Li & Fung highlights need for change in the supply chain
Li & Fung says disasters, like Rana Plaza, can be prevented
The apparel industry and its supply chain have experienced "profound change" and "significant action" following recent factory tragedies in Bangladesh, according to Rick Darling, executive director of government & public affairs at Li & Fung. Speaking in London this week, he discussed the industry's efforts to improve factory safety, the role played by manufacturers, retailers and authorities, and the increasing need for transparency.
Rick Darling describes as "profound" the changes that have taken place in the apparel industry and its supply chain since the Tazreen Fashion fire in November 2012 and the collapse of the Rana Plaza building six months later, which together claimed the lives of more than 1,200 people.
"The recognition after Tazreen was that fires can't be prevented but evacuation plans and getting people out can be. Education is the low hanging fruit, something we can do relatively quickly and safely.
"And then Rana Plaza took place. This was a complete change for the industry and not just in Bangladesh.
"When you look at a scene of 1,100 people dying, a building that collapsed making apparel for some of the biggest retailers and brands in the world. It just became untenable."
"The action taking place since then, albeit in some cases relatively small, has been significant and I have seen the industry move together to improve the situation," he told delegates at the Retail Week Live event.
Following Rana Plaza, initiatives such as the Accord on Fire and Building Safety in Bangladesh, and the Alliance for Bangladesh Worker Safety were set up with global fashion retailers and brands to improve improve working conditions in the country.
The Accord covers 1,600 factories in Bangladesh and more than 2m workers - over half of the Bangladeshi garment workforce - while the Alliance covers nearly 700 factories and around 1.28m workers.
However, slow progress in carrying out plans to inspect Bangladeshi ready-made garment factories for fire, building and electrical safety is one of the main criticisms levelled at the initiatives.
But Darling points out that ultimately the task is substantial, and one that will take time.
"We'd all like to have done this more quickly, but we have to bear in mind that the Alliance and Accord were formed two months after Rana Plaza collapsed. It was a major effort to organise and get the proper governance in place...it took tremendous resources.
"It's frustrating because many, of course, would like to see the inspections finished by now, but there are 3,500 factories in Bangladesh that export. We are extending, as an industry, teams to do structural evaluations on these buildings...things we never would dream in our lives as an industry we would be responsible for doing. Getting that organised has been a mammoth task."
For Li & Fung, some of that work has involved the reorganisation earlier this year of its factory support services into a new business unit. The idea is that it will focus more intensely on improving factory and worker safety in the garment industry.
Darling says the Alliance and the Accord "have done all they can" to get things moving as quickly as possible.
The Accord last week announced it had begun safety inspections on more than 1,500 garment factories supplying a group of mainly European retailers. Both the Accord and the Alliance have committed to finishing the inspections by July.
Darling also believes that the authorities have a greater role to play in ensuring worker safety and compensation in the wake of disasters.
"Rana Plaza basically pointed out that globally, in these emerging economies, governments, for the most part, haven't necessarily done their job in creating safe environments for workers," he says.
"Let's be clear about this, I don't think brands and retailers were ever really constituted to actually do structural inspections of the buildings they were working in. They just don't have the capacity.
"After Rana Plaza, the industry took the position: "We can't wait for them [the government] to get that capacity. We are committed to Bangladesh like we are committed to a lot of emerging markets".
He adds: "The decision was made to step in for the next five years, at least, and do what the government should have been doing."
Darling concedes that part of that effort is helping the government build capacity, but suggests this effort cannot be sustained for the next 15-20 years.
"Part of the next five years is getting these factories safe and...building capacity for the government to come in and replace this effort."
Darling says retailers are "individually passionate" about getting it right.
"None of us in the industry want to wake up again and find out in a factory we are working with making $3-$4 T-shirts, that 1,100 people have died. These are disasters we can prevent and there is a tremendous amount of passion from retailers to get this right and Bangladesh is the start."
Darling says the focus right now is on Bangladesh due to the urgency of the issues -but suggests the initiatives could be mirrored in other markets.
"The important thing will be how these retailers react once Bangladesh has got the progress going. But nobody wants to get distracted right now.
"There is a lot of change taking place. Bangladesh is going from a very low base, but the message we are giving to other emerging markets is, don't sit back and think you've got another 10-15 years to get this right, you need to get it right in the next 24 months if you expect western brands to embrace the country."
The Tazreen and Rana Plaza disasters have also served to highlight the sheer complexity of the apparel supply chain and the challenge of making it more transparent and accountable.
"The reality is, the garment supply chain is complicated and our studies show there are five to six second- and third-tier suppliers to every factory we use. In the case of Li & Fung, we are active in 15,000 factories, which means there are probably another 75,000 factories that touch those factories. So, is it complicated? Absolutely."
Darling suggests the use of technology will, in a short period of time, "push people" towards a solution, but adds: "It's complex and it may not be something that can be done in 6 or 12 months.
"There's no light switch, but we're past the idea we can't provide transparency, that's not an excuse anymore."
Despite the safety issues in emerging economies like Bangladesh, Darling questions whether the tide really is turning back towards domestic sourcing.
"There is an interesting discussion taking place. There is a desire, partly political, and maybe some business desire, to believe the garment industry might come back to the developed economies. On a personal basis, I think it's unrealistic, I don't think it's going to happen."
He points to US retail behemoth Wal-Mart, which has been open about its desire to invest more in the Western hemisphere and build facilities in the US. However, he adds that, in the end, it will come down to labour.
"Labour rates around the world are significantly less than they are in the US or Europe and, from a job creation standpoint, any of the factories being created in these developed economies are almost fully operated. Building an underwear factory in North Carolina sounds really sexy until you realise it takes 80 people to run it.
"It doesn't necessarily get the job done. I'm not a big believer that a significant amount of production will come back into Europe or the US."
An interactive databank with intelligence on the major apparel sourcing countries
When it comes to other issues the apparel industry should be keeping a close eye on in the year ahead, compliance and factory safety, macroeconomic headwinds, trade legislation, and consumer confidenc...
Project Synopsis: MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity unde...
Synopsis Canadean's "Jaclyn, Inc. - Company Capsule" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, major products and...
UK supermarket brand George at Asda is on a journey to a more sustainable supply chain through its Responsible Retail programme. Lynne Tooms, senior director of quality and sourcing, explains why reta...
Canadean's "Delta Galil Industries Ltd. - Company Capsule" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, major produc...
For our annual briefing on apparel industry issues to watch in the year ahead, just-style has again asked leading executives for their feedback on the challenges and opportunities likely to emerge in ...
- How M&S plans to revamp its clothing business
- The difference between compliance and safety?
- Footwear to see "significant" gains from TPP
- Yarn-forward rules weigh on Vietnam TPP potential
- UK retailers key to domestic manufacturing growth
- Gap accused of rights violations in supply chain
- US Q1 in brief – Guess, Burlington Stores, Sears
- M&S to see "departure" of sourcing chiefs?
- Adidas Speedfactory eyes large-scale production
- H&M, Inditex and Nike rated supply chain leaders