In the 15 months since the Rana Plaza factory collapse killed more than 1,130 Bangladeshi garment workers, the country’s apparel industry, which accounts for nearly 80% of its exports, has been under intense scrutiny. Western clothing companies, Bangladeshi factories, trade associations, and international labor organizations have negotiated labor reforms and safety modifications to prevent another such tragedy.
But making manufacturing work safer is easier said than done. Retrofitting factories is expensive, and some owners are balking. And much of the safety equipment, including fire doors, sprinklers, and safety lights, has to be purchased overseas—where more technologically advanced manufacturing flourishes—and can take months to arrive.
“It’s a reflection of the fact that Bangladesh is at the beginning of the chain for manufacturing.” said Sarah Labowitz, a research scholar on business and human rights at NYU Stern School of Business, and a co-author of Stern’s report on supply chains and sourcing after Rana Plaza (pdf).
Factory owners say that even when equipment is available domestically, it doesn’t carry internationally accepted safety certifications. “The main challenge in sourcing from local manufacturers is the lack of testing facilities available locally,” said Nabeel Ud Daulah, who manages knitwear factories for the Dird Group, which supplies to brands such as Marks & Spencer and Tesco. “It is difficult to substantiate the fire rating claims made by local manufacturers.” For that reason, Ud Daulah said, Dird generally purchases independently certified equipment from overseas.
That can be a maddeningly slow process. “It takes 90 days after you’ve made the purchase order from China, India or Dubai to get the fire doors imported into the country,” said Ian Spaulding, Senior Advisor to the Alliance for Bangladeshi Worker Safety—an organization of 26 North American clothing companies including the Gap, Walmart, Macy’s, and Nordstrom, formed in the aftermath of Rana Plaza.
According to the Alliance’s first annual report, the Bangladeshi government only recently responded to complaints from the alliance and trade associations about tariffs on safety equipment that was doubling or tripling the cost of necessary upgrades. About month ago, they eliminated the tariffs. Previously, an imported fire door from China cost about $961, according to the report. Now, that same door costs about $374. But even without the tariffs, the system is hardly seamless. The door is only produced in China once the Bangladeshi factory has placed an order and issued a letter of credit for payment—and then there’s customs and shipping. That’s why the whole process can take three months.
After completing fire safety training and inspections at 587 factories, the Alliance shut down 10 factories due to structural issues that rendered the buildings unsafe, Spaulding said in a conference call this week. “We feel confident that [the closures] were absolutely necessary to protect lives,” he said.
In addition to those closings, the organization issued correctional plans, addressing issues such as electrical wiring and emergency exits, for almost every inspected factory. The average cost of upgrades and corrections is around $250,000, said Spaulding—a steep price tag for factory owners. The organization is working with the International Monetary Fund to facilitate low-cost loans with funds from the member companies.
The Alliance is also trying to facilitate the safety upgrades factories are now required to make. It sponsors a semi-annual equipment expo in Dhaka, where suppliers can present their equipment to factory owners. Fayaz Taher, the entrepreneurial CEO of Bangladesh’s Fortuna Group—which makes everything from footwear to fried chicken—says local supplies of safety equipment are improving, but there is still a gap to fill.
“It is a big market opportunity for international firms to come form joint ventures to supply international standard safety equipment,” Taher said. “We have the necessary engineering capability and resources, as well as the materials. I am confident some smart entrepreneurs, investors, and brands can take this opportunity with the growing garments and manufacturing industry in Bangladesh.”