Inside Bangladesh’s garment industry, second largest in the world

Editor's Note: This is the second piece in a three-part series that goes inside Bangladesh's garment industry to explore how the Rana Plaza collapse served as a wake-up call to an entire global supply chain and how Bangladesh is working furiously to reform itself before another tragedy strikes. Read Part One here.

DHAKA, Bangladesh — As workers at the Tuba Group garment factory in Dhaka begin to receive wages after an 11-day hunger strike that began July 28, with demands focused on securing pay and economic justice rather than safety and inspections, the question remains: is the emphasis on safety reforms in the Bangladeshi garment industry driven by actual risk and worker outrage, or by international brands and consumers concerned about bad publicity?

In the aftermath of the Rana Plaza garment factory collapse on April 23, 2014 that killed 1,129 workers and the Tuba Group’s Tazreen Factory fire on November 24, 2012 that killed 117 workers, global attention has been focused on the working conditions in Bangladesh’s garment industry, which is now struggling to reform itself before another mass tragedy strikes. International consumers and brands have put immense pressure on local producers to meet international safety and structural standards immediately, or risk being shut down.

The ready-made garment (RMG) industry, which constitutes 80 percent of Bangladesh’s exports and is currently worth $20 billion, is estimated to double in value to roughly $36 to 42 billion by 2020.

Yet, the industry — and the country so dependent on it for growth — finds itself in a difficult bind.

On the one hand, a lack of reform could lead to another disaster like those seen at Tazreen and Rana Plaza, which could result in Western brands fleeing en masse. Factory owners are reporting that brands are testing out other countries for production, and in the most recent season factories have seen a drop in orders.

On the other hand, many factories simply cannot afford to comply with the expensive reforms now required by Western brands, especially with buyers refusing to pay even a few cents more per unit.

For an industry not even four decades old, it is precisely its rapid rise that has been both a blessing, allowing it to capture brands’ attention and orders, as well as a curse, with safety improvements often lagging behind its exponential growth.

FROM 130 TO 4 MILLION

In 1974, Richard Nixon, responding to pressure from domestic textile producers, enacted the Multi-Fiber Arrangement (MFA), which set strict quotas on how many garments countries could export to the US and Europe every year.

After South Korea had exhausted its export limits to the US under the MFA, it began looking for a global partner in order to continue producing garments for the West. Bangladesh, then a brand-new country with crushing poverty and little infrastructure, was searching for a way to jumpstart its development.

Nooral Quader, a former civil servant and freedom fighter in the 1971 Bangladeshi Liberation War, saw this as an opportunity. “He came to an agreement with [Daewoo] whereby he would send off 130 workers to South Korea for a six-month training program,” said Quader’s daughter, Vidiya Khan, “and then he would bring them back and essentially start the first 100 percent export-oriented garment factory of Bangladesh.”

What ensued was a partnership: South Korea traded training and industry know-how for the ability to continue to export — through Bangladesh — to the US.

“He was a father to the industry,” Khan said. “You know how you have the village elder? He was something like that. Teaching and learning and growing.”

In 1979, the 130 Bangladeshis were sent to South Korea on a mission to learn garment production inside and out.

It was a move that would be considered the birth of the Bangladeshi garment industry.

Quader’s first factory, Desh Garments, opened in 1980 and was staffed by workers trained in South Korea.

When Quader died in 1998 after a long career, his daughter Khan said, the family considered handing over control of the business. But she couldn’t let it go.

“So I packed my bags,” Khan said. “My mother said, ‘You don’t know anything about garments.’ I said, ‘Well, I’m going to learn.’”

Today the industry that began with 130 employs over 4 million people —including 3.7 million women — in over 5,000 factories across the country. This exponential growth has been largely driven by Bangladesh’s plentiful and low-cost labor supply, and the country is now the second largest ready-made garments (RMG) producer in the world, falling only behind China.

Moreover, Bangladesh’s RMG industry has contributed significantly to other industries, adding even greater value to the larger economy. Demand for cell phones has increased — for garment workers who have come from surrounding villages to keep in touch with their families — and the need for new factories has led to a boom in construction. Clothes that need to be trucked to and from ports employ thousands of drivers, and garment workers shuttling between the city and their family homes in the countryside have made each holiday a significant revenue generator for the country.

There is a realization in Bangladesh that the future of the country's economic development depends on the continued growth of its RMG industry. According to Rubana Huq, managing director of the Mohammadi Group, which owns multiple garments factories in Bangladesh, “garments is the driving force behind the economy. It only contributes to about 11 percent of our GDP, but at the end of the day it’s a lot of employment — a lot of people.”

Yet infrastructure growth has not matched the rapid growth of the garment industry, and that weakness surfaced a year ago in the collapse of Rana Plaza, said Khondaker Golam Moazzem of Bangladesh’s Center for Public Dialogue (CPD).

“I think most of the stakeholders take that message and they are now in the process of actually rethinking their activities and the process,” he said.

HISTORY REPEATS ITSELF

The auditing and reform process is not new to Bangladesh’s garment industry. “It has evolved over time,” Moazzeem said. “But the problems in the factories and the workers’ safety as it is observed nowadays is a new issue.”

During its infancy, brands required factories they contracted with to meet certain technical standards. “It all related to machines, production processes, you know, basic things,” Huq said. “So that sort of standardized the industry, and was easy to comply with. We had to buy efficient machines, we had to have very organized lines, and that was fine.”

In the 1990s, Western consumers — and subsequently brands — began calling for social compliance to address child labor, long hours and poor working conditions. In July 1995, a memorandum of understanding was signed by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to immediately remove from the garment industry all workers under 14 years of age, a move that was seen as more interested in placating consumers’ consciences than promoting the young workers’ best interests.

Now, with tragedies like the Rana Plaza collapse and Tazreen factory fire garnering international attention, garment retailers fearful of negative brand association are demanding safety compliance, with audits now expanded to include structural, electrical, and fire protection.

A lead engineer at the auditing firm Bureau Veritas who has been at the agency since the 1980s — and who agreed to be interviewed under the condition he remain unidentified — said that he had noticed structural deficiencies while doing social compliance audits for years, yet was given no box in the report for those concerns. And if it was not in the audit’s scope, he simply couldn’t report on it.

“It’s the dynamics of the market,” the auditor said. “Only recently have these engineering audits begun—you can see it as an evolution taking place in the industry.”

While the safety audits are acknowledged to be vital by local producers and international consumers alike, the speed with which factories are being forced to comply with new standards is seen by factory owners as unachievable. Furthermore, the cost of the new systems requested are, for many factories, prohibitive. So the question remains: is the urgency of these reforms driven by actual risk, or rather by brands and consumers who are concerned with their reputations?

SAFE BUILDINGS, SAFE BRANDS?

The current reforms, now focusing on safety and structural integrity, are being carried out by NGOs, Civil Society Organizations (CSO) and industry groups, including the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety, commonly known as Accord and Alliance. Accord is a legally binding agreement between trade unions, UN organizations, and mainly European retailers, while Alliance is a group of 26 North American apparel companies, retailers, and brands, including Costco, GAP, Walmart and Target.

While garment industry insiders agree that the safety reforms being emphasized by Accord and Alliance are necessary, they also admit the fear that the audits interests lie with brands rather than the workers, seeing the overriding priority as protecting brand interest.

Some reforms call for changes that are prohibitively expensive and do not efficiently address safety concerns. For example, rather than installing $150,000 firefighting equipment, Huq said, factories should spend $25,000 on safety training. “Practicing and training [workers] in safety culture — I think that’s much more necessary.”

Furthermore, some of the compliance standards set by Accord and Alliance are simply culturally irrelevant. Owners of the Azim and Sons (Pvt.) Ltd. factory in Gazipur said that misunderstandings between auditors — who are mostly foreign — and Bangladeshi factories are commonplace. Safia Azim, daughter of Azim and Sons’ founder, said that in the nineties, when a Western buyer saw children of workers in a daycare center at the factory, they mistook them for child laborers and demanded they be removed from the factory.

“I immediately started thinking that to leave a 10-year-old in a slum…is the most unsafe thing in Bangladesh,” Azim said. “Wouldn’t it just be better to have the 10-year-olds here? But you know, that’s not compliant.”

Even though auditors were informed of the misunderstanding, only the younger ones that could not be mistaken for workers were allowed to stay.

Auditors also insisted on the installation of Western-style toilets in Azim and Sons’ factory, even though workers preferred squat, or ‘Indian-style’ toilets. Azim said that a number of the Western-style toilets were so disused that the stalls were converted into storage closets.

Furthermore, the blanket standard that has been applied across the industry is not indicative of the wide degree of variation that exists between factories — from those that are simply a floor of 20 machines to those are state of the art.

The BGMEA has designed a three-tier system of rating factories based on size, quality, and safety. Tier 1 factories are often purpose-built in export processing zones (EPZ) using the latest safety protocols with the ability to implement whatever reforms are deemed necessary by buyers. These factories enjoy tax breaks and other manufacturing benefits. Along with their slightly downsized Tier 2 counterparts, they receive the most attention from safety auditing organizations like Accord and Alliance, and are the first factories to undergo inspections.

Tier 3 factories are smaller, and many deal solely in subcontracts, thereby escaping the attention of the international auditing system.These factories are in the most dangerous position. They often operate in rented spaces within commercial or residential highrises — buildings that have not been designed to bear loads required by garment factories. Furthermore, because land prices in Dhaka have continued to rise — now nearly rivaling those in Manhattan — to keep up with demand, landlords add unplanned and often illegal floors to the top of buildings, like the three that were added to the top of Rana Plaza.

While it is common knowledge that subcontracting occurs within the garment industry, transparency is lacking, leading to unauthorized shadow subcontracting. “Some vendors are transparent about [subcontracting] and they share it with their brands,” said Huq. “They say, look, I don’t have space, I’m using these factories, please audit them. Some vendors don’t.”

BETWEEN A ROCK AND A HARD PLACE

Changes are happening, and there is a new sense of awareness along all levels of the industry — from garment workers to industry leaders — that safety reforms must be brought to the industry.

But there is also a sense that a more nuanced approach is needed. Factories in rented spaces cannot be expected to make the same changes as purpose-built factories. Many can't afford the new safety systems required, and buyers are barely budging, if at all, on prices. The government has promised financial aid for smaller factories to improve, but it's unclear how and to whom it will be delivered and when.

Furthermore, there is a sense throughout the industry that standards are not being applied evenly. “If compliance is going to be applicable for Bangladesh, we have to have a level playground, meaning it should be equally applicable in India or in China,” Huq said. “It should be standardized. It should be globalized. Otherwise, we are going to be the ones who are going to miss out on opportunities.”

And if these safety issues have been around for years, then why the immense pressure to reform immediately, or else face closure? Is it for the workers’ safety or that of the brands? What role do each of the stakeholders — producers, brands, consumers, workers — hold in bringing change to this industry?