Bangladesh fears exodus of apparel firms after Disney exit

Written by New York Times | New York | Updated: May 4 2013, 07:39am hrs
A day after the Walt Disney Company disclosed that it was ending apparel production in Bangladesh, that countrys garment manufacturers expressed alarm that other Western corporations might follow Disneys lead. They feared that could bring about a potential mass exodus that would devastate Bangladeshs economy and threaten the livelihoods of millions of people.

Mohammad Fazlul Azim, a member of the Bangladesh Parliament and an influential garment factory owner, implored brands not to leave Bangladesh, noting that many factories did comply with safety standards. The whole nation should not be made to suffer, he said. This industry is very important to us. Fourteen million families depend on this. It is a huge number of people who are dependent on this industry.

Factory owners in Bangladesh as well as Western apparel retailers have faced intense pressure from governments, consumers and labour groups to improve workplace safety there after a building containing five garment factories collapsed last week outside the nations capital, killing more than 500 people.

Several Western retailers indicated on Thursday that they were considering new plans to ensure factory safety, efforts that would require investing in, rather than abandoning, their operations in Bangladesh. But few have made financial commitments to upgrade unsafe factory buildings or to endorse tougher and deeper inspections. So far, pledging money for relief efforts has been the most common response by big retailers.

Ever since the building collapse, Western apparel companies with ties to the country have scrambled to address public concerns about working conditions there. Benetton repeatedly revised its accounts of goods produced at one of the factories, while officials at Gap, the Childrens Place and other retailers huddled to figure out how to improve conditions, and some debated whether to remain in Bangladesh at all.

Galen Weston, the chairman of Loblaw, a major Canadian retailer, said his company wanted more rigorous factory inspections that would for the first time examine the structural integrity of buildings housing these garment factories. He also said Loblaw, which makes the Joe Fresh apparel line, was trying to figure out what more it could do to improve workplace conditions there.

Weston said he was disturbed that factory managers saw fit to send apparel workers back into the building last week after it had been declared dangerous. What role does industry play in propagating a manufacturing culture that would take such risks with peoples lives he said. Im troubled by the deafening silence from other apparel retailers on this issue.

Weston said he was upset that only two out of the nearly 30 Western apparel brands whose goods were manufactured in that building had spoken out about the disaster.

The public disclosure of Disneys directive came two days after officials from two dozen retailers and apparel companies, including Walmart, Gap, Carrefour and Li & Fung, met near Frankfurt with representatives from the German government and non-government organisations to try to negotiate a plan to ensure safety at the

more than 4,000 garment factories in Bangladesh.

Officials from two non-government organisations who attended a meeting in Germany on Monday aimed at improving factory safety in Bangladesh said on Thursday that they were confident that several major retailers would soon join a broad plan to ensure fire and building safety in Bangladesh factories. But so far, that plan has been embraced by just PVH, the parent company of Tommy Hilfiger and Calvin Klein, and the Tchibo Group, a German retailer.

Im quite confident that we will get some of the big retail players to sign on to this, said Jyrki Raina, general secretary of the IndustriAll Global Union, a federation of 50 million workers from 140 countries. The world will not forgive us. We will all look ridiculous if there is nothing done.

If a few more retail giants sign on, labour groups are likely to turn up the pressure on others to join the effort or face protests, several officials said. Already, demonstrators have carried signs outside the stores and offices of major retailers that bought apparel from factories in the collapsed building. Raina said that at the Monday meeting worker advocacy groups and retailers sought to revise the PVH-Tchibo plan so that it would be acceptable to more retailers while still maintaining strong workplace protections.

Several labour advocates voiced optimism that two companies that have taken the lead in creating a compensation fund for the Bangladesh victims and their families Loblaw and Primark, an Anglo-Irish retailer would join that plan, which calls for Western retailers and brands to help pay for safety improvements at garment factories.

Walmart, Gap and numerous other retailers have balked at embracing the plan. Retail and labour officials say that is partly because the retailers are concerned about the plans binding legal commitments.

Some companies have taken steps on their own. In October, Gap announced a $22-million fire and building safety plan with its suppliers in Bangladesh, without identifying which factories it was using there or how many factories would be improved under the plan. And three weeks ago, Walmart pledged $1.8 million to train 2,000 Bangladesh factory managers about fire safety.

Michael Posner, a former assistant secretary of state of human and labour rights in the Obama administration, called Walmarts contribution a drop in the bucket when you consider you have a thousand faulty workplaces.

Some non-government organisations estimate that it would cost $3 billion, or $600 million a year for five years, to make the needed fire safety and building improvements to ensure that Bangladeshs more than 4,000 garment factories were safe. Bangladesh exports about $18 billion in apparel a year.

Posner, now a professor at the Stern School of Business at New York University, said the Obama administration was not doing enough to address safety problems in Bangladesh. One of the big gaps here is that governments are standing on the sideline, he said. Theyre neither pushing a united strategy among big companies nor pushing hard enough on the Bangladesh government to do the right thing. Its one thing to convene a meeting, its another thing to say to brands, You have to work together to fix this'.

Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, and Representative George Miller of California, the top Democrat on the House Labour Committee, have also urged the administration to do more to push Western companies and the government of Bangladesh to fix factory safety problems. You cant do this piecemeal, Levin said. You have to take the bear by the tail and get everyone to the table. The governments havent done that.

One administration official said it was working on a plan that would provide several million dollars to the Bangladesh government to help strengthen its efforts to regulate factory buildings, especially on fire safety.

Posner said Disneys move apparel represents less than a fifth of the nearly $40 billion in annual sales of its licensed products might encourage other Western brands to leave Bangladesh. Now other companies feel they have a green light.

David Schilling of the Interfaith Center on Corporate Responsibility said he generally supported a stay and improve not a cut and run approach for Western companies in countries like Bangladesh.

There have to be signals to government and suppliers, especially when you have loss of life, that positive steps have to be taken, he said. But you also have to have companies saying, Enough is enough. Were wanting to see significant change or we cant source here.