About a year and a half before a fire at a clothing factory in Bangladesh killed 112 people in November, executives from Wal-Mart,
Gap and other big retailers met nearby to discuss ways to prevent the
unsafe working conditions that have made such tragedies common.
Representatives from a dozen of
the world's largest retailers and fashion labels gathered with labor
groups and local officials in April 2011 at the three-day meeting held
in the 15-story, glass-walled headquarters of the Bangladesh Garment Manufacturers & Exporters Association in Dhaka, the capital. They were considering a first-of-its-kind contract that would govern fire safety inspections at thousands of Bangladeshi factories making T-shirts, blazers, and other clothes Americans covet.
Under the terms of the agreement, each company would be required to publicly report fire hazards at factories, pay factory owners
more to make repairs and provide at least $500,000 over two years for
the effort. They would also sign a legally binding agreement that would
make them liable when there's a factory fire.
Discussions seemed promising.
Then, on the second day, Sridevi Kalavakolanu, director of ethical
sourcing for Wal-Mart Stores Inc., spoke up. "In most cases very
extensive and costly modifications would need to be undertaken to some
factories," Kalavakolanu was quoted as saying in the minutes of the
meeting obtained by The Associated Press. "It is not financially
feasible ... to make such investments."
The statement from the world's largest retailer, with $447 billion in
annual revenue, essentially sucked the air out of the room, witnesses
said. It also set the tone for the rest of the meeting, which ended the
next day without a single company agreeing to the plan.
"I think that really had quite an impact on ... everybody who was in
the room," said Ineke Zeldenrust, who was at the meeting representing
the workers' rights group Clean Clothes Campaign. "It was quite clear
that we were very far from a solution."
As if to underline how much still
needs to be done, even as executives nixed the proposal over tea in an
air-conditioned room decorated with flowers, scores of scarred survivors
and their relatives gathered outside the same building to await
compensation checks from another fatal factory collapse more than six years earlier.
The retailers' meeting and its aftermath highlighted a central issue
for the $1-trillion dollar global clothing industry: What role retailers
play — and should play — in making working conditions safer at the
factories that manufacture their apparel.
Retailers often claim they know
little or nothing about conditions at factories, because the long and
intricate manufacturing chain runs through several contractors and
sub-contractors. Wal-Mart and others whose garments were found in the
ruins of the fatal Tazreen Fashions Ltd. on Nov. 24 say they had severed
ties with the factory or were unaware their clothes were being produced
there.
Yet some industry experts and labor activists say it is those major
retailers, and the customers who buy their clothes, who ultimately set
the price for how much factories get paid, and how much they in turn pay
their workers. Safety, they say, can take second place to profits.
The retail industry hasn't released estimates on how much it would
cost to upgrade Bangladeshi factories to Western standards. But one
advocacy group, The Worker Rights Consortium, puts the cost at about
$1.5 billion to $3 billion over the next five years. That's about 3
percent of the $95 billion expected to be spent on clothes manufacturing
in the country during that time. It also amounts to about 10 cents
added onto the cost of a T-shirt.
Building fires have led to more than 600 garment work deaths in
Bangladesh since 2005, according to research by the advocacy group
International Labor Rights Forum.
Major retailers such as Wal-Mart, Gap Inc. and Swedish clothing chain H&M have stepped up their own fire safety
efforts, but they've stopped short of industry-wide standards that
would hold them legally and financially accountable for fire hazards at
factories.
Gap, which owns the Gap, Old Navy and Banana Republic chains, turned
down the proposal because it did not want to be vulnerable to lawsuits,
according to Bobbi Silten, senior vice president of global
responsibility. The retailer also did not want to pay factories more
money to help with safety upgrades, she said.
"It seemed very challenging to agree to," she said. "We don't own
these factories and we're not the exclusive brands. It would be a
different picture if we owned the factories."
Since then, Gap has hired its own
chief fire inspector to oversee factories that produce Gap brands in
Bangladesh. In addition to about $1 million spent on safety measures in
Bangladesh in the last two years, Gap has committed to another $2
million to ensure that people laid off because of fire safety repairs
are still paid. The San Francisco-based company has pledged to put
factories in touch with financial institutions that can give them up to
$20 million in capital for safety improvements. The chain has also said
it will share anything it learns about safety issues in factories with
the Bangladeshi and U.S. governments.
Silten acknowledged that such measures are not exhaustive.
"But we believe that in order to change (the system)," she said, "we need others to change."
Fashion chain H&M, which places the most apparel orders in
Bangladesh, also did not sign on to the legally binding proposal because
it believes factories and local government in Bangladesh should be
taking on the responsibility, according to Pierre Börjesson, manager of
sustainability and social issues, who attended the Dhaka meeting.
"We have the responsibility in Bangladesh to improve the situation, but this is through educating suppliers," he said.
H&M, which works with more than 200 factories in Bangladesh, is
one of about 20 retailers and brands that have banded together to
develop training films for suppliers. H&M has also started to do
electrical assessments at the factories it does business with, an
expense shared by the factories. It is pushing for suppliers to
establish workers' committees to negotiate better wages and other issues
with factory management, Börjesson said.
Wal-Mart, which ranks second in
the number of apparel orders it places in Bangladesh, has also taken new
steps. This year Wal-Mart is requiring regular audits of factories,
fire drills and mandated fire safety training for all levels of factory
management. Spokesman Kevin Gardner said Wal-Mart's comments during the
April 2011 meeting, which were jointly edited by Wal-Mart and Gap in the
minutes obtained by the AP, were taken "out of context."
"Wal-Mart has been advocating for improved fire-safety with the
Bangladeshi government, with industry groups and with suppliers,"
Gardner wrote in an email to the AP. "We firmly believe factory owners
must meet our (supplier standards), and we recognize the cost of meeting
those standards will be part of the cost of the goods we buy."
Auditors hired by Wal-Mart, based in Bentonville, Ark., inspected the Tazreen factory
in 2011, giving it an "orange" or high-risk rating. Months later, the
third-party auditor did a second inspection, giving it another "orange"
rating. And early this year the factory was no longer authorized to
produce merchandise for the retail giant. The company said a supplier —
who has since been fired — had moved Wal-Mart production there without
its knowledge.
But Prakash Sethi, a professor of management at City University of
New York, is skeptical that Wal-Mart has so little power or knowledge
when it comes to safety conditions at factories.
"How long will it take Wal-Mart to identify a factory if they were
making shirts or shorts that were uneven, or where the sewing was below
acceptable quality? Less than two days," he said. "They would
immediately figure out which factory, where it's being made and put a
stop to it. Why is it that they can't do it about the workers?
Labor activists also doubt that the safety plans designed by retailers themselves will do the job.
"Voluntary codes of conduct are useless," said Charles Kernaghan,
executive director of the Institute for Global Labour and Human Rights,
who is best known for exposing the use of Honduran child labor to
produce clothing for celebrity Kathie Lee Gifford's line in the
mid-1990s. "The monitoring is completely phony."
In many ways, it is strong demand
that has driven the problem in Bangladesh. Companies in developed
nations like the U.S. move production from country to country in search
of the lowest costs and least worker strife. Bangladesh is now second
behind only China among the world's largest exporters of apparel, with a
$20 billion-a-year garment industry.
Cheap labor, unlike materials, transportation and taxes, is one of
the few costs retailers and brands can control. And factories in
Bangladesh know they can get lucrative deals with retailers and
designers by shaving pennies off the cost of making a T-shirt, so they
often cut corners.
Bangladesh has the cheapest labor by far. The average garment worker
in Bangladesh earns the equivalent of 24 cents an hour, compared with
$1.26 an hour in China, 53 cents an hour in Vietnam and 34 cents an hour
in Cambodia, according to The Worker Rights Consortium.
Yet growing competition to offer up-to-the-minute fashions at low
prices in the weak global economy has led retailers and designers to
demand even lower costs from factories. A few years ago, companies
shipped new merchandise to stores every two to three months; now, the
goal is a fresh supply each month. They are also asking factories to
make last-minute changes to orders more often — add a button here or a
belt there.
Factory owners can agree, or lose the order, sometimes to new factories that spring up overnight.
"Factory owners, in a certain sense, they're in a bind," says Robert
Ross, author of "Slaves to Fashion: Poverty and Abuse in the New
Sweatshop" and a sociologist at Clark University. "They're forced to be
ruthless and brutal — and they are."
A year after the retailers'
meeting in Dhaka to discuss the safety proposal, only two companies have
signed the resulting joint memorandum of understanding.
Phillips Van-Heusen Corp., a New
York City-based company that sells the Calvin Klein and Tommy Hilfiger
brands, in March signed the legally binding agreement after a national
TV news report that chronicled the dangerous conditions in one of its
Bangladesh factories. The company agreed to underwrite a two-year, $1
million program that allows independent fire-safety inspections and
public reports of findings. But PVH, which did not return repeated calls
seeking comment for this article, pledged to start the program only if
at least three other major retailers sign on.
So far, only one has: A German coffee chain named Tchibo that also sells clothes.
Last week, Nanda Bernstein, the
chain's head of vendor relations, said on a post on the company's
website that measures by individual companies were not enough, and a
sector-wide initiative was needed. Her quote: "As soon as two more
companies join, it will come into force."
