It’s not just Bangladesh anymore. The focus on factory safety is being stepped up in countries worldwide as brands and retailers begin to translate the tough — and valuable — lessons learned over the last four years in Bangladesh.
After the collapse of Rana Plaza in April 2013, global brands and retailers came together to work out safety parameters that would help the industry in Bangladesh, the world’s second-largest apparel exporter after China. More than 1,100 workers died in the building collapse, adding to concern about the deaths of workers in a series of earlier factory fires, including 111 fatalities in the fire at Tazreen Fashion Ltd. in November 2012.
Following the Rana Plaza disaster, the Bangladesh Accord for Fire and Building Safety and the Alliance for Bangladesh Worker Safety were formed, the former grouping mainly European brands while the latter was primarily made up of U.S. based retailers and brands. Both organizations will complete their five-year mandates in 2018.
Analysts believe that the days of irresponsible sourcing are over, and the global apparel industry, worth an estimated $1.7 trillion last year, has no choice but to tighten and better monitor its outsourcing safety criteria the world over.
In February, for example, German retailer KiK Textiles and Non-Food GmbH rolled out a new initiative across 30 of its factories in Pakistan to evaluate safety procedures and plan on remediation. Patrick Zahn, chief executive officer of Kik, flew into Karachi to launch the program. “We want to create a working environment at our Pakistani suppliers in which no one should fear fires, building collapses, or other accidents that could be prevented with reasonable health and safety measures,” he said at the time.
“In Bangladesh you had essentially a series of workplace casualties; workplace fatalities and accidents, with both factory fires and structural collapses,” said Jennifer Bair, associate professor and associate chair of the department of sociology at the University of Virginia. “So basically you had brands putting money into initiatives for fire, electrical and structural safety of the factories and working with the owners of the building to address problems that arise. Nothing like that had ever been done before, so it was pretty unprecedented. I think in that sense the Accord and the Alliance are really remarkable in terms of what they conceived and set out to do.
“There’s a lot of debate about how successful they have proven in terms of the pace of the inspections and remediation but I think that even the critics and the skeptics of the program have to acknowledge that this was a massive, ambitious undertaking that has also been unprecedented in terms of the scope and scale terms of the private sector really taking into account the failure of the public sector and the government in particular to enforce its own laws and regulations,” Bair added.
She said that what could be generalized about the lessons learned, or what could possibly be replicated in other contexts, was essentially the degree to which “you had brands working together to pull this off.”
Sean Cady, vice president of global supply chain and responsible sourcing at VF, observed, “We are finding that we have similar challenges around the world.”
He explained these challenges didn’t necessarily relate to geography or countries but that there were certain trends related to smaller factories versus larger ones, and older versus newer plants. “Indeed our data shows we have more challenges on structural integrity, fire safety, etc. with older factories than newer factories. And that’s true across the world in all the countries where we’ve conducted our assessments. In developed countries we don’t necessarily have structural issues because there are robust building codes, there are assessments and permits, but in many of the developing countries in which the supply chain operates, building or electrical codes are not necessarily well-developed. Alternatively, there are strong codes on the books but the enforcement of those codes or the permits against the codes is not a very robust system, so they don’t necessarily meet the needs or are not being complied with,” he said.
Ian Spaulding, who heads Elevate, a company that provides engineering and inspection teams that have worked in Bangladesh, and now in other countries, said many of the global companies have incorporated some of the critical standards through their entire social compliance audit programs.
“I think the reality is that many of the member companies of the Alliance or the Accord are saying, ‘We have to take some of the experiences of Bangladesh and apply them in other countries where we know there is also risk,” he said. “For example, when their auditors visit China, they look for fire doors, fire separators and egress routes — that has been happening the last few years. But I think what is happening now is that companies are also looking at all the different sourcing countries and seeing that they have similar risk levels to Bangladesh. We have worked on different projects in other countries, but it is normally on a piecemeal basis, one factory here or there [does] the training, or [sets] the standards.”
The project with KiK in Pakistan is different.
“It is the first of its kind, it’s a big deal,” said Spaulding about the inspections Elevate is executing in the 30 Pakistan factories from which Kik sources. “Because it covers all the factories in Pakistan from this company, applying the same standards, methodology and approach. It includes graphic scans, UV scans, concrete test samples and all the things associated with that.”
Ansgar Lohmann, who is in charge of corporate social responsibility at KiK, told WWD that the project was now well underway. “The main idea is to transfer the key elements of the Accord of Bangladesh to Pakistan, in our factories which are mostly at Karachi, Lahore, Faisalabad and Islamabad as well,” he said.
“The initial idea came up when there was an earthquake in October 2015 and one of the biggest factories in the paper industry was affected at that time. Starting from that point we were thinking about what we could do in order to prevent upcoming incidents in the garment industry. As a result, we made up our minds that it would be good to transfer safety related to fire, electrical and structural issues from the Accord of Bangladesh to Pakistan in order to improve the workplace, health and safety for employees. That was the main idea behind the project.”
Although some labor unions attribute the program to the fact that KiK manufactured at Ali Enterprises in Karachi, which had a fire in September 2012 in which 260 workers lost their lives, Lohmann denied this and pointed out the court in Pakistan ruled that the fire was sabotage.
“KiK is spending 300,000 euros [$327,000 at current exchange] for this total project, covering almost 30 factories and we are expecting that the remediation will be completed within a one-year period, hoping that the timelines will be kept by each of the factories. At the end of the year, Elevate will revisit the specific factories — this means not the social auditing team, but the engineering teams — in order to convince themselves that all the findings have been settled,” he said.
Factory owners appear to be opening up to the new processes of inspection and remediation.
Lohmann explained that conversations were held with factory personnel to see if they were on board, and if they understood all the findings to move ahead to the remediation phase. “The responsibility of the remediation is on the side of the factories, which means that the responsibility for buying materials and the remediation is by the factories, although KiK paid for the initial assessment in full. Now, the job of KiK is to push the supplier and the factories in the right direction,” he said.
The stumbling block in Bangladesh about the costs of factory remediation appears to be less of an issue in Pakistan.
Spaulding explained that the costs of remediation of the Pakistan factories are expected to be less than those in Bangladesh as the facilities are smaller, in many cases three-story buildings or less, and are often purpose-built for manufacturing clothing. “Many of the apparel sector factories, unlike those of the home textile industry in Bangladesh, tend to employ less than 500 workers and remediation costs are expected to be between $100,000 to $120,000, as against the average of $300,000 to $500,000 in Bangladesh,” he said.
The knowledge gained from Bangladesh makes it easier in some other ways. The Pakistan building code, for example, is very similar in terms of language, tone and standards to that of Bangladesh and India, Spaulding said.
“There are also unique differences,” he pointed out. “For example, the concrete strength requirements in Pakistan are stronger than that of Bangladesh. So we are modifying our protocol to incorporate the national building code. On other factors, especially related to fire safety, there are no requirements of fire doors for fire separation, egress routes, or specifications on the way the building is designed to cope with fire in the national building code. In such a case, we believe the standard to be inadequate, as in Bangladesh, so we are using the harmonized standards from the Alliance and Accord and applying those in Pakistan.”
VF’s Cady said that after Rana Plaza, the company began examining more responsible sourcing initiatives and what could be done to enhance its engagement with factories around the world. VF was a founding member of the Alliance.
“About a year-and-a-half into our experience with the Alliance, VF realized these issues could not be just isolated to Bangladesh. There must be electrical or structural challenges at government factories around the world. And one of the things we did was that we sat back and thought a little bit about how we could use the breadth of our supply chain reach across the world to create change. We began an initiative we called Critical Life Safety, taking the exact same standards from Bangladesh that we developed in the Alliance, from structural integrity of the building to fire safety and fire evacuation, to worker training and to electrical safety of the factories to every single supplier in our supply chain,” he said.
VF has been conducting inspections in almost 1,000 factories in 45 different countries to this end. “Our assessments around electrical and structural and fire risk in factories go well above a typical social compliance audit, these are true engineers that go out and assess the factories by a global engineering firm at VF’s own cost, full electrical, structural and fire safety risk assessment at every single factory in our supply chain,” Cady said. “We found that countries have different levels of risk, but some of the challenges that we’ve seen in Bangladesh are identical to those in other countries.”
Citing an example of a factory that was audited in Brazil, Cady said the VF inspection team found a significant structural issue in one of its walls. “We evacuated workers from that portion of the factory immediately, the same day of the audit, because the risk was so significant,” he said, adding that the factory owner was “completely on board with the initiative, and brought in a structural engineering company and quickly fixed that wall to put workers back to work within a few days.”
A similar situation in Egypt, where an audit found imbalanced electrical systems because the factory transformer was overloaded, could have resulted in an electrical fire in that factory. “We could not predict whether or not this would result in a fire, but at the end of the day if you lost that transformer you would have lost production. The factory would have had to shut down until they could replace the transformer, and could have resulted in lost production for weeks as well,” Cady said.
But there are lessons from Bangladesh that could be harder to replicate, analysts observed.
Bair at the University of Virginia pointed out that while there has been a lot of discussion about the ways brands approach issues like labor compliance, for example in the supply chain, it is being done based on different company or factory guidelines, and fixed on more individual terms. “But they haven’t really cooperated much in terms of trying to come up with collaborative solutions to what are really pretty common problems in a lot of ways,” she said.
In addition, the initiatives by separate companies don’t quite cover situations related to shared factories, in which several buyers source from the same factory.
Many of the KiK factories in Pakistan, for example, are shared factories with other buyers from Europe and the U.S. This has long been a complaint by many of the factory owners in Bangladesh, that the needs and specifications of different buyers can be overwhelming.
Asked why KiK did not undertake the factory remediation in Pakistan in collaboration with other retailers, Lohmann said the Accord was not ready yet to “transfer this initiative by themselves over to other sourcing countries,” although these discussions did happen. “Since the Accord was not ready we said we want to originate this on our own,” he added.
But in a major change since Rana Plaza, when workers tragically lose their lives in a horrific factory accident, the onus of responsibility is now often being shared in a global context. For example, while the Pakistan court ruled the fire at Ali Enterprises was a result of sabotage, KiK agreed in September 2016 to a $5.15 million payment in long-term financial assistance to those affected by the fire.
Early inspections worldwide also are meant to pre-empt tragedies.
Another important issue that emerged from the cooperation and collaboration among brands in Bangladesh is related to transparency.
“The Accord and the Alliance have pushed the envelope on transparency in ways that could be generalizable beyond the particular situation in Bangladesh,” Bair observed, referring to the details provided by the web sites about factory inspections, including the problems that were identified.
As companies look beyond Bangladesh to their global supply chains, perhaps the best way to continue progress is for a single industrywide body. Bair pointed to the model followed by the Better Work Programme of the International Labour Organization as a potential way forward. Another path might be through IDH, a sustainable trade initiative based in the Netherlands. A program by the organization called LABS — which stands for Life and Building Safety Initiatives — is expected to focus on the assessment and remediation of the structural, fire and electrical risks, as well as the evacuation readiness of apparel manufacturing plants worldwide.
As VF’s Cady pointed out, “Even though VF has conducted these types of assessments and remediation throughout our supply chain, we see the need for the industry to work together on this and we’ve been instrumental in pulling together the industry or pulling together the third party in the Netherlands to lead the group globally. IDH has already worked powerfully in the industry and they are a great facilitator and convener.”
Meanwhile, as the five-year term of the Accord and the Alliance nears its close, the way forward is being debated extensively in Bangladesh itself.
The launch of the Remediation Coordination Cell (RCC) at the Pan-Pacific Sonargaon Hotel Dhaka on Sunday is being seen by factory owners and the Bangladesh government as an attempt to merge the work of global brands and retailers with local authorities.
The RCC also has a more immediate mandate of overseeing remediation of 1,293 garment factories that are part of the National Initiative. These were factories not under the purview of Western brands and retailers, which have inspected more than 2,230 factories in Bangladesh. The RCC is supported by the International Labor Organization (ILO) with funding from Canada, the Netherlands and United Kingdom.
Speaking at the launch of the RCC, Mujibul Haque, state minister for labor and employment, said the term of the Accord and Alliance does not need to be extended as the RCC will oversee workplace safety.
“The government is fully committed to ensuring the safety of the garment industry and all who work in it,” he said. The RCC will help facilitate knowledge transfer from the Accord and Alliance and build the capacity of government officials for a sustainable inspection system, he added.
Global trade unions, governments and non-governmental organizations have been watching with mounting frustration at the slow progress of the National Initiative, which initially monitored more than 1,549 factories that were not producing directly for European or North American brands or retailers. More than 200 of these have closed. The number of factories remediated under this initiative are not yet available, are mostly based on self-disclosure by factories, and still need to be verified.
Earlier this year, Commerce Minister Tofail Ahmed was categorical in his statements that the government would not extend the stay of Accord and Alliance beyond the expiration of their current tenure in June 2018.
“We will take our own responsibility in 2018,” he said. It is a sentiment that has long been echoed by the industry in Bangladesh.
However, global trade unions have been expressing their concern and interest in extending the Accord for another five-year period via the negotiation of a renewal of the agreement for 2018 to 2023.
Marking the fourth anniversary of the signing of the Accord on May 11, Clean Clothes Campaign noted that it was “crucial to safeguard and build upon progress made so far” as the Accord entered its fifth and final year. In the memo, Clean Clothes Campaign and three other witness signatories of the Accord outlined why a second Accord was needed and some important ways to strengthen it further. Recommendations included developing ways to deal with anti-union violations; covering other parts of the supply chain, including spinning mills; severance pay to workers whose factories close, and increased transparency of brand-supplier relationships.
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