The factory fire: Global commerce, local tragedy

Published on NewsOK Modified: December 1, 2012 at 9:04 am •  Published: December 1, 2012
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Producing overseas requires building in transportation time, usually 6 to 8 weeks for shipments of thousands of pounds of garments to reach the U.S. from Asia. So orders for the next summer season go out in late fall, allowing 6 to 8 weeks to produce cloth and other materials, and another 6 to 8 weeks for production. That explains why the products found in the wreckage at Tazreen, days after Thanksgiving, included T-shirts, children's floral shorts, and women's pants in bright pastels.

Competition for those orders seeds intense pressures. When U.S. Ambassador Dan Mozena spoke to Bangladeshi garment manufacturers in June, he recounted a late-night call from the CEO of a big clothing company, anxious that publicity about repeated fires and poor work conditions at factories where his goods are made could defame his brand.

"He said his company would gladly pay more for a Bangladeshi product if it were Fair Trade; his company's reputation is worth more than saving a few cents per shirt," Modena told the group.

But the pressures at work in Bangladesh, which has climbed to second place behind China among the world's largest exporters of apparel, continue because it is part of a global production economy with interchangeable components. Making clothes requires relatively low-skilled labor and equipment that is easily relocated or replicated, making it "uniquely susceptible to geography hopping," Green says.

That gives big buyers of clothing significant leverage. When a major retailer buys a garment, roughly 50 to 60 percent of the costs are for raw materials, 15 to 25 percent is for labor, and the rest is split between transportation, overhead and expenses like import duties, Rangajaran said. But except for the labor, the other costs are largely beyond buyers' control.

"Continually chasing low-cost labor is one of the big levers you have to pull," he said.

The result is a production system that has rapidly bypassed long-ago ways of doing business, when most clothing companies owned the factories where their goods were made and the workers were on their own payrolls. Now, a company like Wal-Mart or Sean John does not have to own a single factory, and the plants they rely on can change from year to year. The shifting creates the new challenge of keeping tabs on conditions where the work is being done.

That could explain some of the confounding answers that have come this week from companies that produced at Tazreen.

Wal-Mart said Tazreen "was no longer authorized to produce" its merchandise at the time of the fire, although the factory was approved until early this year.

"A supplier subcontracted work to this factory without authorization and in direct violation of our policies," said the world's biggest retailer, which would not identify the supplier.

Sears Holdings, which also owns Kmart, said it discovered only after the fire that its merchandise was "being produced at that factory without our approval," leading the retailer to cut ties with a supplier it said was responsible, International Intimates. The chief operating officer of the New York-based lingerie company would not comment. Tazreen's owner also declined to answer questions.

Critics say such responses are inexcusable, that companies are hiding behind links in the supply chain to duck their responsibility for working conditions in the plants that produce their goods.

"Wal-Mart has little incentive to lay down the law to the factory owner because the factory owner has produced the good at a price that Wal-Mart wants and that (retail) price requires," said Robert Ross, a professor at Clark University who has written extensively on labor abuses in the global apparel business. That "constrains them to use practices that are either abusive, or exploitative or sloppy."

Apparel makers, anxious to ensure quality and protect their images, are well aware of the risks. Since 1996, when an expose showed that clothes sold under celebrity Kathie Lee Gifford's label were being made in Honduras using child labor, companies have worked hard to prevent a repeat scandal centered on overseas factories. The apparel industry launched Worldwide Responsible Accredited Production, a Virginia nonprofit that certifies factories meeting its standards. Most major retailers now require that auditors visit the plants that make their products, to ensure the owners comply with their codes of conduct.

The Tazreen factory was audited at least twice by Wal-Mart in 2011. Its parent company, Tuba Group, posted a long-expired WRAP audit certificate for one of its other plants on its website.

But WRAP's president and CEO, Avedis Seferian, said audits, alone, won't eliminate risk. He noted that when the group opened an office in Bangladesh in early 2011, its first project was starting a Factory Fire Training Program, hoping to prevent a recurrence of a 2010 blaze at a plant that made clothes for The Gap which killed 29 workers.

But the complexity of the global supply chain helps create a dynamic that allow factories like Tazreen to continue operating, Green said.

"All of these layers, which I think represent rational decisions at an individual level, result in a system that is pretty irrational, where you have a real lack of transparency about exactly what is going on," he said. "And when you have a lack of transparency, you have a lack of accountability."

___

AP writers Anne D'Innocenzio and Mae Anderson in New York contributed to this report. Adam Geller, a New York-based national writer, can be reached at features(at)ap.org. Follow him on Twitter at http://twitter.com/AdGeller .



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