Ian Spaulding, senior advisor to the Alliance for Bangladesh Worker Safety

Ian Spaulding, senior advisor to the Alliance for Bangladesh Worker Safety

From providing the first low-cost loans for factory remediation efforts, to setting up worker helplines and training 1.1m people on fire safety, the Alliance for Bangladesh Worker Safety is making “good progress” on its goals. But this is just the beginning, according to Ian Spaulding, senior advisor to the Alliance, who talks to just-style about what still remains to be done.

“A lot of people in the West like to beat up on Bangladesh,” is Ian Spaulding’s response to criticism of efforts underway to upgrade Bangladesh’s ready-made garment industry.

And he points to the second International Trade Expo for Building and Fire Safety, which took place in Dhaka in December, for real hard evidence of the work that is taking place to improve factory conditions in the country.

“10,000 people came here and they were writing purchase orders, buying equipment, asking very technical questions, business was taking place,” he explains, adding: “This is really unprecedented in Bangladesh’s history. Factories are getting better; Bangladesh is on the move.”

The three-day event was part-sponsored by the Alliance for Bangladesh Worker Safety, which is leading inspection and remediation efforts at 587 suppliers for the 28 largely North American brands and retailers who make up its membership. These include some of the biggest names in the business, such as Wal-Mart Stores, VF Corporation, Gap Inc, Target, Fruit of the Loom, Macy’s and JC Penney.

Long road ahead
But in line with the note of caution almost always accompanies any discussions on efforts to improve compliance standards in Bangladesh in the wake of the Tazreen Fashion and Rana Plaza tragedies, Spaulding adds: “This is not an easy undertaking. We have a long way to go.”

He also acknowledges the various conflicting narratives that form a backdrop to efforts to improve structural and labour conditions in the South East Asian nation.

“The one narrative is that factories are actually getting better and there's good stuff happening; and there's another narrative that expresses concern the government must do more to take on what is, in essence, its responsibility to protect citizens. Either they're going to backslide and brands are going to speed up their diversification strategy to look for other sourcing markets, or they’re going to modernise and address the issues and rise to the opportunities in front of them – and I'm optimistic that's what will happen.”

For its part, the first 18 months saw the five-year Alliance achieve its goal of inspecting all factories from which its members source; corrective action plans have been issued and remediation work is underway. In addition, another 1,500 or so factories have been inspected by separate initiatives the Bangladesh Accord on Fire and Building Safety, and the government-backed National Action Plan.

But this is just the beginning. “A big part of what we all need to be thinking about is how we can drive forward remediation. The remediation part is the most complicated and will take years [to carry out]. We also need to ensure that we have the right installer community, people who can install product effectively and do it right the first time.”

It’s also an expensive undertaking, with the cost of remediation estimated at $250,000 per factory – taking the total for the Alliance member factories alone to US$146.75m.

Low cost loans
As far as the Alliance is concerned, Spaulding is especially proud of its achievements in making low-cost finance available to factories to move forward with the necessary improvements, which range from the installation of sprinklers and fire doors to the relocation of factories located in unsafe or multi-purpose buildings.

“Loans are out, money is in the hands of factories now; we're the first out there with real money, and it's not just talk, it's real.”

In November, Alliance member VF Corporation issued the first advances worth $1.3m to Arunima Sportswear, Olio Apparels, and Radisson Apparel as part of an agreement with the International Finance Corporation (IFC), an arm of the World Bank. By underwriting up to US$10m in loans, VF has been able to negotiate lower interest rates for its suppliers – putting the company “so far ahead of everybody else,” on this front.

In addition to separate arrangements between individual buyers and their suppliers, the group as a whole is also working on a package that will offer access to low-cost loans for all factories that it works with. “We’re making good progress. Our goal is to have a supplier finance package available by March.”

Drilling down into the details, Spaulding explains the Alliance is using its time and resources to put together a sustainable financing solution for remediation upgrades. “We hope to have the IFC offer low cost US dollar lending capital to local banks so that we can get lower interest rates passed on to borrowers. We are also exploring how to deploy a donor-backed credit guarantee product to reduce the risks of lending to the smaller factories who will struggle get loans without additional support.

"By facilitating access to lower cost capital and sharing risk with local banks, we hope to unlock a truly sustainable financing solution for the sector over the long run."

The default rate is likely to be low, Spaulding believes, since any factories that fail to pay back the loan will be classed as non-compliant – which in turn means no Alliance member company can source from that factory. “So it creates an incentive for the factory to make good on the loan and to remediate in good faith.”

Empowering workers
In addition to remediation of buildings, “there's a whole bunch of other activities that all these initiatives need to do,” including “changing the minds and behaviour of so many factory owners and supervisors and managers and workers about fire safety and how to identify and communicate risk.”

“But our first priority was fire safety, as workers were too often unsure what to do in the event of a fire. So we've done massive training of 1.1m workers. We're not just doing the training once, but looking at how we can build up the capacity of worker representatives and factories as well as management and supervisors and workers to do on-going training themselves, without the need of organisations like the Alliance or Accord.”

Other initiatives include rolling out a worker helpline to 250 factories so far, making it the largest such project ever launched in Bangladesh. More than 3,000 calls are being received each month – around 60-70 calls per day – with workers’ concerns ranging from safety to other unrelated issues such as pay. This puts another, previously unexpected, pressure on the Alliance to manage issues over and above safety.

“As an organisation we are wrestling with how do we respond in a way that supports effective worker representative structures and upstream communication but at the same time ensures that we get buildings safe.”

Building this upstream communication system is a key to empowering workers, which is another focus for the Alliance – despite critics often suggesting otherwise. “Lots of folks would love to say we don't represent workers; that's not true. We have a different governance structure, we have a robust labour committee with seven trade union members.

“Industrial relations will take a generation to work through, it's not an overnight thing,” Spaulding says, adding that improving dialogue between workers and management is a key first step towards establishing proper worker structures.

Longer term outlook
Looking to the longer term, “probably the most important thing is what do we do on 11 July 2018, which is the first day that the Alliance doesn't exist.”

In particular, concerns have been expressed widely and repeatedly at the apparent lack of government engagement in overseeing the inspection and remediation process for the 1,500 or more factories that fall within its scope, and its ability to take charge once the Alliance and Accord pull out in 2018.

“This is the hard part, the institutionalisation,” Spaulding agrees. “What will the Ministry of Labour, the Directorate of Inspection for Factories and Establishments (DIFE), the Capital Development Authority of Bangladesh (Rajuk – the civil authority that approves it) and the Directorate of Fire Service and Civil Defense (DFSCD) do that's different than the pre-Rana mentality?”

All currently have overlapping authority and little or no coordination, all of which adds to the complexity and confusion when it comes to making decisions.

“They need to get how they're governed, how they improve buildings, who approves them, against which standard, what information is made public, how are things remediated, are buildings shut down when they need to be shut down etc. These are the kinds of conversation we need to have, along with the issue of trade unions and the role of trade unions.”

He adds that Alliance board meetings have most recently been focused on institutionalisation at a strategic level, with high-level discussions including the setting up of a school for fire protection in Bangladesh. 

“This gives me hope that all of the initiatives are going to have a positive impact here.”

He also points out that while the Alliance is “resisting conversations” on replicating its work in other countries, individual member companies like VF Corp are applying what they’ve learnt in Bangladesh to other countries, including thermographic scans and civil engineering in high rise buildings. “We also have standards that are being applied in other countries, so there is a spill-over effect, and that's because companies want to learn from Bangladesh.”

Sourcing commitment
Spaulding also reiterates earlier comments that Alliance brands and retailers remain committed to sourcing from Bangladesh – noting that annual member dues, which are based on dollar purchasing from Bangladesh, have stayed the same, with a rise in purchasing by some members offsetting a decline at others.

The big buyers such as Wal-Mart, Gap and VF Corp “are definitely buying more.” He cites a factory that has grown its business with one Alliance member from $6-7m to $30m, “partly because they’ve done so much on remediation, and partly because they got rid of a lot of bad factories in shared buildings, so there was some consolidation where they moved production over to better factories.”

And while the “compare and contrast” rivalry between the Alliance and the Accord “can be little abrasive at times,” Spaulding admits, ultimately “the fact there are two initiatives makes us both stronger. We are basically 95% the same and the stuff where we're different is actually complementary. Our greater enemy is a lack of progress, and we should be focusing on the barriers that get in our way.”