentioned, some in denial.

However, we would like to call special attention to our readers to an Opinion column published in today’s edition of The Financial Times which is titled Business must take the lead on Bangladesh’s Working Conditions. (Paid subscription or free metered view)  This opinion piece penned by John Gapper is in our view, is well written. It urges western companies to not take the current easy path to withdraw sourcing from the country but instead come together to collectively raise overall standards. Gapper notes that it is easy to forget that even in the U.S., there was a previous history of inferior working conditions and garment factory fires, which helped to establish the International Ladies” Garment Workers Union and subsequent improved health and safety laws.

He calls for retailers to stay in the country and keep providing jobs for women which has helped to collectively raise the poverty levels across Bangladesh by almost 30 percentage points. Workers in the country earn an average of $37 a month, and are a bargain based on current global rates. The World Bank estimates that productivity among the most run-well factories is on par with China, while wages are one-fifth of China’s average. There are far more garment factories in the country and Gapper quotes a McKinsey survey that indicates that 50 to 100 of the total 5000 garment factories have “very high” compliance standards and he argues that this presents an opportunity to improve standards without threatening overall global  competitive advantage.

The editorial outlines two other actions including retailers banding together to push the Bangladesh government to overcome corruption, and to open the doors to labor unions. That latter imperative is arguably going to be the most controversial and contested.

The argument presented by this FT editorial s that the industry itself can play a big role in getting the country out of severe poverty, while developing a safer environment of working conditions. It is unacceptable for hundreds, and perhaps thousands of workers to perish in preventable industrial tragedies.

For our part, we do not dispute the difficult challenges that lie in apparel sourcing within low-cost manufacturing regions.  But, at the same time, retailers and contractors cannot continue to turn a blind eye or hide behind sub-contracted chain of custody regarding unsafe working conditions.  Neither can global social responsibility standards continue to be ignored.

As consumers of apparel and clothing, we need to insure that we are willing to pay a higher retail price to retailers who adhere and enforce safe working conditions in global factories that they do business with. We need to stick with brands committed to helping factory workers to work their way out of severe poverty and provide for their families, while working in safe factories or distribution centers.

As a supply chain community, we need to get more serious about our responsibilities to foster more diligent and dedicated labor social responsibility practices across the globe and to stand for good practices vs. a few additional points of product margin, or giveaway promotions.

It would be a real shame if the industry walks away from Bangladesh because it is the easier solution.

Bob Ferrari

Be Sociable, Share!
  1. Bob, I agree with you and the FT that brands shouldn’t run at the first sight of trouble. Can we at least though admit that raising standards and rewarding good compliant factories – at the same time as weeding out the bad – cannot be achieved with current social audit practices.

    In fact, I would argue that what’s needed now is not social audits at all: 2 of the factories at Rana Plaza were audited apparently. But the auditors are now claiming that they weren’t structural engineers, so it is not their problem. I can’t argue with that, but I can argue that given it is well known that over 700 Bangladesh workers have died through unsafe buildings (building collapses and fires) – and this figure does not include Tazreen or Rana, so is more than likely to double – why are brands sending in auditors to check that workers are being paid when the factory they are in is a death trap? Surely we must prioritise here, fix the building safety issues, pressure the government to enforce stricter permit laws, then deal with pay, discrimination, overtime etc

    I would also add that given the scale – 5000 factories – accepting that factory owners are hardly likely to tell the truth – we should at least try to engage the workers in any social audit process. Not on the periphery, but front and centre and systematically. We are working with brands on this, but Bangladesh offers the perfect place to innovate the social audit process that has so far and so often proven to be ineffective at best.

  2. Bob Ferrari says:

    Stuart,

    Thanks for sharing your perspectives.

    You have raised some rather interesting observations related to prioritization of supplier audit goals. It would seem that prioritization can be muddled by all of the different social and business related forces being brought together by the various stakeholders involved in apparel sourcing, particularly involving Bangladesh. Hopefully, some entity will take the lead.

    Regarding engaging workers in a social audit process, this seemed to work effectively when the Fair Labor Standards group was engaged by Apple to audit its suppliers in China.

    Perhaps other of our readers can share their experiences with both prioritization of audit needs and effective use of worker focused social audits.

    Bob Ferrari