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Splits Develop Over Bangladesh Safety Plans

More European brands and retailers joined the Bangladesh fire and safety accord with unions on Wednesday, while the divisions grew among American companies.

WASHINGTON — There is no unity over Bangladesh.

This story first appeared in the May 16, 2013 issue of WWD.  Subscribe Today.

As even more European brands and retailers — along with a rare U.S. one, Abercrombie & Fitch — beat a midnight deadline and joined the Bangladesh fire and safety accord with unions on Wednesday, the divisions grew among American companies over an agreement on the issue.

“We are committed to Bangladesh and support industry-wide efforts to improve safety standards. We believe this is the right thing to do to bring about sustainable, effective change,” said Kim Harr, director of sustainability at Abercrombie & Fitch.

While A&F became only the second U.S. company to sign the IndustriALL Global Union-led agreement, other American firms outlined their own new initiative to address safety issues in the South Asian country. Their proposal comes a day after Wal-Mart Stores Inc. revealed its own plan to address working conditions in Bangladesh.

The “North American Bangladesh Worker Safety Working Group” on Wednesday unveiled the “Safer Factories Initiative” that will include short-, medium- and long-term strategic goals for making “meaningful improvements” to worker safety in Bangladesh. The initiative plans to establish a sustainable funding mechanism for training, upgrades of factory structures and ensuring the safety of new construction.

Unlike the IndustriALL accord, the new U.S. plan by American retailers and brands and six U.S. and Canadian industry associations is not legally binding and no companies have signed it. Six industry associations, representing hundreds of retailers and brands, comprise the working group. They include the National Retail Federation, Retail Industry Leaders Association, American Apparel & Footwear Association, U.S. Association of Importers of Textiles and Apparel, Retail Council of Canada and the Canadian Apparel Federation.

The tension between the groups behind the two accords escalated on Wednesday, with a war of words developing.

RELATED STORY: As Europeans Sign On, U.S. Retailers Divided Over Bangladesh Accord >>

Matthew Shay, president and chief executive officer of the NRF, made a scathing statement criticizing the binding IndustriALL accord, saying it “veers away from common sense solutions and seeks to advance a narrow agenda driven by special interests.”

“Retailers are committed to a plan of action that is both workable and sustainable,” Shay said. “The IndustriALL plan isn’t a plan at all. It gives no clear path to practical and immediate solutions to the challenges facing the Bangladeshi garment industry. It seeks major funding by private business without providing accountability for how funds are spent, as well as binding retailers to specific resourcing requirements without taking into account the impracticality of such a requirement. And it exposes American companies to a legally questionable binding arbitration provision, a process that serves only the unions, not the workers they represent.”

Judy Gearhart, executive director at the International Labor Rights Forum, said Shay’s comments were “misdirected.”

“The trade unions and labor rights groups and NGOs are very much united in this idea that we can’t continue with voluntary programs especially when it comes to worker lives,” Gearhart said. “I find it interesting they [NRF] are implying in their language here that this is all about the interests of unions and not about the interests of workers.”

Gearhart fired back, asking the NRF rhetorically, “And your interest is about the workers and not about the bottom line? Is that what you are saying? I think to put unions down as not being concerned about workers is misplaced.”

Gearhart said she believes there are two reasons few U.S. companies have signed the binding accord.

“I think there is a whole overstated analysis of the [legal] liability and I think Gap has played a leadership role and they have dug in on this,” she said. “The other piece is that American companies do not have the same history as European companies of valuing trade union partners.…The NRF says it will work with the government, brands and industry stakeholders, but that flies in the face of the whole concept of working in a tripartite manner in order to ensure workers’ rights and welfare.”

As the deadline to join the IndustriALL Global Union-led accord passed, general secretary Jyrki Raina applauded the more than 30 companies that had signed on.

But he also said, “We will not close the door on brands who want to join the accord after the deadline but we will be forging ahead with the implementation plan from today.”

He stressed that “those who want to join later will not be in a position to influence decisions already made. The train moves on and these companies will drive the process. There can be no uncommitted passengers because the stakes are too high.”

In a similar vein, UNI Global Union General Secretary Philip Jennings said, “This accord is a turning point. We are putting in place rules that mark the end of the race to the bottom in the global supply chain.”

But the retail unions’ umbrella groupings chief was critical of major companies that opted not to join the accord.

“Wal-Mart, the world’s largest retailer, is out of step. By not signing up, the Wal-Mart brand sinks to a new low. Equally, Gap’s refusal to join is a mistake that shoppers will not forget. We will make progress without them,” Jennings said.

In outlining its proposal, the working group of U.S. companies said, “The recent accidents at apparel production facilities in Bangladesh are heartbreaking and have strengthened our resolve to find practical and sustainable solutions to ensure the safety of garment production facilities and workers in Bangladesh and the viability of the Bangladesh garment industry as a sustainable manufacturer and supplier to markets around the world.”

As part of the short-term objectives of the initiative, the industry group said it plans to build on worker and safety education and training for fire prevention and workplace safety. The group said its initiative will also give more power to workers.

“The initiative will specifically empower workers to be cognizant of workplace safety concerns and equip workers to respond swiftly and appropriately to safety concerns. In order to maximize the impact of this initiative, buyers will develop mechanisms to share information on trainings to ensure that the training can reach the most number of workers and factories possible,” the group said.

The Safer Factories Initiative repeats many of the objectives laid out in the National Tripartite Plan of Action between government, owners and workers in Bangladesh brokered by the International Labor Organization in March. The U.S. plan calls for buyers to work in conjunction with the Bangladeshi government, factory owners and workers to develop and implement an industry standard on fire and building safety and conduct assessments of all factories based on the standards.

“Despite the best efforts of brands and retailers who routinely audit factories for a variety of compliance needs, and more recent efforts by many companies to conduct assessments focused on building and fire safety, much more work remains to be done,” the working group said. “Further, efforts to conduct these assessments have been hampered by lack of a clear industry standard for fire and building safety.”

Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel, said she does not believe the new U.S. initiative competes with the IndustriALL-led binding accord that 25 mainly European brands and retailers have signed. On Wednesday, Arcadia of the U.K., the parent of chains such as Topshop, was the latest to sign the agreement, bringing the number of companies that signed the binding and enforceable pact to 25 by Wednesday afternoon.

“What we have done is consolidate and focus on a single effort,” Hughes said of the U.S. proposal. “That will make a big difference in working conditions in Bangladesh because we have a consensus and commitment to the new initiative. I don’t see it as divisive from what the IndustriALL folks have done. It is a slightly different approach that intersects with what we are doing and we will move closer together with these best practices.

“From my perspective, this will be a binding commitment and 95 percent of what the Safe Factories Initiative is focused on overlaps with what the accord by IndustriALL looks like. But there were some key areas where we couldn’t develop a consensus,” Hughes added. “At the end of the day for associations, we think this will be a more successful initiative if it has the broadest consensus and all companies join together, versus an agreement that is only focused on the largest producers and top-tier suppliers. I think the two initiatives complement each other because they broaden the net of companies that are going to step up and make a public commitment to support more action in Bangladesh.”

The IndustriALL agreement with labor unions requires that companies mandate and pay for renovation and repairs to ensure factories in Bangladesh are made safe. The pact is a legally enforceable contract between companies and unions that will use binding arbitration to resolve disputes. It stipulates that companies will agree to independent safety inspections with public reports; mandatory repairs and renovations ensuring factories have the money to pay for all repairs, renovations and retrofitting by raising prices or paying for renovations directly; require factory owners that are considered top-tier suppliers to a brand or retailer to allow union representatives to have regular access to their factories, and terminate business with any factory that refuses to make necessary safety upgrades. It also requires “a vital role” for workers and their unions, requiring the establishment of health and safety committees in all covered factories, with worker representatives making up at least 50 percent of the membership.

The signatory companies are required to develop a full implementation plan within 30 to 45 days.

Arcadia, in revealing it had signed the accord, said, “As a large clothing retailer, we were deeply saddened by the recent events in Bangladesh, and our thoughts are with all of those affected.”

It noted that Bangladesh represents a small percentage of its total supply chain. Topshop’s purchases from Bangladesh are less than 25,000 pounds, or $29,430 at current exchange, to date this year.

“However, in order to show support for the initiative that this accord is proposing to undertake, we as a group will be signing up,” Arcadia said. “This will be done on the condition that we understand the final costs to us, which to date has not been made clear. As with any other commercial contract we sign, we reserve the right to review our participation if the accord does not achieve its stated aims within an agreed time scale.”

In Washington, Bangladesh Foreign Minister Dipu Moni met with Kevin Burke, president and chief executive officer of the AAFA and Obama administration officials.

“We feel it is important that factories there are safe and workers are safe and there is a record that factory owners are complying with the standards set by their government,” Burke said, noting that AAFA has a long-standing relationship with Bangladesh, and has conducted education programs on fire safety there.

“What I stressed with Minister Moni is the Bangladesh government needs to be open to our industry on what they are doing and how they are going through the process of shutting down factories that deserve to be shut down,” Burke said. “If they have building codes that are being violated, they need to address those building codes.”

Burke said he also stressed the importance of having an open, two-way constructive dialogue between brands and retailers and the Bangladesh government.

“It’s very clear to me that the government of Bangladesh is very serious about making changes,” he said. “This [the collapse of the Rana Plaza building that killed 1,127 people] was an unfortunate tipping point with the loss of lives. We do not want to see any more loss of life in Bangladesh. Period. We are looking at this as a collaborative effort to make certain it doesn’t ever happen again.”

Burke said the working group is seeking a long-term solution in Bangladesh. “One of the things our working group came up with is this safe factory initiative, which includes short-term, medium-term and long-term strategic goals. We are not going to fix the problems today.”

Officials from the U.S. Trade Representative’s office also met with the visiting delegation from Bangladesh to continue discussing issues arising out of the ongoing review of worker rights and safety concerns under the Generalized System of Preferences, a USTR spokeswoman said.

“The Bangladeshi delegation briefed USTR and an interagency U.S. team on developments pertinent to the review, including measures that the government and other stakeholders have announced in recent weeks following the Rana Plaza tragedy,” the spokeswoman said. “The information provided by the Bangladeshi delegation will be taken into account as the administration considers the next steps in the GSP review.”