Entering the new year, the initiatives to improve factory safety in Bangladesh’s apparel sector have been evaluating their progress.
This story first appeared in the December 30, 2014 issue of WWD. Subscribe Today.
Twenty months after the collapse of Rana Plaza, the tragedy that claimed the lives of more than 1,100 workers, WWD spoke to the leaders of the initiatives that aim to ensure the safety of the almost 3,500 garment factories in Bangladesh. These include the Alliance for the Safety of Workers in Bangladesh, the initiative of 26 brands and retailers, mostly American; the Accord on Fire and Building Safety in Bangladesh, the consortium of 190 brands and retailers, mostly European and some American, and the Tripartite National Action Plan, with the Bangladesh government taking responsibility for the remaining factories, with inspections led by the Bangladesh University of Engineering Technology and supported by the International Labour Organization and funded by the Dutch and British governments under a $24.2 million grant revealed last year.
The Bangladesh Garment Manufacturers and Exporters Association, a powerful body of factory owners, continues to be central to all negotiations and moves toward greater safety in the industry.
RELATED STORY: Bangladesh Estimates Factory Repairs Will Cost $3B >>
Factory inspections completed so far include 1,106 by the Accord, 587 by the Alliance and 606 by the National Tripartite Committee, led by a team from BUET. The Accord and the Alliance have 340 factories in common, for which inspections completed by the Alliance were understood to be taken as the guiding point, to avoid duplication. While the Alliance and the Accord completed their inspections in July and September, respectively, the NTC, which has an estimated 1,700 factories to evaluate, is still completing its inspections.
All three initiatives have had to agree on safety measures involving structure, fire and electrical systems. This approach has taken considerable negotiation, with the various parties working together with representatives of different government ministries to effect the changes. Reports of discord between the Accord and the Alliance have been widespread over the past year, but the ultimate goal has generally papered over the differences.
At the Apparel Summit in Dhaka earlier this month, Prime Minister Sheikh Hasina pledged her support to continue the process of change. Factory owners also have been working through the BGMEA, with a renewed focus and a goal to grow the industry from revenues of $24.5 billion in 2013-14 to $50 billion industry by 2021, the year Bangladesh celebrates its 50th year of freedom.
The garment industry has helped Bangladesh maintain an economic growth rate of 6 percent for almost a decade and provide employment to about 4 million workers, 80 percent of whom are women.
Here, updates on the three main initiatives:
THE ACCORD IN FIRE AND BUILDING SAFETY IN BANGLADESH
The Accord, a legally binding agreement signed by more than 190 companies from 20 countries in Europe, North America, Asia and Australia; two global trade unions, IndustriALL and UNI; numerous Bangladeshi unions and with the International Labour Organization acting as the independent chair, completed inspections of 1,106 factories in September.
Rob Wayss, its executive director, spoke about the progress and the concerns that remain.
WWD: The Bangladesh Garment Manufacturers and Exporters Association has said the Accord is not doing enough, and they need more help with remediation and on several other counts. Are they telling you that, too?
Rob Wayss: We do a lot of work with BGMEA to get their support for the Accord and for the remediation. The Accord puts a tremendous amount of effort in making sure that the financial element for the remediation is understood and applied in practice.
With every single factory that is inspected, we meet with the owner or the owner’s representative, together with the lead brand, to explain the process after the inspection, how the Accord verifies things and what support we need from them and what they can expect from us. In those conversations, we inform the parties of their obligations and discuss the finances and of our requirement that, before the corrective action plan (CAP) will be approved, they have to confirm — both with the factory owner and the brand — that the financing for the remediation is confirmed. We also require them to provide us information on the composition of the remediation.
In many cases, it is self-financed.
The BGMEA has criticized this, saying that the brands aren’t meeting the requirement of the Accord, that they are not providing support to the factory owners. And we’ve asked BGMEA if they have information on any specific cases in which the factory owners or one of their members approach one of our brands for support for remediation and if there was either a refusal to discuss or refusal to provide support for the remediation. If they gave us that information, we would investigate and intervene; if necessary, we would escalate it.
WWD: The lending money that the International Finance Corporation put forward earlier this month through VF Corp. appears to be understood by the industry in Dhaka to be linked with the Alliance.
R.W.: No, we’ve worked actively with the IFC for the past year. We’ve learnt of the possibility of an IFC instrument investing here, met with them, shared the information with our steering committee, shared the presentation in one of our steering committee meetings, and there is an interest in them by several of the Accord brands.
We’ve done a series of Webinars with IFC and the Accord staff. We’ve had about 300 of our signatory companies participate in the Webinars, and in speaking with the IFC, it appears that 10 of our brands are well into the discussion of setting up an instrument. There are a couple that have already been set up that will be announced soon. So, we’ve been working with them for the better part of a year now. So it’s not an Alliance initiative. The IFC has worked with the Alliance and the Accord, and any one of the brands, the Accord or the Alliance, can speak with them about setting up an initiative.
WWD: Has the Apparel Summit this month been helpful in clarifying some of the issues and differences among the various stakeholders, including the Accord?
R.W.: The summit is more of an industry promotion event than anything. I mean, people in the community know that inspections have taken place, they know that the initial ones have finished, they know that remediation costs money, and they want to figure out where the money is going to come from and what the options are for getting the money or for getting the support. And I think that’s what the session on remediation addressed — on how this can happen.
WWD: In April, factory owners appeared to be resistant to inspections, but now they appear to be glad for them and ready to move forward. Has that been your experience, too?
R.W.: Clearly, the inspections took place, and there wasn’t a tremendous amount of resistance — some noise, but not a tremendous amount of resistance in terms of practical purposes.
And on the remediation stuff, it varies. I would say, by and large, the factory owners are going about it and being fairly sincere. Some of them have expressed the need for some financial support, and we are facilitating those discussions or putting the brands and the factory owner together so that discussions take place.
I would say that the bigger issue that we will have to deal with is people not meeting timelines, whether through lack of effort or [for] legitimate reasons; I think there will be some cases of both. But I think it’s not so much that people aren’t going to fix stuff — they know they have to fix it. I think it’s wanting to get more time to fix it and then, obviously, finding the means of support to make this happen.
WWD: So, what’s on the top of your worry list at this time?
R.W.: I would say — I don’t think it’s going to happen — but I don’t want to see large-scale failure to remediate within reasonable timelines. And, again, I don’t think we’re going to see that. But it’s something I think about, and we’re doing everything we can to prevent it from happening.
I certainly don’t want to see timelines on remediation not being met because there wasn’t sincere discussion on financing to begin with, like that factory owner needed help and either didn’t ask for it or the discussion on it was not substantive and then — four months later, when they’re supposed to have fire doors installed and fire-alarm systems — nothing’s getting done or not getting done adequately, and the factory owner says, “I can’t do it because I don’t have the resources. I need some help.” I hope that doesn’t happen, and, again, we’re proactively doing this stuff to prevent it.
On the safety and health committees, the election of worker representatives is, I think, going to be a sensitive subject and requires a prominent role by the government. The government should be the one to oversee those elections and serve the regulatory functions if there are any irregularities in the elections. It’s important for the government of Bangladesh to step up and do that.
WWD: The numbers that BGMEA is saying — about $250,000 per factory and $3 billion for all the factories — are they correct? Is that fair?
R.W.: We don’t really have an average per factory because there really isn’t one. It depends on how many floors, how many doors, how many meters of wiring for the alarm system; it depends on whether they will have to put a sprinkler system in; it depends on, structurally, if the building is fairly sound and there’s not a lot of column strengthening that needs to take place. So, we don’t give an average because it can vary so dramatically.
WWD: It’s the same in terms of relocation?
R.W.: Again, are they proposing a factory that is five or 10 stories? How many doors are there going to be in the factory, how many square meters is the floor going to be — without that, you don’t know. So, what we do is, we provide information that we’ve been gathering on costs of common inputs, so you do the math. Here’s a standard-size fire door of this dimension, which costs this much; the installation for [that] fire door costs somewhere in this area; a meter of sprinkler system can be purchased and installed for this much; the computer components for a central fire-alarm system cost this much; the cabling per meter costs this much; the jacket of a column costs this much, and then you have to do the multiplication based on this. That kind of stuff is what we provide.
WWD: Will you be working with the formation of new trade unions and worker representation at factories?
R.W.: The trade unions are signatories, but we don’t do any union organizing or anything like that. The trade-union signatories are equal partners, so they get all the inspection reports. We’re investing in the IndustriALL structures; we’ve done a lot of trainings with their activists, with their worker-outreach people, with their trainers.
We’ve worked with them to select a group of people to set up meetings with the workers from the factories to go through the inspection reports and get their contact information and share ours, so that we have access to workers in the factory as part of our monitoring when the remediation is taking place. We rely on them to do outreach to workers when the worker committee representatives are elected — that will be happening in the next year. They do outreach with members on how to handle the safety complaint mechanisms of the Accord. But we don’t require a union at the factory. We’re not supporting IndustriALL to do union organizing.
WWD: What has been the hardest to initiate on the ground so far?
R.W.: I don’t find any of it particularly hard to work with — not the BGMEA, nor the government. BGMEA is a member-based organization, so they have to represent their members. The people that serve on the board of directors, they are elected people, so there is a bit of politics that comes into it, which sometimes affects our work, so…on a day-to-day level, from the political leadership level, we work well with BGMEA. Our engagement with the government is more with the national-effort project with ILO and the National Tripartite Committee. We have a good working relationship with them.
WWD: What would really help on an immediate level?
R.W.: From the government perspective, it’s important for the rules on the labor law to be published [and sent] to the safety and health committees. They need to lay down what the rules are going to be for the safety and health committees and how they are going to get elected. That will be very helpful to everybody because we have to establish them in our factories. So, I think the work will get more intensive with the government when the elections start taking place — that’s going to be a big deal. These will start in early 2015.
WWD: So, 2015 is essentially going to be about meeting timelines on remediation?
R.W.: Yes, the remediation and monitoring the remediation is going to be a major part of our work, and preparing and establishing the safety and health committees and training the people who will be on the committees will be a big part of our work going forward.
We’ve also done a lot of upgrades on the Web site. It will be launched this month. We’ve done a lot of graphics on it and significant change in layout.
WWD: The fire in October at the Mega Dyeing Ltd. factory happened after inspections were completed by the Accord. Aren’t inspections expected to eliminate these risks of fire?
R.W.: I don’t think we are going to be able to eliminate accidents in the garment factories, and I would expect that, yes, we would see fires and other industrial accidents in the factories. Our job is to eliminate the ones that can be avoided through practical safety measures.
But I would say, realistically, it will take 12 to 18 months to remediate the factories that we’ve inspected. Even when they are remediated, we won’t be removing all hazards — it’s a cat-and-mouse sort of thing. You also have to allow for possibilities of backsliding, and you have to allow for repairs made on the electrical systems to not be maintained.
I mean, we can’t eliminate the possibility of industrial accidents. I would suspect that we’ll see some fires and, hopefully, again, that these will be dramatically reduced and that workers won’t be injured when they do break out and that there will be fire doors if they do, so that people can get to safety faster.
It’s terrible, of course, anytime we [hear] that any of the factories we have inspected have a fire or an accident. But we need to work with purpose to make sure that these things get fixed and that we’re tracking and supporting so that they do get fixed.
WWD: Are there things that people on the global level don’t understand about what’s happening on the ground?
R.W.: They need to know that factories in Bangladesh are being made safe. There’s been a lot of progress in one year, and the commitments that the Accord has made are being met — not without its problems, not without its complication, not without setbacks or occasions where we’ve had to enforce the Accord — but commitments have been met, and we’re working hard to make sure they are met. And by doing this, the factories that produce for the Accord brands are being made safe.
They’re not safe yet, but they are being made safe.
THE ALLIANCE FOR BANGLADESH WORKER SAFETY
The Alliance, which has 26 North American apparel companies, retailers and brands, including Gap Inc., VF Corp., and Wal-Mart Stores Inc., completed inspections in its 587 factories in July. An additional fire-safety training program for 1.1 million workers and managers was part of its focus.
Ellen O’Kane Tauscher, former U.S. Congresswoman and the Alliance’s independent chair, spoke with WWD about the tasks ahead and what it will take to achieve safer garment factories in Bangladesh.
WWD: What is your immediate concern on the ground in Bangladesh?
Ellen Tauscher: In order to do business, you need to do two things: have a business license and belong to the BGMEA [Bangladesh Garment Manufacturer and Exporters Association]. So, it makes sense that you’re going to have the bifurcation of the factory business: the factories that are taking the exports, the flight to quality, the factories that are higher end, more sophisticated, safer and have better everything, [and] then you’re going to have the domestic factories. I want to continue to have these aspirational goals [and] continue to have factories do better and more.
WWD: Will there be 4,000 factories in the future?
E.T.: It’s not my job to figure out how many there should be. Business interest and competition and the normal business cycle will dictate whether there will be 4,000 factories or 3,500 factories. I want each of those factories inspected — every one of them.
I want subsequent initial inspection and subsequent remediation. I want them inspected every year, and that’s got to be the job of the Bangladesh government. And they’ve got to decide that there can’t be a shadow factory business; there can’t be some factories that have kind of gone under because, with that, you’re going to take the whole thing down.
WWD: Are these issues being understood at the local level?
E.T.: These are the kind of awakenings that the ministers and government…and the BGMEA and the brands and the buyers [are having]. There is a lot of sophistication after [the collapse of] Rana Plaza, when American and European brands began to understand. When something bad happened and they were called and asked, “Were you in that factory?” they kind of knew where they were, but they really didn’t know where they were. You can’t do that any more. You gotta know where you are. We require it as a part of this binding agreement.
WWD: In this time, have you seen the business model in Bangladesh really maturing and changing?
E.T.: The change has been enormous just in the past 18 months, causing buyers to focus. And requiring them to only be in factories that are in the inspection process creates a lot more visibility [and] also creates people making a lot more smart choices, the flight to quality.
So, what we want is to pull everybody up. There will be some that won’t make it. But [the process] has to be an organized endeavor of the government, BGMEA and these business owners.
You have to create a floor —regardless of the other vagaries of the business model — that you cannot have anyone sourcing, even if it’s just domestic, from a factory that is uninspected. That is such a material change. That will take us well beyond the five years, but it will change everything, and that is how we start to stabilize business and people’s expectations in the business. You start to mature the business model, and you start to mature the business, and you empower and educate the workers.
WWD: Has the Bangladesh government held up the right end to make these changes possible?
E.T.: Yeah, but you always have to have a healthy tension in a relationship because you have to be able to say, “Yes, I know it takes a long time, and it will take six months. But I can’t let it be seven because I have five years. So, let’s get this time line, and let’s understand how to queue and sequence the elements of a major plan.”
For instance, I don’t want to do any more inspections. I want to get my inspections done, which we’ve done. I want to sit down and get these agreements with the factory owners, CAP, and then move on to the remediation plan. But then there will have to be ongoing inspections. What requires them, and who is going to do them? You don’t have to be a buyer to do that. Let’s get the inspectors hired, and by the end of year three, we want that they are doing them on their own. We’ve got to get them doing annual inspections.
We’ve got to get them to a place where not only their capability and capacity is increased to take over from us but [they also can] take over from us without having any degradation of the standards. You can’t be nose down when you need to be nose up.
WWD: You’ve agreed on the contentious issues of the common factory approvals with the Accord?
E.T.: Yeah, we’ve agreed, and then we — me and my board — will have some meetings with the senior leadership of the Accord to get past some of these political issues that are wasteful and distracting because, in the end, the Accord and the Alliance already have an agreement on how to go forward. We’ve already created the standards and the aspirational seven stories for fire suppression. So, the question is, what do we do about the other 2,000 factories that are still under the Bangladesh purview to manage?
WWD: What has been the biggest challenge for the Alliance these past months?
E.T.: The biggest challenge has been — because this is a hybrid conception, never created before — to do something that is tough to do: cultural and social change and half a world away. All of the things that make this hard. So, actually, getting down to it was difficult, but we were pretty clear what we had to do. We set very significant milestones for ourselves. We just went about getting it done.
The toughest part still is the political challenge.
WWD: In Bangladesh? Or do you mean in the U.S., as well? Or do you mean politics between the various segments?
E.T.: Yes. It’s the political tension between the Bangladesh government and the Alliance and the Accord [and] the factory owners — and all of those [relationships] have been managed very well, I think. And then the relationships back at home, people’s expectations…and, of course, the relationship between the Accord and Alliance.
WWD: Things haven’t been working very smoothly with the Accord on the ground. Is that frustrating?
E.T.: No. I can only affect what I can do. We’ve decided that we’re going to take the high road, and we’re going to be results-oriented, and we’re going to keep our promises. I cannot set expectations for somebody else. I can’t require people to do things unless I have an expectation that I can meet because we have an agreement. But we don’t have an agreement with the Accord.
If anything, I think that people are starting to see that, from the very beginning, we’ve always decided to be results-oriented and take the high road and not be drawn into a political fight — that’s really about certain constituencies of the Accord who don’t like the American brands. I’m not going to change the fact. I don’t have to. They are not my constituency. My constituency is here.
WWD: What aspirations and goals are you setting out for the coming months? Are these common goals with the Accord and the Bangladesh government?
E.T.: I think there is general awareness and acceptance that — so, we’ve got maybe 600 factories; they have maybe 1,300 or 1,400 factories out of 4,000. So, there are now all these other factories, anywhere from the high teens to 2,500 factories that the Bangladesh government has to inspect. What we’ve been very aware of from the very beginning is that, if there should be, God forbid, any tragedy in a Bangladesh ready-made garment factory, it doesn’t matter who is sourcing from it. So, we’ve set some aspirational goals, including having fire-suppression equipment on the seventh floor, and this is not part of the building code in Bangladesh. We would like to have some legislators pick it up and take a look at it because there are two things that you accomplish when you do that: [Using] either fire doors or fire-suppression equipment like sprinklers, first thing you do is, you give people on upper floors a chance to get out. But equally important, fire-suppression equipment allows people to go to work the next day. And there is something to be said about being able to go back to work the next day.
WWD: So, is the awareness of the timeline — of five years in Bangladesh — becoming clearer now?
E.T.: Yes, we’ve already been there 18 months. We’re out of this business in three and a half years. There is already the sustainability compact, [and] there is the National Tripartite Action plan. We are now working with the brands, the Accord and the Alliance to sit down and say, “This is the timeline in five years, and we’re doing our factories.” We know now that there is a flight to quality. We know now that there are 1,700 of 4,000 factories where the Europeans and Americans have congregated, there is a sophisticated plan, so there is a real going business. These factories are going to now pass through other tests and will get more export business. But what is the government going to do or the BGMEA?
WWD: What do you see as the real shift in attitude in Bangladesh now that the Alliance has done all this work already?
E.T.: At the panel [at the Apparel Summit in Dhaka earlier this month], I’m sitting there — we’re making the factory owners spend an average of $250,000 per factory. Their complaint is that there is a business environment where they are not competitive because of the high interest rate. They’re not saying, “They are making us spend a quarter of a million dollars to make their workers safe.” No. They are complaining to the commerce minster that it’s costing too much to borrow. They’re not saying, “That lady is making us do it.”
That’s how the seismic shift has been: People have absorbed this, they have accepted it, and they have moved on. It’s amazing. It’s stunning.
I have more factory owners coming to me, saying, “I am doing it faster. I am doing sprinklers on the seventh floor.” They understand that fire suppression is a double benefit: It gives people time on the upper floors to get out, but it also gives them a place to come back the next day. If you’re waiting for the fire brigade to come, holy mackerel!
Also, this is a way for workers to return to work the next day. It’s a win-win. It’s an insurance policy. I remember the first time I described it [last] summer, six months ago: There was a little resistance when I explained it as [being] the best policy for workers and for you, because you’re not waiting for the fire department to come. They’re going to find a way to do it —they’ve brought it all on board, they’ve absorbed it. It’s a huge, huge, huge shift.
WWD: Is that what it’s costing, between $250,000 and $300,000?
E.T.: Yes, for the American- and European-sourced factories, and these are the flight to quality — better managed and better resourced, better everything.
WWD: And you’re helping to find the money for remediation?
E.T.: So, this is the test of sophistication of the entire enterprise of this public partnership: our ability to bring resources of both corporate-quality lending and the IFC [International Finance Corp.]. Everyone has been looking for imaginative, interesting and a, frankly, new way of accessing capital. We realized early on that for many of the factory owners who look and appear to be needing credit from their buyers — [that] was the wrong message. So, we had to turn it around and make sure that they didn’t think that we were questioning their ability to be a resource. The remediation is extraordinary and a new kind of expense.
And there is a premium on doing it quickly. If you can figure out how to afford it in your business model but borrowing some money at a lower cost gets it done faster, that’s an incentive for everyone to do that. There were some conversations with the factory owners to make sure they didn’t feel vulnerable. We worked with VF, but Wal-Mart and Target, The Gap and others are involved.
This is innovation. This is people really saying, “OK, let’s just figure out how to be creative. Let’s figure out how to do something in a new way.” And IFC, to their credit, was right there and saying, “OK, let’s figure out how to do it.”
WWD: How much interest are they going to charge?
E.T.: You know, it’s a market variable. But it’s very competitive and a much better rate than [at] HSBC and other banks.
WWD: Now that fire and safety issues are being addressed, will the Alliance take up trade unions and workers’ rights as an important issue?
E.T.: It’s always been an important issue. Our bylaws insist that workers have the right to organize, whether it is [as] a labor union or a workers’ health-benefit committee. We promote that workers have the right to organize, and they have to make their own choices on how they do it. We’ve said that right from the very beginning. We encourage the workers to organize.
WWD: Part of the criticism of the Alliance is that workers are not a priority.
E.T.: Look, do we have some labor leaders who are never going to like the Alliance? Apparently, there are. I think the test of the thing — whether you have any class or whether you have any credibility — is whether you can actually take someone you don’t like, see something that they do that they do well and say, “I guess you do that well.”
And unfortunately, apparently, there are some people, both in the United States and Europe, who refuse to accept the fact that they have got “yes” for an answer. These are companies that have said and promoted and done more. We’re the only group that pays people if they lose their job. So, where is the big labor organization called the Accord? They’ve got tens of thousands of people who have lost their jobs without compensation. We’ve compensated everybody who’s lost their job for four months.
So, you know, I think it is a little hollow to be claiming that there are people all for labor rights, while people are out of work because of the actions they have had to take because the factory that they are working in is unsafe, but they’re not paying them. Only the Alliance is paying them. We’ve paid lots of people.
You know, people just don’t want to accept the facts. Their biases are showing, and it is unfortunate, but the truth of the matter is, our record is unequivocal.
WWD: Is there a sense of satisfaction about the achievements so far?
E.T.: Are we satisfied with the progress? No. But we are working closely together. And if you ask, “Should anybody be satisfied with the progress?” the answer is no. You have to have that tension there. You’re always trying to get something done, but it doesn’t have to be adversarial because we have the same goals in mind, and we’re really confident that we’re really in a good place.