The Flanarant: Where does the Tazreen fire leave Bangladesh?
US brands and retailers were baling out of Bangladesh even before the fire at the Tazreen Fashion factory killed more than 110 people at the end of last month. And given the subsequent criticism aimed at Walmart for sourcing there, many other buyers must also be wondering whether the country continues to be worth the risk, according to Mike Flanagan.
Why has the fire at Tazreen Fashion in Bangladesh - where between 110 and 130 people lost their lives at the end of last month - generated so much more publicity around the world than an almost identical blaze at Ali Enterprises in Pakistan three months ago, where the death toll was three times higher?
It would be good to think we're seeing an outpouring of genuine concern at yet another fatal fire in the Bangladesh garment and textile industry. Or real worry about what the fire - and its death toll - might mean for the future of Bangladesh's export-led garment industry.
But it's probably not just cynicism that puts the limited interest in the Karachi fire down to the fact that almost all its garments were being made for KiK, a German discounter.
In contrast, Tazreen had published audit reports from Walmart, including one confirming in August 2011 that the factory's shortcomings posed just a "medium risk", and that it was fine for Walmart and its suppliers to commission orders there.
To a man with only a hammer, they say, everything's a nail. If you think all the world's evils are down to multinational corporations, Walmart's connection, however tenuous, means you can pin the Tazreen horror on what's pretty much the biggest - and therefore by definition the most evil - multinational of all. For its part, Walmart isn't even admitting it knowingly commissioned garments from Tazreen.
But if you're concerned about what the future holds economically for the world's largest concentration of desperately poor people, Walmart's just a bit player in the problem.
So let's start with what Tazreen Fashion means for Bangladesh.
The United Nations groups the world's poorest 48 countries into a category called Least Developed Countries (LDCs). Bangladesh is by far the biggest of those 48. Its 150m people are almost twice as numerous as the next largest LDC, Ethiopia.
Most of the LDCs have been mired in poverty, but Bangladesh's story is different. It has now got just about the highest life expectancy, practically the lowest infant mortality (half the average for LDCs), and the slowest population growth rate. And most development experts agree that by creating an enormous supply of jobs for women, Bangladesh's garment industry has contributed immensely to women's empowerment.
But that garment industry is without doubt the world's most dangerous. Not because it requires workers to carry out dangerous processes, or even because there are so many fires. But because, when fires break out at garment factories, they seem to result in multiple deaths more often than anywhere else on earth. In the last 12 years:
- 2000: In November, 53 workers died at Choudury Knitwear
- 2001: 24 died at Maico Sweater
- 2004: 9 died at the Misco Supermarket building, and 23 died at Shan Knitting
- 2005: 25 died at the Sun Knitting and Processing Factory, Godnail in January; 64 died at the Spectrum factory in April
- 2006: 67 died at KTS Chittagong, 6 died at the Jamuna Spinning Mill, and 22 died at Phoenix Garments
- 2010: A fire at knitwear supplier Garib & Garib killed 21 workers in February and 29 were killed in December at That's It Sportswear, a unit of the Hameem group
- 2011: 2 workers were killed after a boiler explosion at Eurotex
- 2012: 115 are reported dead at Tazreen, and some reports claim up to 100 are still missing
Why are deaths so common in Bangladesh fires? I'd suggest there are three reasons:
- Though no poorer than other LDCs, Bangladesh is overwhelmingly the most densely populated LDC - and very little of its flood-prone land is suitable for locating factories. Which makes construction much more expensive than in Cambodia, Haiti or Laos, the other three LDCs with a substantial garment industry.
- The Bangladesh garment industry is almost entirely owned by Bangladeshis. In Cambodia, Haiti and Laos, a very large proportion of factories is owned by foreigners, who learned how to manage in their own country (usually China, Taiwan or Korea) before setting up in Bangladesh.
- History has taught Bangladeshis to be peculiarly prickly about foreign interference. During WW2, shortly before independence from Britain, millions of people in today's Bangladesh died in a famine that was partly the fault of British mismanagement - a tale that today often turns into one about food needed locally being sent to feed foreign troops. During the country's war of independence from Pakistan in 1971, Bangladeshis suffered atrocities from Pakistani troops - and conspiracy stories abound about evil Indian plans to undermine Bangladesh.
Taken together, this is what happens:
- For cost, most garment factories are built in cramped, multi-storey, often multi-occupancy, buildings. Inevitably this means owners may not think about the need for external emergency exits - and in some buildings they may not even be possible. Frequently, access to the building by fire engines is impossible too, because of later construction getting in their way.
- Even if anyone noticed, Bangladesh is just too poor to afford an adequate fire inspection service, and to pay it enough to resist bribes. To provide services to its 150m people, the Bangladesh government gets just one-eighth of what the city of New York gets to provide services to a population one-twentieth the size of Bangladesh. But New York also gets services like healthcare and military protection provided by Washington or New York State.
- So in effect Bangladesh outsources factory compliance to customers. Whom it then ignores.
Activists thoroughly misunderstand the role of customers in Bangladesh.
The first reaction of the Worker Rights Consortium to the Tazreen fire was to blame Walmart because: "First of all they are the largest buyer from Bangladesh," (untrue: H&M is) and so "they make the market".
But no-one "makes the market" in Bangladesh. When C Douglas McMillon, president and CEO of Walmart International, asked to speak about working conditions with the Bangladesh Prime Minster, Sheikh Hasina, in February 2010, his request was rejected.
A July 2012 letter to her about the need for constant wage reviews from buyers at Walmart and H&M, as well as from Gap, Carrefour, Tesco, JC Penney, Nike, Marks & Spencer, Mothercare, Levi Strauss and about ten other brands and retailers was politely ignored - as was a pitch to her for higher wages from Karl-Johan Persson, H&M's CEO at a meeting in September 2012.
When US Secretary of State Hillary Clinton called in May 2012 for a "thorough and independent investigation" into the abduction of a prominent labour leader, she was ignored too - and the response of the country's Employment Minster to the US Ambassador's further questions into the abduction was to solicit contributions to worker relief funds.
Tazreen Fashion's owner, Delowar Hussein, now claims it never occurred to him that the multi-storey factory he built in 2009 on top of a fabric warehouse needed external emergency exits.
The terrifying thing is that he might be telling the truth. In spite of the hundreds killed in factory fires between 2000 and 2009, maybe no-one did think external exits are essential to saving lives.
But at both Tazreen and at Ali Enterprises in Karachi, it's been the same story: a fire in the warehouse on the floor that workers had to exit through, meaning they couldn't get out because the exits were full of smoke. A judicial enquiry, by the way, discounts claims that exits were locked in Karachi; people couldn't get out because, even unlocked, the exits were inherently unsafe.
Delowar says Bangladesh fire inspectors didn't insist on external exits. He's clearly correct in saying Walmart didn't insist on them, because we have that August 2011 audit report which says compliance problems were "medium risk", but nothing worth suspending shipments for.
And some Bangladeshi insurers seem not to mind either. Nasir Chowdhury, managing director of Green Delta Insurance Company, said his company accepts poor risks - then simply reduces the payout after a fire if any negligence can be found.
That said, though, it was Delowar Hussein who decided to build a factory the way he did. Any qualms he might have had may have been eased by the silence of the local fire inspector, Walmart and his insurer - but that takes nothing away from his complete responsibility for the decision, which in fairness he's accepted.
But it's clear not many others in Bangladesh fully appreciate the problem they've got.
On 30 November, a group of local authority inspectors started to look at fire safety around the Ashulia area where the Tazreen factory is located. By 2 December they'd visited 232 factories, of which 64 were put in the "unacceptable" category.
But so far, they've not quoted a single case of a multi-storey factory being graded "unacceptable" for lack of external emergency exits. All their "unacceptables" are about missing or badly maintained extinguishers and hoses, inadequate training or other relatively easily (and in the inspectors' view, cheaply) addressed problems.
Not a word about any need for substantial structural changes to factories, to the buildings around them, to factories' electrical wiring and to adequate sprinkler systems and reliable water supplies.
Who'll pay for all that? The brands and retailers should, say the activists.
Baling out of Bangladesh
But American brands and retailers were baling out of Bangladesh even before the Tazreen fire.
Walmart has fired 43 suppliers there, and in the second quarter of 2012, US apparel imports from Bangladesh were 6% lower than in 2011, as the "low price" buyers moved back to China.
For many American buyers, the on-costs of Bangladesh - such as the delays and the disruption because of violence - more than outweighed the low prices made possible by the country's low wages. Productivity in Bangladesh is generally poor.
Those problems have got worse since the Tazreen fire. Two Chinese-owned factories shut up shop in the midst of the violent demonstrations that followed the fire. A leather goods factory was invaded by protestors, and largely destroyed, on 1 December because its workers had refused to stop work and join the demonstrations.
There is an awful possibility looming. Looking at the pasting Walmart's been getting for even being in Bangladesh, many buyers must now be wondering whether it's worth taking the reputational risk of buying from unsafe factories, or the severe financial risk of paying to upgrade someone else's factory.
Yet if many buyers decide to cut back their exposure to Bangladesh at the same time, this would risk a sudden collapse in orders, and increase in redundancies - which in Bangladesh almost inevitably means more violent demonstrations.
The activists are demanding "independent inspections by trained fire safety experts not controlled by the brands or the factories being inspected".
Quite right. But the real reason Bangladesh needs all 5,000 of its factories inspected is that we haven't got the faintest idea how much it'll cost to make them all safe (or even how much it'll cost to inspect them). In many cases, factories will be declared unsafe, and their owners will want to walk away - just like their clients.
This isn't a possibility anyone's even begun to face up to.
From the millions of words that have poured out since Tazreen Fashion caught fire, five must strike many as extraordinary.
"So you should change your decision," said a petition on 2 December to Walmart from three Bangladesh trade unions, referring to Walmart's announcement its suppliers would no longer be allowed to use Tazreen.
Yet I still can't find a single case of a factory's workforce sending a petition demanding external exits be installed, or fabric stored in a separate building.
Buyers can't be forced to place their business somewhere it makes no sense. Bizarrely (to some of us) Bangladeshi workers seem more aware of that basic fact of manufacturing than the Walmart bashing activists.
An interactive databank with intelligence on the major apparel sourcing countries
More than 220 companies have now signed the Accord on Fire and Building Safety in Bangladesh following the collapse of the Rana Plaza factory building in Dhaka, which killed more than 1,100 people in ...
A group of US based retailers and brands working towards a new programme to improve fire and safety regulations in Bangladeshi garment factories is unlikely to finalise its plans until early July....
A deferred payment and impairment charges have contributed to an 11% drop in first quarter profit at apparel and footwear retailer Genesco Inc....
Swedish fashion retailer RNB Retail and Brands is to sell its off-price fashion unit Kosta Outlet Mode to the Norwegian retail company Airport Retail Group AS....
New legislation that would make US imports of travel goods such as handbags, luggage and backpacks eligible for duty-benefits is being seen as a potential "game-changer" with implications that could s...
- Under Armour on track with new UAS sportswear line
- Myanmar garment exports surged 20% in 2015
- EU trade ministers push on TTIP and Canada pacts
- What does the future hold for world wool supply?
- Why synthetic fibres are a safe bet for the future
- US retailers urge action on Hanjin Shipping crisis
- Zara launches eco-friendly Join Life collection
- Adidas unveils first Speedfactory running shoe
- Bangladesh calls for US duty-free apparel access
- Brexit may hit suppliers with UK duty-free access
- Too Many Standards
- Apparel (GLOBAL) - Industry Report
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Ralph Lauren Corporation : Retailing - Company Profile, SWOT & Financial Analysis
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras