Comment: Crossing the line on ethical behaviour
By David Birnbaum | 21 January 2013
"The Tazreen Fashion factory was neither an unforeseen accident nor negligence."
The fire at the Tazreen Fashion factory in Bangladesh last November was the result of at least one customer's decision that providing minimal working conditions and subsistence wages are not cost-effective. The challenge, now, is to find a solution, says David Birnbaum.
The global garment industry is very hard: not hard as in difficult, but rather hard as in ruthless. We operate in some of the poorest countries in the world where the value of human life approaches zero and where corruption on an unimaginable level is commonplace.
Nevertheless, despite all the difficulties, we garment professionals manage to maintain some code of ethical behaviour. To survive, each of us creates an invisible line that separates us from the abysmal cultures in which we operate. Cross that line and we become them.
On 24 November, when the Tazreen Fashion factory located in Bangladesh burnt to the ground killing 112 workers and injuring 200 others, it became clear that at least some of us had crossed that line.
The problem is neither the fire nor the deaths and injuries. That is part of business as usual. We all know that many, if not most, of the factories in Bangladesh are deathtraps with locked grated windows, impassable stairwells blocked with fabric and old garments, and fire-fighting equipment that for decades have not been inspected - much less put in working order.
The recent Bangladesh government investigation that concluded the fire was an act of arson is a time-honored solution dating back 80 years: why take responsibility when we can blame the whole thing on some crazy communist Dutchman.
The problem is not that the arson story is a pack of lies. That too is part of business as usual. After all we have to tell the media something.
We might ask ourselves, how credible are these people who are giving us this arson story?
Government: Bangladesh is home to the only government to have been voted the world's-most-corrupt three years running. When winning the award for third consecutive time, one bemused Bangladeshi minister claimed this could not be true because there had to be some country somewhere in Africa that is more corrupt than Bangladesh. These are the people who ran the arson investigation.
Industry: The Tazreen Fashion factory is listed as a three-story structure on to which five additional stories have miraculously appeared. At the time of the fire, Tazreen was in fact an unlicensed factory. Frankly this is a little pathetic. In a country where for a few hundred dollars you can buy a revision of the factory plans and a new factory operating license, failure to have the necessary documents is just a case of venality. We do know that in the midst of the fire the Tazreen sewing supervisors told the sewers to continue work, claiming there was no fire and that the bells and sirens were part of a fire drill. These are the people supporting the arson investigation.
Customer: Wal-Mart has the perfect answer. We know nothing. We were totally unaware that our garments were being produced at Tazreen.
All of the above are simply part of the normal operation of our industry. You can believe the Bangladesh Government, Tuba (the owners of Tazreen Fashion factory), and Wal-Mart. You can also believe that your T-shirt was sewn by Santa's elves at the North Pole.
This is not really the issue. Beneath all the kerfuffle we are told that the Tazreen fire was the result of arson by outside criminal forces, an unforeseen accident or at worst internal negligence by junior factory staff.
We are invited to take our pick
In fact, none of the three are even close to the truth. The fire at Tazreen, and the resulting deaths, were the direct result of at least one customer's decision that providing minimal working conditions and subsistence wages are not cost-effective.
The issue is not the problems in the factories. We all know the problems. The issue is the need to understand everyone's inability to find a solution.
The Bangladesh government, for all its faults, cannot provide a remedy. Garments account for 81% of all Bangladesh exports and virtually 100% of all industry jobs. Should the garment industry falter, the entire Bangladesh economy would disintegrate. Government cannot take any action without industry agreement.
The Bangladesh garment industry, for all its faults, cannot provide a remedy. They are trapped by their customers, many of whom come with price lists from previous years, with the expectation that suppliers will provide the same prices this year as last year, or lower. The threat is that any price increase will force the customers to go elsewhere to other suppliers or other countries. Suppliers cannot take action without customer agreement.
The customers are divided
For the past 18 months customers such as VF, PVH and M&S have taken the position that the current situation in Bangladesh is untenable, and that efforts must be made to improve safety, working conditions and to provide annual wage increases. Executives from these and other customer companies have met with government, industry and stakeholders to find a practical solution.
On the other side, a few customers such as Wal-Mart have taken the position that the cost of any improvement in safety, working conditions or wage increases will make the industry uncompetitive - which, in turn, will result in moving business from Bangladesh to countries with lower wage rates.
Wal-Mart's position effectively put an end to all conversation. Let's face it. If you were Bangladeshi owning a factory in Dhaka, would you argue with the world's largest buyer?
The reality is that rising wages and the cost of providing better safety and working conditions will not force Wal-Mart or any customer to go to a country with cheaper labour; because there is no country with cheaper labour. As every garment sourcing professional is aware, in the race to the bottom, Bangladesh is not just the winner, it is the only contender.
During the past three years, wage rates in Bangladesh have remained unchanged, while in competing countries they have risen in excess of 20% per year. If Bangladesh wages were to double tomorrow, wages in Indonesia and Cambodia would still be 50% higher; 100% higher in Vietnam, and six to ten times higher in China.
Wal-Mart is no longer looking for the lowest price, because Wal-Mart's policy is that no price is low enough.
In its quest for lower prices, Wal-Mart has decided that sacrifice is necessary. The retailer's fight against improved safety standards and factory working conditions is simply the result of its no-price-is-low-enough policy.
Everyone in the industry recognises that conditions in most Bangladesh factories are beyond the pale.
- Health and safety standards are generally appalling;
- Workers are paid on average $60 per month, which is now below subsistence level;
- The cost of living has risen to the point where many are paying half their wage for rent;
- Vitamin deficiency and outright malnutrition is becoming a serious problem.
It is a few customers, such as Wal-Mart, who are fighting to maintain that environment.
The Tazreen Fashion factory was neither an unforeseen accident nor negligence. It was the direct result of the policies of Wal-Mart and others like them.
Business as usual
From Wal-Mart's point of view, the death of 112 workers, while undoubtedly regrettable, was cost effective. Despite this unfortunate incident, costs in Bangladesh remain unchanged. The assumption is that eventually things will settle down, the media will find someone else to pick on, and Wal-Mart will return to business as usual.
This is what life looks like on the other side of the line, where there is little difference between the good-old boys in Bentonville and the good-old boys in Dhaka.
Tazreen was not a one-off event. Given the state of Bangladesh factories, death by factory fire is inevitable. There will be other Tazreen disasters.
The excuse that they are just a bunch of good-old-boys from Arkansas, who did not know who or where their goods were being produced, is a sick joke. People are literally dying to make Wal-Mart garments.
It is time for Mr Duke, Mr McMillon and the other higher-ups at Wal-Mart to stop acting like a bunch of small time grifters and remember that they are the heirs of Sam Walton's vision. They are taking Wal-Mart - the name of the most successful retail operation in history - and turning it into a dirty word.
It is time to accept responsibility. Just as Wal-Mart has the power to stop progress towards factory safety, working conditions and wage increases, so too does it have the power to move forward.
The fire at Tazreen is an opportunity for Wal-Mart to turn things around in both Dhaka and Bentonville. This is the practical approach. The costs are negligible; and, given the current state of Wal-Mart's reputation, the increase in good-will beyond count.
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