DHAKA, Bangladesh — The Bangladesh apparel industry has an ambitious goal: $50 billion in sales by 2021.
This story first appeared in the December 9, 2014 issue of WWD. Subscribe Today.
That was the message delivered by Atiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association, at a three-day Apparel Summit here aimed at assessing the progress the industry has made following the tragedies at Rana Plaza and Tazreen Fashions, which have claimed the lives of more than 1,200 people over the last two years. The summit drew global retailers, academics, nongovernmental organizations, ethical groups, brand heads and politicians to discuss the way forward for the sector.
Instead of mourning, the first two days of the summit provided a sturdy and introspective look back at the last 24 months in which the industry has been shaken to its core, and has risen again with determination — with factories that have been inspected and have plans for transformation in coming years, with global brands and retailers as obvious partners rather than fickle friends.
Islam spoke repeatedly about the industry’s future, giving the crowded panels and the quiet audience the $50 billion dream by 2021, the year that Bangladesh will celebrate 50 years of freedom. That gives the apparel industry, which is now valued at $24.5 billion, six years to almost double in size.
Bangladesh remains the second-largest producer of ready-made apparel in the world, after China.
Prime Minister Sheikh Hasina, speaking at the opening of the summit Sunday morning, endorsed the idea of a $50 billion industry.
The industry panels that followed over the next two days, often with eight or nine speakers a session, discussed what it would take to propel the sector toward that goal.
“We are happy to know that the Accord, Alliance and National Action Plan inspected 2,193 factories,” the prime minister said, acknowledging the global assistance that has come to help make the apparel sector safer over the last 18 months.
The Alliance for Bangladesh Worker Safety is a coalition of 28 North American retailers that last year made a five-year agreement to help improve garment factory safety in the Asian country. The Accord for Fire and Building Safety in Bangladesh is a five-year legally binding agreement between mostly European retailers, labor and nongovernmental organizations.
The prime minister said the government was in the process of building new economic zones and was paying attention to the need for better infrastructure, including more dependable electricity supply. However, she spoke her mind about the need for international retailers to pay more for their garments. She said that increasing prices would automatically help the workers.
This was a recurring theme during the conference, as factory owners and union leaders like Nazma Akhtar said that while demanding better working conditions, brands and retailers also should pay more. The theme echoed through several sessions in which the need for negotiation, pricing products better, and simply knowing when to say “no” came up as issues that brands and suppliers need to work through.
Issues about productivity were reexamined.
“Last year, Vietnam exported garments worth $17 billion with its 1.3 million workers, but Bangladesh earned $25 billion with 4.4 million workers,” the BGMEA’s Islam said. Looking at the target ahead, he added that diversification had happened — and the shift from low-end products to higher-end ones was slowly taking place. He said that 30 percent of total garment exports are now high-end products.
Several other ministers spoke on the summit’s opening day, a sign of government support for the process, including A.M.A. Muhith, finance minister; Amir Hossain Amu, industries minister; Tofail Ahmed, commerce minister, and Abul Hassan Mahmood Ali, foreign minister.
The prime minister also inaugurated the second International Building and Fire Safety Expo, which was organized and led in part by the Alliance to help factory owners access better and cheaper fire-safety equipment. More than 50 exhibitors attended the event, which executives said was the largest gathering of fire and safety vendors in Bangladesh so far. There is little or no certified equipment made in Bangladesh; the Alliance has been helping factory owners get access to better equipment from abroad.
“We have seen great progress — from factory owners, safety experts, government, ILO and buyers — into transforming Bangladesh’s ready-made garment industry,” said Ellen Tauscher, independent chair of the Alliance. “But Bangladesh has to work every day, every week to sustain the efforts made by all stakeholders in the last one year.”
Her words appeared to buoy the audience, a reminder that Brand Bangladesh needed some sustained effort and focus. Another reminder: The Alliance and Accord had three-and-a-half more years, and the industry needed to gain its strength before that.
“No one should risk their lives while working in the sector — and there should be a certainty and credibility about this,” Tauscher said.
It was inevitable that the future of the Alliance and the Accord would come up for examination. Calls for both groups to work better together came up time and again. There were also several questions about the fact that the two groups were talking compliance with their factory inspection standards in other countries, but were so far enforcing them only in Bangladesh.
There were several American academics at the event, including Sarah Labowitz, codirector of the New York University Stern Center for Business; Rachel Heath, assistant professor in the department of economics at the University of Washington, and Thomas A. Kochan, professor of work and employment relations at the Sloan School of Management of Massachusetts Institute of Technology.
“Your time is running out,” Kochan said, cautioning that price competitiveness from being the lowest-cost labor only ever lasted a certain time. “As we try to move up in terms of price, sophistication and technology, we have to make sure that we bring the workforce along with that process. We have to engage employees and their representatives in this process. So, for management, it means shifting business strategies.”
There were plenty of voices from within Bangladesh, including commerce minister Ahmed, who entered his session in time to hear an impassioned plea to bring interest rates down. Noting that these were between 16 and 22 percent — too high to support a strong business segment — it was agreed that the government needed to help.
Mostafa Golam Quddus, former president of the BGMEA, said that high interest rates were pushing factory owners into bankruptcy.
“More than 500 garment factories have already been closed because of high interest rates and another 500 are on the brink of closure, if the existing interest rates continue,” he said. “We are now inside the banks’ belly. They are eating us.”