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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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