Ian Spalding on the Challenges in Bangladesh

The Alliance for Bangladesh Worker Safety's senior adviser talks with WWD about how the organization is handling some of the more complex issues.

DHAKA, Bangladesh — While change is ongoing in the Bangladesh apparel industry after the tragic Rana Plaza collapse in April 2013, both the Alliance for Bangladesh Worker Safety and the Accord on Fire and Building Safety are being watched keenly in Dhaka.

Ian Spalding, the alliance’s senior adviser, is a key person responsible for implementing the plans of the group of 26 retailers and brands, mainly from North America. Here, he talks with WWD about how the organization is handling some of the more complex issues that are emerging as the alliance establishes an office in Dhaka and begins its factory inspections and training programs.

WWD: What is the count on factory inspections at this time?
Ian Spalding:
Well, it’s a moving target, but as of Wednesday, 508 inspections have been done and 119 are remaining. It’s really important to keep in mind that doing inspections is incredibly complicated. We use electrical engineers, fire engineers, structural engineers and prior to the establishment of the alliance, there were individual companies that did their own inspections. We did a review of those inspections and found that some of those were completely ineffective and some were not very good at all. Others were very thorough and largely equivalent of the alliance-led inspections. So when we talk about inspections of the 508 factories, that includes alliance-led inspections by our team in Bangladesh with seven local firms and some previous inspections that Wal-Mart, Gap, Children’s Place and few other companies have done themselves and that have been accepted for their equivalency. The total number of factories to be inspected is 626.

WWD: Does it seem realistic to inspect all of these by July 10?
It does. We’ve made a commitment and we will fulfill it, but it’s also important to mention that the inspection is the start of a very long journey of remediation. It doesn’t mean that we don’t go back and evaluate a factory in July or September if there is a need to reevaluate a factory or in order to prove that the factory has remediated. There will be a need for some ongoing inspections to happen after July. But we have to have a milestone and a target, and that target is July 10, one year from the founding of the alliance. We are well on our way and we are confident that we will achieve it.

WWD: How have employers reacted to inspections? Have they been against them? Do they see them as cultural imperialism?
It’s hard to say all factories think the same way. Some factories are going to be incredibly scared and frustrated and anxious about anything that we do. They’re scared of what the ramifications are, they’re scared of losing the business, etc. The others are going to be quite comfortable because they see this as a benefit and a way to reassure themselves that their factories are safe. From our perspective, what we’ve done, which is different from other initiatives that are out there, is that we have really brought stakeholders along, we have BGMEA [Bangladesh Garment Manufacturers and Exporters Association] on our board of directors, we’ve done a fair amount of outreach to the industry to establish good relations with them; in addition, we’ve provided many training and orientation sessions for factory owners so that they can understand what we’re doing.

And the last thing is we have really partnered with Bangladesh firms and we have an office with Bangladeshis in Bangladesh. The assessment firms are local, which is very different from some of the others, which only hire foreign firms and bring in foreign inspectors — we don’t do that. We provide local firms and local engineers with international oversight and support and that is a very different model. This is trying to address the need to build long-term sustainable solutions that are built by Bangladeshis for Bangladesh.

WWD: From your earlier reports, it appears that about 40 percent of factories are in shared spaces. Is that the most complicated part to handle?
Well, it is a complicated issue. Shared spaces, or multitenant or multipurpose buildings, are actually at a uniquely higher risk than other factory buildings. One reason for this is because they are not purpose-built, which means they are built for commercial or a residential building and they are retrofitted to become an industrial building. The other issue is that in a multitenant environment, you have to coordinate between different tenants. For example, if an alarm goes off on the second floor, that has to work across the entire building and the fire safety measures need to be throughout the building. So the position of the alliance is that multitenant buildings are perfectly acceptable so long as we have access to the entire building, so long as fire safety and structural safety and electrical safety is maintained through the entire building and not just for the factory floor.
WWD: Is it likely that the accord and the alliance will be able to agree to each other’s terms of inspections?
It is certainly our hope that we will not duplicate inspections and we have an agreement that we will work together to figure this out. Now, it is the principles that often need to be worked out — we have the same standards. That’s the good news, but there’s still some work to be done to determine whether we have the same assessment protocols. Now, we may do the same evaluation and we may use a ferroscan to check the  column strength, the concrete strength and they may not do that, or vice versa. So to make sure we are comparing apples to apples, we have to review each other’s assessment protocols and look at the qualifications of the firms we have respectively appointed, and look at the way we train workers and worker representatives. After that has been done, then we will be in a place to be more comfortable with each other’s inspections.

But the other thing to keep in mind is that we’re not talking just the alliance and the accord. There  is the National Tripartite Plan of Action, NTC, which is doing factory evaluations through the Bangladesh University of Engineering and Technology, BUET, but today’s BUET factory is tomorrow’s alliance factory. So we have to have a mutual recognition of each other’s inspection reports of the alliance, the accord and the NTC. That way we’re truly ensuring there is no duplication of inspections.

WWD: Does it need a lot more dialogue and negotiation to ensure there is no duplication?
It does need a bit more dialogue and negotiation. The ILO [International Labor Organization] has taken up this task to try and harmonize the assessment protocols in all three initiatives and the way in which we involve workers and worker representatives in the process.

WWD: How about the association with labor unions? Hasn’t that been a weak link for the alliance?
In April, we expanded our board to add additional labor leaders. I think the key thing is that we solidified our involvement with the local trade union movement in Bangladesh, and that’s not a small achievement. As you know, a trade-union community is emerging and it is certainly growing, as it should in a country where there is an uneven balance of power. Now we have terrific trade-union representatives who are advising us on our board of advisers and they are a great resource to ensure that we involve workers and worker representatives in a more effective manner.


WWD: Factory owners are very concerned about the remediation and feel they’re not getting enough help from either the accord or the alliance.
The alliance has committed to paying workers 50 percent of the first two months’ salary if a factory is shut down, and this was done recently.

The other major area of remediation is for fire doors and sprinkler systems, for which there are no manufacturers in Bangladesh, they just don’t exist. So we organized an Expo to bring in the fire door and sprinkler systems companies — we had more than 3,000 participants. We also realized that the cost of those doors and sprinkler systems was very high and partly the reason they were so high was because the government taxes the fire equipment, so we wanted to address that by saying, “Let’s create a local market where they can produce and sell this equipment but let’s also reduce the cost of remediation by eliminating the duty on the equipment.” So we worked very hard on that so that the government eliminates or significantly reduces those duties.

The last thing I’ll say, related to remediation, is that we have assembled individual member companies that have made a commitment to make available $100 million in low-cost loans and that’s a real commitment, so that if a factory needs money to buy equipment or upgrade their electrical system, they will have access to capital to do that. As you may know, the cost of capital in Bangladesh is between 14 and 18 percent through the local banks and through our mechanism, we are providing low-cost loans that are either interest-free or 2 to 3 percent, rates that are unheard of in Bangladesh, so that factories can begin the heavy work of remediation.