WASHINGTON — The Alliance for Bangladesh Worker Safety has come a long way in the year since it was created in the wake of two factory tragedies in Bangladesh.

This story first appeared in the July 23, 2014 issue of WWD. Subscribe Today.

The challenges it will face in the next four years of its five-year commitment remain significant. The alliance’s annual progress report, while citing significant strides, comes at a tense time for all stakeholders. The government of Bangladesh, in particular, is facing increasing pressure from the U.S. to quicken the pace of improvement of safety and worker’s rights in the garment industry.

And labor activists remain encouraged but critical.

The alliance, which includes Wal-Mart Stores Inc., Gap Inc., VF Corp. and Target Corp., released its first annual report on Tuesday, touting the progress it has made to raise and improve fire, electrical and structural standards and empower workers in Bangladesh’s garment industry to prevent more tragedies like the Rana Plaza building collapse and Tazreen Fashions Ltd. fire that claimed the lives of more than 1,240 workers and brought global scrutiny to the country and the brands and retailers making clothing there.

Among the achievements the alliance cited Tuesday were:

• 100 percent inspection of a total of 587 factories used by its member companies.

• Fire and building safety training of one million garment workers and managers in Bangladesh.

• Recommendations to the Bangladesh government, which swiftly closed 10 garment factories either fully or partially due to dangerous structural problems.

• Compensation payment to 1,000 displaced workers and extending the payment of wages from two months to four months.

• The rollout of worker emergency hotlines in a pilot project of 50 factories.

• Helping factories secure short- to medium-term loan guarantees and making $100 million available in low-cost loans to factory owners for improvements.

• Increasing to 97.8 percent from 39 percent the number of workers who can identify what to do in case of a fire.

“There is no question that important and steady progress toward a safer garment industry has been achieved this year, but our work is far from over,” said Ellen Tauscher, independent chair of the alliance, on a call with reporters. “As we move forward to the challenging task of remediation, the alliance will work in partnership with the Bangladesh government, labor, factory owners and other groups working on the ground to improve safety because we all have a significant role to play. We know that improving garment factories and ensuring the safety of workers isn’t going to happen overnight, but we are incredibly pleased with the progress at our one-year mark and we believe the right plan and partners are in place to create lasting change in Bangladesh.”

Earlier this month, a critical Obama administration said that Bangladesh failed to meet several criteria outlined in an action plan last year on improving garment factory safety and reforming labor laws, thereby leaving in place a suspension of its U.S. trade benefits.

As part of the review of suspended trade benefits, U.S. officials cited serious concerns over the pace of safety inspections in garment factories by the government as well as escalating violence against labor activists.

On Tuesday, a spokesman from the U.S. Trade Representative’s office said: “We appreciate the efforts of the private sector initiatives…and support their work.”

But unions were circumspect in their analysis of the alliance’s progress.

“It’s definitely always good to have improvements,” said Celeste Drake, trade and globalization policy specialist for the AFL-CIO. “There are workers who are in factories that have been inspected that have been declared safe and they know they are in a relatively safe workplace and that is good. But there have also been a lot of numbers flying around about inspections that have been completed and yet we hear from the U.S. government that the Bangladesh government has not hired all the inspectors it needs to.”

Drake said this can’t be just a “tick the box” exercise.

“The Bangladesh government has to have a functioning inspection system in place so it can go back and do periodic reviews as things change,” Drake said. “That is the only way we will know if they have really stopped adding floors and putting heavy machinery on them. There has to be a regulated process for this. Certainly it is good to have improvements, but at the same time there are areas outside of this where I think the situation is measurably worse for workers — in particular with respect to violent repression of unions. Those numbers have gone up. That is the kind of behavior that it would be helpful if brands step up in this and say that is not acceptable behavior in factory contracting.”

Alliance officials insisted Tuesday that progress has been made, while acknowledging that substantial improvements still need to be secured and sustained.

“A year ago when we began our effort, obviously there was not a foundation that was established in Bangladesh to create a safe garment industry,” said Ian Spaulding, senior advisor for the alliance and senior partner in Elevate Ltd. “There was no common standard that factories were required to meet for fire, structural and electrical safety. The inspections that were happening were varied, often duplicative and left too many factories out of the inspection process.

“One year later, it is not the same industry,” he noted. “There is a foundation that has been built to drive the changes throughout.”

More than 50 percent of the factories have begun remediation to achieve compliance with the new harmonized safety standard, the alliance officials said.

The inspections have also led to the closure of 10 alliance factories (four within the past month) by the Bangladesh government, either partially or completely and part of the next phase of the alliance’s work will be stepping up monitoring efforts of factories that need to remediate to improve fire, electrical and building safety.

The five apparel factories that were fully closed were RSI Apparels Ltd., Jan Fabric, MAM Garments Ltd., Bay Fashion Ltd. and That’s It Ltd. Those that were partially closed were Maks Fashion Ltd., HKTG Garments (Pvt.) Ltd., H.B. Fashions Ltd., Valient Garments Ltd. and Clifton Cotton Mills Ltd.

Even with all of the progress cited, the alliance officials were quick to point out the challenges that lie ahead.

“Several challenges remain as the group looks to continue progress over the next four years,” the alliance said. “Uneven government capacity, unauthorized subcontracting, limited presence and acceptance of trade unions, and a lack of modern safety equipment must all be navigated to achieve sustainable change.”

Spaulding said 98 percent of the factories lack sprinkler systems and more than 95 percent lack proper fire doors. Many factories are fitted with pipes and fire hoses that are only two inches in diameter instead of the four inches required, which “cuts in half the water capacity available to extinguish fire in the building,” he said. In addition, many of the factories have electrical systems that are not grounded, which poses significant risks.

“All of these issues and many more must be addressed,” Spaulding said. “That is where we will focus most of our efforts in the months and years to come.”

Spaulding said there is also a “limited pool” of qualified engineers in Bangladesh that are familiar with international safety standards, as well as a limited knowledge of modern safety equipment and practices on the part of factory managers.

One significant challenge facing factory owners is the cost of remediation.

Remediation costs run about $250,000 on average for most factories, but can run as high as $500,000 to $600,000 for factories in buildings that are seven stories or higher, which the alliance stipulates must install sprinkler systems.

“Now that we have 26 member companies that have tremendous clout, that do the vast majority of importing from Bangladesh, when a factory does not remediate, the consequences are that it is classified as noncompliant, and after an escalation procedure [if the factory still fails to remediate] the factory is terminated” and none of the other alliance members will be authorized to place production there, Spaulding said.

He noted that some factories have resisted remediating, but none have been deemed “noncompliant” to date and expects the bulk of factory remediation to take place over the next 12 to 18 months.

Tauscher said the alliance board approved the establishment of a compliance committee on Monday to oversee remediation in the second year of the alliance’s initiative.

At its peak in terms of total factories covered, the alliance companies reported using as many as 750 factories in Bangladesh, Spaulding said.

That number has since been pared down to 587, not because of non-compliant factories or companies pulling business out of certain plants, but because of seasonal production, inadvertent inaccuracies in the identification of the type of factories that fall under the commitment and a narrowing of the definition of core alliance factories, Spaulding said.

“What we have seen is consolidation,” Spaulding said. “When business moves to consolidate, that doesn’t mean a factory closes or is unsafe, it often means we can buy the same amount of product from fewer factories,” which is the case, he noted.

He also said consolidating the group of factories has given the retailers and brands more leverage in exacting remediation from factory owners.

Spaulding said the alliance is also making the entry of new factories more rigorous and expects approximately 30 new factories to come online soon due to seasonal demands.

He also noted that companies have not pulled orders out of Bangladesh, although apparel imports to the U.S., at least, are down 3.8 percent from Bangaldesh for the year to date, according to U.S. government.

“Preliminary estimates suggest we actually sourced more products from Bangladesh from the 26 member companies than last year this time,” Spaulding said.

Tauscher defended the alliance’s 12 to 18 month remediation projection.

“We closed 10 factories that had a risk to life and limb,” she said. “While they are getting remediated, we [approved] a new process yesterday…to make sure these remediations are not done in fits and starts and that there is consistent work being done.

“I think it is important to understand that we gave ourselves five years for a reason,” she said. “This is a very big lift. But I still think there is a lot to be proud of as we announce our annual milestones today.”

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