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5th May 2013

Alternatives for the Garments Industry

Following the collapse of the Rana Plaza building last week and the terrible loss of life there is a lot of discussion about the current state of garments industry compliance, about the role of the international buyers and customers, about buildings safety and enforcement of the buildings code and about preventing such disasters in the future.

But I think that much more radical changes are needed in the garments industry in Bangladesh, not just to prevent further disasters, but to really enable the garments industry to reach its potential. Pebble and Hathay Bunano ps are not part of the garments industry but we are making textile items in Bangladesh and as such we do feel a closeness to this industry and are eager to see it improve for the benefit of everyone.

I think there are 3 radical alternatives which would allow the garments huge improvement. Always remembering that the garments industry in Bangladesh employs almost 5 million people and so any improvements to the industry will have a huge effect for the country.

1. After more than three decades of the garments industry operating and growing there still is not a single Bangladeshi brand in the Western world. Why is this? Many garments factories in Bangladesh have state of the art equipment and buildings and are run very well and yet year after year they submit to the rigorous negotiating techniques of Walmart, Tesco, Inditex and the like, who year on year bring down the price they will pay. I don’t have an issue with rigorous negotiation. Profit maximisation is the aim of capitalism. Pebble is a social business and operates on a different set of values but the majority of the world is still capitalist and shareholders expect profit maximisation. In that sense it is the buyers responsibility to their shareholders to get the best price possible. But Bangladeshi garments owners have given away their negotiating positions. On the whole, a single garments factory will sell more than 50% of its production capacity to a single buyer, and in some cases sells up to 100% of its production capacity to a single buyer. Clearly it you have only one or two buyers your negotiating position is weak because if that buyer chooses to go elsewhere then potentially you could have an empty factory and still have salaries to pay.

If these large garments companies in Bangladesh were to produce for their own brands as well as for brands around the world, they would increase their margins and the negotiation with foreign buyers would be a more equal relationship. Currently Bangladesh garments factories do not compete with other countries – since Bangladesh is the cheapest place in the world to make clothes. The Bangladesh garments factories compete with each other until in extreme cases factories have been known to take orders at a loss in order to secure a customer. This doesn’t help anyone. The BGMEA has a responsibility to set minimum price guidelines for the industry to prevent this race to the bottom that the international buyers are so happy to take advantage of.

Of course, Bangladeshi garments owners do not have the skills currently to start their own brands but in a globalised world large companies can buy in skills that are needed from experienced and established consultancies and so to see a Bangladeshi brand out there on the high street returning a larger margin back to Bangladesh and giving factories a stronger negotiation position on the remainder of their production capacity would be a huge improvement for the industry.

2. Bangladesh is a small country geographically. There are good road links throughout the country. Why is the garments industry still located in the outskirts of Dhaka and Chittagong? The garments industry is staffed mainly by economic migrants who come from rural locations looking for work and the opportunity to send money back to the villages for their families. These workers live in pitiful conditions, paying disproportionately large rents for appalling living conditions to landlords who seek to take advantage of the situation. The minimum wage has increased twice in Bangladesh since I’ve lived here and each time the wages are increased, the rents for accommodation are increased, leaving the economic migrants no better off. Increasing wages will not automatically improve the living conditions for the garments industry workers. If garments factories were located in the more rural areas then the workforce would be those people living locally. Managers would of course, need to relocate, but the vast majority of the workers would be local people. Automatically their living conditions would be better because they would be living at home in their villages, and likely their productivity would increase too as they would be living with their families and not suffering all the pressures of economic migration.

There is a shortage of electricity throughout Bangladesh and so all garments factories invest in their own generators or power plants and so this wouldn’t change with a rural relocation. There are also problems with gas lines and this would require the commitment of the government to ensure gas availability for factories relocating rurally. The trucks which take the containers to the port run overnight on the roads and this wouldn’t change with a rural relocation. There are no adverse reasons for the garments industry to relocate rurally. So why doesn’t it happen? Well maybe when the ball starts rolling and one factory does this then others will follow.

3. My final suggestion is related to the sweater industry rather than the woven industry. Hathay Bunano operates with more than 60 rural production centres, each one placed close to where the women live. The time consuming work is then done in these centres and the products are then sent back to our finishing centre for faces and finishing. This enables consistency across volume and enables us to export a high quality product. A similar set up could be adopted by the sweater industry with smaller satellite facilities around the country making the less skilled mass produced pieces for the sweaters – back, fronts, sleeves. The knitting machines used in all factories in Bangladesh require no electricity and so this could be set up easily. These pieces could then be sent back to a larger facility where they would be finished by linking together and having collars and labels etc added ready for export.

The issue you might raise about this is one of logistics – is it possible logistically to make this work? Currently some of the large garments factories in Bangladesh utilise the latest ERP (enterprise resource planning) software. They are fully equipped to manage flow of garments, garment pieces and raw materials around their factories and so it is only a short step from this to managing those pieces from different locations.

If we were to see just some of the factories in Bangladesh take on one or two of these suggestions, we would see a much strengthened industry able to deliver effectively what the workers of Bangladesh have been hoping for these past 30 years and what the workers of Bangladesh deserve. There are alternatives to the way that things are done currently. I hope, sincerely, that in the shadow of the worst industrial tragedy in history in Bangladesh, that this industry looks seriously at radical alternatives which promise a new renaissance for the industry.

All of us at Hathay Bunano ps and Pebble are deeply saddened at the enormous and senseless loss of life that has occurred in this tragedy and our thoughts and prayers continue to be with all those affected.

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