Is there another, and rarely commented on, way in which
retailer practices have contributed to the spate of garment factory
catastrophes in South Asia over the past year?
It would be unrealistic and cynical to attribute the pace at
which Bangladesh apparel exports have soared since the Tazreen fire in November
to publicity for low prices the country has been receiving: however cynical an
observer might be, garment orders cannot be switched on that quickly. In the
first six months of Bangladesh’s current financial year (July-December), apparel
exports (in US dollars) were up 8.5%, but growth has been in double digits ever since,
and hit 20.7% in June.
In our view, there is a link though. That link (which applies
to the Ali Enterprise fire in Pakistan as well) is the little-discussed, but difficult
to understand, decision by management on the spot to order work to continue
amid evidence of a likely imminent disaster.
Universally, commentators in the West have attributed those
decisions to “greed” and those condemnations have gone unchallenged. But
observers at the Razzak Plaza building on June 27 saw factory workers beating a
TV reporter up for reporting it was unsafe: engineers that day confirmed it was
dangerous and the building, and the factories within it, remains closed. So why
do people, in a city with a long history of factory accidents, treat evidence
of more unsafe buildings so lightly?
One reason, of course, is that if you’re very poor, there’s
always going to be a temptation to run risks. Personally, I can’t imagine being
in a factory like Rana Plaza, after seeing a TV programme the previous day
about how unsafe it was, and working there nonetheless. Or, in a city with a long history of factory fires,
accepting a foreman’s claim that a fire warning was a false alarm. But I’ve
never lived on $38 a month.
There’s a similar motivation on the part of management.
It’s now clear that a contributory factor in the current disasters has been the
awful coincidence over the past year of booming orders, an uncertain Western retail
environment and a massive collapse in public order in Pakistan’s and Bangladesh’s
biggest cities.
There’s a horrible commercial risk in being a garment
manufacturer these days. You get the order from Walmark or whoever and you
think you’re going to make money. You buy the raw material they tell you to – and
there’s a guarantee you’ll get the full price for the finished garments within
so many days of your delivering those garments to a ship or truck at the time
specified in the contract. But if, between getting the order and shipping the
goods, production is disrupted by power outages, raw material being delayed en
route or access to your factory blocked by violent rioters (in other words if
you’re a normal Dhaka or Karachi factory), you’ll be left with a huge pile of
unsellable garments and a whopping fabric bill you’re going to struggle to pay.
Sometimes, the Western retailer will allow a shipment delay.
But if he’s worried sales aren’t going to be as rosy as he expected six months
ago, he won’t – or he’ll fine the factory so much it might have been better for
the manufacturer if the order had been cancelled.
Now there are hundreds of things that can delay production.
Hundreds of reasons why factory owners get neurotic about getting a whopping
debit note. And hundreds of reasons why an owner might want to subcontract
production elsewhere – whatever a customer’s book of rules might say. Hundreds
of reasons, too, why a manager in a garment factory might, idiotically, choose
to assume an alarm bell is ringing because the alarm’s not working properly.
Most of those reasons have nothing to do with greed: but
they’ve got a lot to do with a manager’s terror a faulty alarm is going to
bankrupt him – because that’s what will happen if he stops production for a day
on an already massively delayed job. By some estimates, it was impossible to
work in most Bangladesh factories in the first three months of this year for
fully one-third of the working days available.
Now none of that excuses lethal decisions. But it explains
why factories can make stupider decisions when they’re busy than when they’re
not. And it also means that Western buyers wanting to stop the cycle of deaths
in South Asia have to try to break the cycle of orders often not being able to
start production until so close to the delivery date that corners are cut. And it
reminds buyers that a political climate assuring public order is just as
important a factor in evaluating a factory as low prices or decent transport
infrastructure.
There are times too much work CAN be bad for business.
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