Suspension and speculations

 Published in: The Financial Express on June 30, 2013
Suspension and speculations

Richard Trumka, President AFL-CIO thinks that the US Generalised System of Preferences (GSP) suspension was an “important move” and a “catalyst” to bring about a change in the labour situation in Bangladesh. Mike Froman, the United States Trade Representative (USTR) spokesperson thinks that we need to “restore eligibility”; US President, Obama thinks that we have not “taking steps.” The opposition party is rating this as a government failure; Government is blaming certain quarters for having actively lobbied against us; and while some are grieving with us, some are also of the opinion that we deserved it. Who’s going to be working now? And what work needs to be done in reality? What is actually happening out there in the real world of apparel sourcing? I am sharing a recent scenario:

At a buying office in Hong Kong, everyone was wearing the same jackets. Black is of course a colour that hardly can be spotted as having different shades, especially on a jacket. But this black seemed to boast of uniformity that no other black on the same floor of the building wore. I counted the number of jackets that had the same tone and cut. There were altogether 18 black jackets and a dozen more hanging on the rails of a display room of a buying office in Hong Kong. Out of curiosity, I touched one of them and checked out the country of manufacturing. It was Vietnam. My heart sank. Just when I had been contemplating on setting up a brand new blazer factory, I encountered the most aggressive counter product from a competitor. I checked out the prices of the coordinates, meaning a suit. Vietnam was selling them at US$39. The coats looked as if they could go by any brand. The fusing was excellent; the cut flattering; the fall glorious. And here I was trying to cut corners and just convert a few woven shirts lines to making blazers with just a few more machines that would add more sharpness to the finishing. This is what’s wrong with most of us, the Bangladeshi manufacturers. Even while we aim at producing higher value added products, we invest shyly and expect huge returns.

I spoke to that particular supplier from Vietnam whose factory was included in one of the international projects working there. ‘Rana’ was a name that came up right before we even engaged in a meaningful conversation. Our conversation was all about competition and about maintaining the edge of product value. Prices were under scrutiny by all buyers sourcing from Vietnam and at the same time, the pressure of being a compliant factory and upgrading compliance was also a continuous dialogue between the buyer and the seller. Both of us concluded that situation was actually pretty similar in our lands.

In our country, as well as his, it would be difficult to find even a single factory where there were no CAPs (Corrective action plans). There would always be some form of observation from the buyers: major or minor based on which a factory receives an audit rating of green, amber, yellow, red, etc. There are also brands who have points system that are awarded to the factories. For instance, for simple housekeeping, points are awarded. Raising bars on workers’ awareness of rights and issues calls for a substantial rating as well. In a grade point system, factories receiving 60/70 and above maybe rated as responsible factories, deemed suitable for production. Anything below 60/70 could lead to warnings leading to eventual termination of business contract.

There are many, many systems that the factory manufacturers need to be careful about. There are many documents that need to be prepared, many records need to be maintained and many instant registers need to be shared with buyers. The Bangladesh Garments Manufacturers of Exporters Association (BGMEA) President has been repeatedly asking for a unified code of conduct, endorsed by all the brands and retailers. Who is to bell the complaining compliance cat? And what exactly is compliance? Can we really narrow our hundreds of pages of compliance and narrow them down to a few and take a closer look at what we really need to do? What can be done to convey the simple message to our friends in the West that we mean business?

To begin with, compliance can be achieved by following the laws of the country. Apart from following the law, a factory must have BGMEA membership, factory license, trade license, fire license, incorporation certificate, bond license, ERC, IRC, Vat registration, etc. The areas of compliance include working hours, minimum working age, health and safety, environment, discrimination, forced labour, wages and benefits, freedom of association, international trade requirements, harassment and abuse, and security standards. One closer look at the list would reveal that out of the eleven areas of compliance, only one was related to trade and one to security of the production unit. The rest nine are all about labour. As much as Bangladesh has progressed with manufacturing and export, as much as firms like McKinsey continue predicting the rise of exports from Bangladesh, one must pause and think about the variables that threaten our export scene.

One such variable is standard of labour in our country. And this is exactly the factor that has led to the suspension of GSP, a privilege that meant almost nothing for the RMG sector, yet had everything to do with the image deficit that the sector is currently suffering from. Will the European Union (EU) follow with a similar action? Possibly no. The EU has been most tolerant, helpful and supportive towards playing an important role to rescue the industry by improving fire and building safety standards. Yet, media is reeling with stories on the possibility of the withdrawal of the EU’s ‘Every thing But Arms’ EBA scheme.

In order to end negative speculations on any further “punishments”, what can be done to show continuous engagement in the issues of labour and safety? It’s actually just about listening to the workers. Compliance just doesn’t mean a worker of 18 or more years of age having a service book, punch card, personal file, an identity card and wages with defined working hour limits of 60 hours a week with overtime of two hours daily. In a compliant factory, a worker’s grievance is heard and taken seriously. Critically addressing minimum wage, productivity, trade union formation, building integrity are also going to be the key issues going forward.

The challenge, therefore, for the manufacturers today is to ensure that we speak the language of tolerance and compassion. It’s time to count our blessings on account of our readily available labour force. At this point, it is important to note that neither am I an apologist for the sector, nor am I a rebel. I am an average manufacturer who tells every buyer that even if our company does not secure the deal, someone else in Bangladesh should. The business must stay here and business must prosper as Bangladeshi entrepreneurs have proven over and over again how we’ve beaten every single odd and have moved forth with our capacity offers to the buyers. What has however not substantially moved forward is our intent to ace in our area of labour.

True that we are far more competitive than India just because we have mastered the Korean-styled production engineering and they have not. True that Cambodia has difficulty offering minimum quantities, as the cost of shipment per consignment is US$367 while another thousand is paid under the table. True Vietnam only touches the higher value added product and like China, is barely interested in snatching business from us. But what is also true is that there are manufacturers in these countries who are increasing their capacities and may offer a potential shift of sourcing. It is a tricky world of advantages. Wondering for how long buyers will stick to a risky zone at the cost of their reputational risk. Maybe the readymade garments (RMG) manufacturers like us need to reflect more on what we have done so far and what can be done soon, so that we salvage our repute, worth and business.

Truth is, at some point, we need to stop being “shocked” and “surprised” with harsh consequences. Rana Plaza has cost us 1127 lives and a lifetime of regret. But it has brought about special attention to the industry with every sector in the society waking up to warn the manufacturers’ community that change has to come and improvement has to be sustained. The buck needs to stop here and now, with the manufacturing community. And we do need to stop referring to our situation as being “work in progress” all the time. After all, the four million that we directly employ are ours and we should absolutely not give anyone else the opportunity to give us failing scores any longer.

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