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Accord and the Alliance, have failed to address the risk factors caused by indirect sourcing

The unregulated growth of garment factories in Bangladesh is mainly being blamed because of many industrial accidents the sector experienced during last couple of years.

“The ad hoc growth of the garment sector in Bangladesh over the last 30 years is a quintessential example of weak rule of law coupled with strong business opportunities. Lax regulation across the sector has created serious risks that were major factors in the tragedies at Tazreen and Rana Plaza collapse”. The Center for Business and Human Rights of the New York University following a study made this observation.

A team of the university led by Sarah Labowitz, coordinator of the center after the Rana Plaza collapse conducted the research titled ‘Business is Usual is Not an Option’, Supply Chain and Sourcing After Rana Plaza’ covering stakeholders of the sector published on April 22 last, three day before the first anniversary of the disastrous Rana Plaza collapse.

The report examines a range of measures undertaken last year, and commented that none of which has yet addressed the fundamental problems facing the garment industry.

The report is based on a year-long effort that included two fact-finding missions to Dhaka in July 2013 and February 2014 and a meeting in New York in September last year, attended by the key players from across the garment sector including Bangladeshi manufacturers and global brands. The centre also interviewed more than 100 people about business practices in the supply chain.

According to the study, poor government regulations in the RMG sector in Bangladesh facilitated the sub-contract factories to grow up. The sub-contract factories enjoy a little benefits manufacturing apparels as they have been grabbing work order from the mother factories which ultimately leaving a narrow scope for them to ensure the workers safety in the workplace.

“As contracts (work order) are subcontracted to one factory and sometimes re-subcontracted to another, margins get smaller and smaller and oversight becomes more distant. Factory owners at the bottom of the sector cannot afford the most basic investments to improve safety and working conditions”. The report said.

We share the goal expressed by many people of ensuring that ‘Made in Bangladesh’ is a sign of pride for workers, business and consumers. That’s why global retailers and their first-tier manufacturing partners need to recalibrate their business relationships to prioritize transparency and longer-term sourcing commitments, he added.

These facilities often lack clean drinking water and toilets, conditions are cramped, and basic safety equipment is missing. Regulations that are difficult to apply at the top of the sector – either by the government or private companies – are much less likely to extend to this network of indirect suppliers, it said.

The report also blamed the retailers to facilitate the sub-contract factories to be grown up. “Western buyers also are profiting from the indirect system of sourcing. Despite strong language in their policies about non-transparent subcontracting, factory owners report that many buyers factories that rely mostly on subcontracts often struggle to implement even basic safety standards, such as fire extinguishers”, it quoted.

The study also blamed the lack of infrastructural development in the country’s RMG sector while it praised the Export Processing Zones for arranging the industries in a disciplined way quoting experts.

Along with blaming indirect sourcing, a non-transparent practice of sub-contracting, as the root cause of safety risks and poor working conditions in readymade garment (RMG) sector in Bangladesh, the study said additionally, the two major remedial plans, launched last year by the Accord and the Alliance, have failed to address the risk factors caused by indirect sourcing, it said.

Though indirect sourcing has helped invigorate the garment industry and Bangladesh’s economy, global brands doing business in Bangladesh need to assess the overall condition of factories and address the most urgent risks, the report added.

The two initiatives (factory inspection) focus on monitoring less than 2,000 factories, while the total number of factories and facilities producing for the export garment sector is likely between 5,000 and 6,000, the study said.

“The worst factory conditions are largely in the factories and facilities that fall outside the scope of these initiatives. “People across the sector recognize that Bangladesh’s sustained development depends on the garment sector, including through the continued investment of global buyers,” said Michael Posner, co-director of the centre and the former assistant secretary of State for democracy, human rights and labour.

“We share the goal expressed by many people of ensuring that ‘Made in Bangladesh’ is a sign of pride for workers, business and consumers. That’s why global retailers and their first-tier manufacturing partners need to recalibrate their business relationships to prioritize transparency and longer-term sourcing commitments, he added.”
NYU Stern’s recommendations call for companies across the sector — global buyers and national-level suppliers — to join forces to create a single, unified fund for building repairs, safety upgrades and remediation.

The report presents a forward-looking agenda, starting with a collective effort to determine how many factories — big and small, registered and unregistered — participate in garment manufacturing for the export market. Together with the government of Bangladesh, global brands, trade associations and leading Bangladeshi exporters should compile and publish a single, comprehensive list of all factories and facilities, which should be updated periodically.

“Bringing second and third tier factories into the open will make workers safer and help prevent future deadly industrial accidents,” said Labowitz. “Enhancing oversight of subcontracting facilities is a long-term project, but the first step is to acknowledge the true scope of the problem,” he said.

The report calls on the international community — foreign governments, the World Bank and other intergovernmental organizations — to convene a major donors’ conference on factory safety and critical infrastructure in Bangladesh. In the absence of such funds, the report warns, “We are destined to see recurring tragedies in Bangladesh.”

The report also made several recommendations to three stakeholders, business community, and government of Bangladesh and international donor agencies of the sector. It asked the business community, global brands and their first-tier manufacturing partners to recalibrate their business relationships to prioritize transparency and longer-term commitments. Accord and Alliance should join forces in this effort, working closely with the trade associations and the government, the report suggested.

The report asked the government of Bangladesh to reclaim ownership of the country’s regulatory system. The government cannot continue to outsource regulatory functions to the trade associations and others, the report said suggesting the government of Bangladesh to complete the work of compensating victims of Rana Plaza and institutionalize this effort to meet the needs of victims of future industrial accidents.

The report also said that the government alone cannot finish the factory remediation programme successfully and completely.  The international community – foreign governments, the World Bank, and other multilateral institutions – need to step up as well, it said.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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