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Ways of the World

Carol Stone, business economist & active Episcopalian, brings you "Ways of the World". Exploring business & consumers & stewardship, we'll discuss everyday issues: kids & finances, gas prices, & some larger issues: what if foreigners start dumping our debt? And so on. We can provide answers & seek out sources for others. We'll talk about current events & perhaps get different perspectives from what the media says. Write to Carol. Let her know what's important to you:

Wednesday, May 29, 2013

The Bangladesh Factory Collapse and Sustainability

The last issue we talked about on Ways of the World was sustainability.  We thought we would be moving on from that when we shifted to the garment factory disaster in Bangladesh.  But it seems not, as we find ourselves reading about "fast fashion" and "recycling clothes"; sustainability is a concern even for garments and fabrics.  Who would think?

The play-out of the factory collapse near Dhaka, Bangladesh, on April 24 continues.  As well something should that claimed over 1,100 lives.  We want to give you some of the backstory of that factory and of clothes-making in general in Bangladesh, and then we'll try to draw the link to sustainability.

1.  Garment production requires almost no skill, experience or education on the part of workers and relatively modest sums for the capital investment to get the operation going: just a space and some sewing machines.  So it is a very good way to get industry established in a new region.  Recall, as some writers did for us, that even the American colonies started their manufacturing activity during the Industrial Revolution with cloth weaving and clothes making, and industry in other countries often begins with garment factories.[1]

2.  Bangladesh has the lowest labor costs of any East Asian garment manufacturing center, a mere $38 a month minimum wage.  While this might sound to many readers more like an opportunity for exploitation, it in fact helps workers get a lift up out of poverty.  Our current source for this train of thought comes from World Bank research.  Statistical analysis has shown that if we account for the low level of education and little experience, these workers actually make a decent wage compared to other industries.  This is especially notable because the vast majority of these workers are women, who are automatically paid less than men.  This condition may not be desirable, but it is indeed better than abject poverty.[2]

3.  Labor costs in the biggest Asian producer, China, are rising and fairly rapidly.  There is no longer a ready surplus of workers, especially in coastal regions near shipping points.  In part, this is due to the one-child policy, now limiting the availability of younger workers.  Labor costs overall in China rose an average of 8.5% a year in the five years through 2011.  In sharp contrast, those in Taiwan actually fell 2% a year over the same period.[3]  The rise in Chinese labor costs is sending retailers to other regions to seek cheaper production sources.  Hence a rush to Bangladesh, Cambodia and similar areas.

4.  Safety regulations and building codes are in place for Bangladesh factories.  However, these are sometimes not enforced.  The specific building that fell, Rana Plaza, was constructed over a former pond where the landfill is sand, a kind of swamp then.  The building's generators were on the upper floors; when they were running, their vibrations could be felt in neighboring houses.[4]  The mayor of Savar, the Dhaka suburb where the factory collapse occurred, says, though, that there was such a rush to construct new factories that the local government did not have time to process the applications and inspect the new structures.  He was suspended from office within days of the disaster. 

5.  Retailers, located in markets far from production centers in the Far East, face complicated circumstances in responding to these situations.  Producers are generally independent companies, and while they are direct contractors with the retailers, they may subcontract with smaller firms for specific parts of the production process.  Thus, the retailers may be two or more steps removed from the actual site where cloth is cut and basic garments assembled.  Control is hard, even when there are good intentions.

Leading retail chains are taking a couple of approaches to the safety issue.  Wal-Mart is known to have basically a "zero-tolerance" tack: produce safely and meet our standards or we'll cut you off.[5] H&M, the Swedish chain with stores in the US, is trying to work directly with the factories to reform their practices.  Neither way covers everything, but there are heightened efforts to exert what control they can.

6.  At the same time, there has been a shift in marketing and consumer buying patterns in the US, the UK and Europe which call for speedier production of new clothing styles to offer at retail almost as soon as they are first shown in fashion shows.  Consumers and retailers seem to have adopted a new pattern of rapid changing of whole wardrobes.  One brand we read about has created five seasons annually, meaning there is total turnover of product lines about every ten weeks.  Thus, the emphasis in the production process is now on speed more than care and safety.  The trend in retailing is known as "fast fashion".  Maybe you are more aware of it than we are.

This is where sustainability comes in.  Besides labor and factory safety considerations, it takes lots of resources to make clothes.  The British newspaper The Guardian explained recently that it takes 1,500 liters of water to grow the cotton for a single pair of Levi's 501 jeans[5], oil to ship raw materials to factories and finished product to market and land, of course, all of which face intensifying demands.

H&M is a leader in an approach to this issue as well, with a recycling program at 1,500 of their stores.  Recycle clothes?  We've sometimes put old clothes in bins in shopping center parking lots or given them to church rummage sales, but this is a new, semi-commercial effort.  Turn a garment in with the store's cashier and get a coupon for x% off your next purchase.  The used garment can be sold to a recycling company that may well give them to charity or sell in second-hand stores, or the garment can be turned back to a manufacturer who uses the fabric and/or fibers to make new clothes.  Either way, the fabric is used again.  Since increasing numbers of customers have closets full of clothes already in this fast fashion era, this practice can help take some pressure off resource usage, including financial resources.[6]  Indeed, we personally encountered such a "trade-in" promotion at an Alfred Dunner outlet just this past weekend.

In sum,  the Bangladesh factory collapse was an awful thing.  In the aftermath, we are learning about world-wide clothing manufacturing and global retailers' efforts to manage their production with increased emphasis on worker safety.  Also note that while wages and union organizing were only a small part of our discussion, they are getting greater attention as well.  Some of these efforts by the retailers are not especially new, but all of them are putting more emphasis on the importance of working conditions.  We also see that we as consumers have something to do with the rush to produce.  Obviously we want clothes to be as low-priced as possible, and all the latest styles are "must-haves" for us.  Maybe we could slow this down a bit.  Do you suppose we could wear last year's shirts and capris or crops this summer too?

[1] Gladys Lopez-Acevedo and Raymond Robertson.  Sewing Success? Employment, Wages and Poverty following the End of the Multi-fibre Arrangement.  Washington, D.C.: The World Bank.  2012. Page 9.  This is a book placed in the public domain by The World Bank, intended for anyone to use for information on the world garment industry and poverty reduction.  Includes a chapter on Bangladesh. The Multi-Fibre Arrangement was a quota system that expired in 2005.  It was thought Bangladesh and Bangladeshi workers would suffer then as world garment markets opened up, but they did not due to its low cost structure.  This was, however, yet another reason for rushing in the construction of factories, so they could be among the first to meet demand. 

[2] Lopez-Acevedo and Robertson, page 8.

[3] China National Bureau of Statistics and Taiwan Directorate-General of Budgeting and Statistics, compiled by Haver Analytics, Inc.

[4] "Rags in the Ruins", The Economist.  May 4, 2013. Page 42.

[5] Jens Hansegard, Tripti Lahiri and Christina Passariello. "Retailers' Dilemma: Cut Off or Help Fix Unsafe Factories", The Wall Street Journal.  May 29, 2013. Page B1.  Online:  Accessed May 29, 2013.

[6] Oliver Balch.  "H&M: Can Fast Fashion and Sustainability Ever Really Mix?" The Guardian: .  Accessed May 29, 2013.

We also reference this introduction to the structure of world garment manufacturing.
Karina Fernandez-Stark, Stacey Frederick and Gary Gereffi.  "The Apparel Global Value Chain: Economic Upgrading and Workforce Development".  Duke University: Center on Globalization, Governance & Competitiveness.  November 2011.  Bangladesh is one of the case studies.

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Thursday, May 02, 2013

Wetlands, GMOs and Rogation Day Prayers

Last week on Earth Day, we spoke of Nature's Fortune and how businesses are prospering by making investments that enhance Nature and the environment instead of eroding them.  At the end, we made casual mention of two items that are worth more attention: built wetlands and GMOs.  There is actually a suitable church-calendar occasion for this further commentary on Nature, the upcoming Rogation Sunday and Rogation Days.  The Sunday is observed on the 6th Sunday of Easter in the Episcopal Church calendar and the Days are the following Monday, Tuesday and Wednesday immediately before Ascension Thursday; the petition is for blessing of crops as they are planted and for the stewardship of creation.

Ways of the World has offered prayers before at this time of year, especially since our current Prayer Book commemorates industry as well as agriculture in the prayers it presents.  This year, as we googled a bit on "Rogation" – it means "asking", as in "interrogation" – we came across commentaries from priests in rural settings in Alabama and in Wyoming who worry about this shift in emphasis away from agriculture and nature, fearing that it will lure people away from their role as stewards of Nature.  Perhaps.  But as our own current lessons are teaching, we now see that we can use this occasion as a catalyst for talking about both wetlands and GMOs as they clearly represent the meeting of industry and Nature.

Why Would a Company Build a Wetland?
In 1996, Dow Chemical was pressured by regulators to do something about water pollution at its Seadrift, Texas, plant; a new wastewater-treatment facility was clearly necessary.[1]  The company's engineers began the design work for a big concrete system they estimated would cost about $40 million.  But one of them had a different idea: "build" a wetland.  This would work because as wastewater flows through such a wetland, as the EPA's website explains, "it slows down and many of the suspended solids become trapped by vegetation and settle out. Other pollutants are transformed to less soluble forms taken up by plants or become inactive.  Wetland plants also foster [the development of microorganisms, which] transform and remove pollutants from the water."[2]  The Dow version at Seadrift occupies 110 acres and treats 5 million gallons of water a day.  This "green infrastructure" cost $1.4 million, a tiny fraction of the much more involved "gray" installation.  Wildlife also like these places, so here is one instance in which man has helped Nature along in at least a couple of ways.

You've read and heard plenty about how big companies, especially chemical companies like Dow, hurt the environment.  This is an example of how they are evidently coming around on this issue.  The EPA reports[3] that there are more than 1,000 constructed wetlands in the US and 5,000 altogether around the world.  Dow also has a one at Pittsburg, California, and their enormous plant at Freeport, Texas, is becoming an experimental center for a huge project with The Nature Conservancy.  Sustainability officers at many companies are now part of the main operational management, not just offshoots of P.R. or public affairs departments.  As seen in the Seadrift example, the company's bottom line got big help from the built wetland innovation, and such cost considerations are part and parcel of these decisions.  The lower cost way was the better way.

What Good Are GMOs?
The GMO issue is trickier, since not all the science on GMOs agrees about their safety.  They have also not been handled in the most helpful way by the companies that produce them.  Here's some of what we do know.  Genetically modified plants are meant to help food production in three ways.  They are intended to make the plants more resistant to insects so less insecticide is needed, they are meant to increase resistance to viruses so plant yields are greater and they are meant to make plants more resistant to herbicides so weeds can be killed without killing the plants themselves.[4]  These are all good things.  But the chemical formulas to achieve these characteristics must be varied for each growing region according to the soil content and the weed situation in each locale.  So GMO production and distribution are more customized, leaving farmers and consumers more dependent on the individual companies making the seeds.  This has generated a kind of monopoly situation, with public emphasis often focused on the profits made by the companies over and above the benefits of the GMO plants.

There is also concern over what the genetic modifications might do to the soil and whether people might have a greater tendency to be allergic to GMOs than to un-modified plants or to have other reactions to the genes in the modified plants.  Information from the World Health Organization (WHO) assures that for GMOs traded in world markets, no additional "allergenicity" is present; they do urge caution in the use of antibiotic-resistant products in which the modified genes might get transferred to those who consume the foods, though WHO says chances of this are small.  In the main, the WHO experts inform us[5], plants sold in international markets have been found safe.

So why use these if they are questionable?  Because plant yields are indeed greater, and less chemical application, such as insect-killers and weed-killers, is needed in their production.  Being able to produce more food with less raw material will be absolutely necessary in coming decades as the world population grows, Mark Tercek of The Nature Conservancy points out, and all the more as people are lifted up out of poverty into more active lives; that's one of the main reasons he wrote the book Nature's Fortune.  Business and industry must invest in and be stewards of agriculture and nature for all of us, all 7 billion of us, to grow and prosper together.[6]


Almighty God, Lord of heaven and earth: We humbly pray that your gracious providence may give and preserve to our use the harvests of the land and of the seas, and may prosper all who labor to gather them, that we, who are constantly receiving good things from your hand, may always give you thanks; through Jesus Christ our Lord, who lives and reigns with you and the Holy Spirit, one God, for ever and ever.  Amen.


O merciful Creator, your hand is open wide to satisfy the needs of every living creature: Make us always thankful for your loving providence; and grant that we, remembering the account that we must one day give, may be faithful stewards of your good gifts; through Jesus Christ our Lord, who with you and the Holy Spirit lives and reigns, one God, for ever and ever.  Amen.

[1] Mark R. Tercek and Jonathan S. Adams.  Nature's Fortune: How Business and Society Thrive by Investing in Nature.  New York: Basic Books. 2013.  Pp. 168ff and various Dow Chemical Company reports.  See

[2] Office of Water, U.S. Environmental Protection Agency.  "Constructed Treatment Wetlands". .  August 2004.  Accessed April 30, 2013.

[3] Ibid.  Some of the constructed wetlands are associated with farms as well as industrial uses.

[4] World Health Organization. "20 Questions on Genetically Modified (GM) Foods". .  Accessed April 30, 2013.

[5] Ibid.

[6] Tercek and Adams.  Page 3.

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