Albania: still there even if the lights aren’t

Albanian factories' difficulties with erratic power are nothing new. Indeed back in January of this year, it was reportedly a reason many factories in the Korca area were contemplating upping and moving to Macedonia.

But Albanians are pretty good at making this kind of threat. In September last year, they were all going to go bankrupt, they claimed if the minimum wage went up to $185 a month. But they're all still there. In the first quarter of 2008, their apparel exports grew 23%, in spite of the threatened pull-outs. Fell back in Q2 (4.5% down on 2007) – but threats of the industry's death are very much exaggerated

What do you do when the lights go out?

Albania has become the latest country where erratic power supplies are undermining garment factories' ability to do their job.

The problem attracted most attention in South Africa, where it affected the entire economy. But, with far less publicity, it was affecting garment industries all over the world even before fuel prices took off. Sheer shortage of generating capacity has undermined businesses in Vietnam, and the World Bank estimated it would cost Bangladesh $10 bn to provide enough power . Power availability is oftren so unreliable in India that companies invest millions to build their own supply. Stealing power in cities like Pakistan's Islamabad is so widespread, the devices for doing it are actually on tourist guides' itineraries. But authorities from Taiwan to India have tried to fight it.

Fuel price hikes, though, have made the problem a lot worse, as rationing was extended. Most exporting countries subsidise electricity, and often delayed passing oil and gas price rises on to industrial consumers. But the price of fuel soared for the back-up generators many factories keep.

Why you don’t need to go to the Third World to find sweatshops

The story about alleged sweatshops in New York is shocking. But it really isn't surprising.

Every couple of years, London newspapers carry similar scandals about local sweatshops. In Italy, 27% of children born in Prato – the centre of the country's textile industry for at least 700 years – are Chinese and Italian TV ran an expose of the conditions they face in the town's factories in late 2007.

Actually, it's often easier to run really awful sweatshops in rich countries than in poor ones. Usually, just about all the workers are illegal – and even if they're not, they can easily be unaware of their rights. Threatening them with the police may actually be more frightening than it would at home. The New York case seems to have exploited workers' extreme vulnerability to pull the wool over major buyers' eyes – buyers who, when inspecting a factory in a poor country, would have been far more sensitised to fraudulent records, intimidated workers and all the rest.

And it's not as if these places only exist because of competition from low-wage countries: the term 'sweatshop' was invented to describe US factories. And there's been a disgracefully sloppy assumption all sweatshops are Asian – and all Asian factories are sweatshops – since a lamentably woolly and misleading report by Britain's Catholic Fund for Overseas Development back in 1998.

They're there because frightened, vulnerable people can easily be exploited. And having garments made in a rich country is no guarantee that's not going to happen

Bossa: We told you so

We've been carrying stories that Turkish conglomerate Sabanci was trying to sell off Bossa since 2006 And carrying stories of Sabanci's denial since 2007 It even sparked one of our earliest Clothesource Comments

Predictably, they've sold it. Now they're denying Yunsa's up for sale.

Are the Cambodians crying wolf?

Getting hard data about the health of Cambodia’s apparel industry is exceptionally difficult, as both factory owners and unions go from one minute predicting imminent catastrophe to prove that wages ought to go up (unions) or stay low (management), to insisting on the opposite a minute later.

Even the basics are tough to be sure about. One minute the trade association is claiming factories are being forced to close (so the government shouldn’t increase the minimum wage): the next it’s saying they aren’t really (so, buyers, don’t lose confidence in us). It’s very easy to find something to be gloomy about in today’s climate – especially in a country so dependent on garment exports to the US.

But that’s really no reason to believe every word businesses and unions say. In fact, Cambodia’s exports to the US grew 5% in the second quarter of 2008: exports to Europe grew 15%. The industry’s temporary problem is the same as everyone else’s: with price pressure and a year of US dollar depreciation, income from exports isn’t growing as fast as manufacturers’ costs. And what manufacturers can afford to pay workers isn’t growing as fast as workers’ cost of living, or wages in other areas of the Cambodian economy.

Meanwhile, Cambodia’s real problems – above all, its clear vulnerability to inflation and the near-impossibility of dealing with its fractured union system – remain. And no-one’s doing very much to deal with that.

Customs recruiting spin doctors

"It's politics pure and simple"

That's how Laura Jones of the US Textile Importers' Association described a US Customs' decision to reduce China's quota for 2008, because of illegal imports from China in earlier years purporting to be from elsewhere. Which seems pretty harsh: US Customs have a job to do, there's no doubt there's illegal garments being smuggled in, or being imported as if they'd come from somewhere without quota restrictions, and since there's zero chance US importers are going to be short of Chinese quota this year, a reduction doesn't matter.

But Ms Jones has an important point to make. US Customs claims to have found $80 mn of illegally imported clothes in 2006 and 2007. Which is a fleabite in he $145 BILLION of clothes the US imported over the same time – and given that imports are well below quota, illegal imports just aren't a real issue anyway. And there's a bit of a history of well-staged raids – on one occasion apparently synchronised with a completely unrelated raid by EU enforcers – that seem to owe more top publicity value than the seriousness of the crime.

No-one's condoning illegality, and no doubt a bit of publicity is needed from time to time to show the officials are on the job. But there's a running complaint from US importers of heavy-handed enforcement, and far too frequent detention of imports for trivial documentation problems that turn out to be ill-founded anyway.

Meanwhile, the real problem is probably elsewhere. Indonesia's imports from China look absurd – and although Indonesian textile manufacturers comp[lain every month, they do little about the common belief much of those illegal imports just get shipped to the US and Europe as if they were Indonesian.

The enemy in all this really isn't innocent US and EU importers

What's the use of junk statistics?

Do you believe hundreds of people died in in Bangladeshi garment factory accidents this year?

Well the Bangladesh Occupational Safety, Health and Environment Foundation (a trade union-funded pressure group) says it does.

Well, not quite. Its definition of an accident at work is anything that happens travelling to or from work, or as a result of a riot anywhere near your factory. Or, to be more precise, anything reported in the papers as happening. And it won't answer my emails asking quite how many garment workers actually died.

But who cares? Now there's another junk number activists can throw around: not only does the garment industry pay rotten wages - which is why the queues outside Bangladeshi factories trying to get jobs are so long. Now you can claim it kills hundreds of people a year too.

Now one death in a factory is one too many. And I'm all in favour of any attempt to name and shame factory owners who lock fire exits, allow poor safety standards around cutting equipment, or do anything else to endanger their workers. But silly numbers, plucked out of the air, about "hundreds of fatalities" do nothing to help serious attempts at improving worker safety.

Here's who they do help. They help the enemies of workers in poor countries: the near-racist newspaper columnists who seize on every example of poor working conditions to persuade their gullible readers to buy clothes made in the West - and put another few hundred Bangladeshies ouyt of work at the same time. Junk statistics help hypocritical "NGO workers" who draw nice salaries to campaign against non-existent abuses. And they help businesses competing with Bangladeshi workers' employers.

But they're a barrier to real change. Next time - and let's hope it'sa long way off - a factory collapses because corrupt officials have allowed it to be built where it shouodn't, or a fire breaks out, an overload of junk statistics will be yet another reason the right steps won't be taken.

On a subject as sensitive as this, junk statistics really can kill

Brands close Indian sourcing offices

Some pessimism emerged about India's future as a sourcing location as Li and Fung's acquisition of Timberland's sourcing operation led to the closure of Timberland's separate Indian sourcing office. This decision – which has nothing to do with India as a place to buy clothes from – coincided with rumours in India that Liz Claiborne was reviewing the future of its Indian sourcing office, and came shortly after the decision of UK retailer Next to close its Bangalore office – while keeping its Delhi one.

The reality seems a lot more pedestrian than any vote of no confidence in India. Local specialists like Triburg and Fifth Avenue can offer better service, cheaper, to many Western brands and retailers than a directly-operated outpost of a European or American company. Li & Fung seems determined to buy up every sourcing operation it can lay its hands on. And, with retail sales slowing, sourcing is subject to stringent cost review like any other business operation.

Not all businesses are cutting back, however. Marks and Spencer announced the expansion of its Bangalore office to source apparel for its Indian chain. Announcing the decision, Mark Ashman, Chief Executive Officer, Marks & Spencer Reliance India said, "70% of the volumes of what we sell at our [Indian] stores will be made in India."

How permanent are China’s export rebates?

It took China an extraordinarily long time to agree to increase tax rebates on clothing and textile exports.

The reason seems to be a serious argument from China's Ministry of Commerce that the slowdown in the country's apparel exports to the US really isn't such a bad thing. The boom in China's economy over the past few years means there just aren't those hundreds of millions of unemployed Chinese keen to work for nothing we used to hear about, and – from the high-minded perspective of the strategy mandarins – textiles are a business China ought to be getting more or less out of sooner or later. And – as hoity-toity State planners always love to say – the textile and apparel industry really needs to consolidate into fewer, bigger businesses. The fact that Communist state planners have been pushing for bigger textile companies for decades and half the world – from most of Africa, through Egypt to Russia – is covered in big Communist-planned textile factories put out of business by China's nimbler entrepreneurs is irrelevant. Planners always know best, whatever the evidence says

That's not quite how the country's Ministry of Industry sees it: Industry is a lot closer to the reality of complaining businesses, export-oriented companies teetering towards bankruptcy and processions of factory owners complaining they just can't get price increases from their customers that come anywhere near their cost increases. So Industry has won a battle, and export rebates have gone up

But Commerce is better at speechifying, and knows it'll win the war sooner or later. "It could
be a temporary measure, as the government will continue to push forward
the upgrade of its industries."
said
Mei Xinyu, one of its men.

This raises two interesting points. First, China has just the same squabbles between businesses, government and different interest groups as Europe or America. One of the reasons its economy works now and didn't under Mao is that governments listen to those arguments before making decisions – which is also why decisions in China can take so long. It's no easier to forecast Chinese government behaviour than any other accountable government's.

Second is the crucial importance of China's one-child policy. Forecasters disagree about the details of all this, but if you've got an economy growing at 8% a year while your population is close to declining you really are going to run out of workers sooner or later. And some workers – like nimble young women near the coast – are probably going to be hard to find a lot sooner rather than later.

Now the last thing China wants to see is a real decline right now in the number of people earning a reasonable living (and therefore not tempted to go rioting) in clothes factories. Those export rebates are unlikely to disappear in the next few months. But Commerce is going to gain the upper hand: it's unlikely we'll see any more state subsidies to exporters – and don't expect the rebates to be with us forever.

As we're forever saying, China is going to up its productivity. It really will get more competitive – but we still argue that buyers should keep a pretty good repertoire of non-Chinese suppliers in their system

Can Bangladesh really be that unsafe?

"Accidents in work places, mostly in garment factories, killed at least 953 people in Bangladesh in the six months to June", Reuters reported the Bangladesh Occupational Safety, Health and Environment Foundation as announcing in early August.

The claim appears extraordinary. While it is believable that there are accidents in Bangladesh's garment manufacturing, the apparent allegation that around 500 people died from them in just six months seems to beggar belief: apart from the inherent improbability of the claim, any more than one or two deaths a year would be instantly publicised around the world.

But the Foundation – not, as in most Western countries, a government department, but a trade union pressure group – declined to give any evidence for the claim to The Source, and declined to publish a copy of the press release Reuters received. The death claims include deaths travelling to and from work, deaths during riots near factories and "other incidents like lightning and animal attacks in their workplaces." Since stories like this often get a life of their own, readers might wish to remember the Foundation's extraordinary silence about the evidence for it, and its implausible definition of "accidents in workplaces" if ever hearing it repeated by an activist