December 12, 2012 in Business

Safer overseas factories elusive

Retailers balk at proposals for more responsibility
Allen G. Breed
Associated Press photo

Workers protest Nov. 30 to mourn deaths in a factory fire in Dhaka, Bangladesh.
(Full-size photo)

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 headquarters of the Bangladesh Garment Manufacturers & Exporters Association. 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 that 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.

“It was quite clear that we were very far from a solution,” said Ineke Zeldenrust, who was at the meeting representing the workers’ rights group Clean Clothes Campaign.

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 subcontractors. 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.

One advocacy group, The Worker Rights Consortium, puts the cost of upgrading factories to Western standards 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 to the cost of a T-shirt.

Building fires have led to more than 600 garment worker deaths in Bangladesh since 2005, according to research by the advocacy group International Labor Rights Forum.

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.

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.”

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.

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