From the Associated Press, Thursday, November 29, 2012, San Jose Mercury News.
Blaze shows subcontracting maze – Bangladesh factory was used despite retailers’ rules by Julhas Alam
Dhaka, Bangladesh – The garment factory in Bangladesh where 112 people were killed in a fire had been making clothes for Wal-Mart, Disney, Sears and other major retailers – some of whom say they thought they had stopped doing business with the place.
The apparent confusion underscored what some industry experts say is a major obstacle to improving safety in Third World factories: Many major retailers in the U.S. and Europe rely on such a long complex chain of manufacturers, vendors and middlemen to keep their shelves stocked that it is difficult to keep track of where certain products are made.
Amid the blackened tables and melted sewing machines at Tazreen Fashions, an Associated Press reporter discovered clothes and account books Wednesday that indicated the factory was used by a host of major U.S. and European retailers.
Among the items discovered: children’s shorts with Wal-Mart’s Faded Glory label, hooded sweaters marked “Disney Pixar,” shorts with hip-hop star Sean Combs’ ENYCE tag, and sweaters from the French company Teddy Smith and the Scottish company Edinburgh Woolen Mill. Sears was also among the companies listed in the account books.
The tragedy at the beginning of the holiday season is putting a spotlight on dangerous workplace conditions around the world, with no clear answers to how consumers should react or who is responsible.
Wal-Mart said that it received a safety audit that showed the factory was “high risk” and had decided well before the blaze to stop doing business with Tazreen. But it said a supplier had continued to use Tazreen without authorization.
When pressed for an explanation of how a supplier could use a factory without the retailer’s approval and whether it happened often, Kevin Gardner, a Wal-Mart spokesman, did not directly address the issue in emails to The Associated Press.
Sears said it learned after the blaze that its merchandise was being produced there without its approval through a vendor, which has since been fired. Walt Disney, which licenses its characters to clothing makers, said its records indicate that none of its licensees have been permitted to make Disney-brand products at the factory for at least a year.
Combs’ Sean Jean Enterprises did not return calls.
Retailers like Wal-Mart have clauses in place that require suppliers to disclose all factories and subcontractors producing for sale. But it’s hard to crack down on unauthorized subcontracting, said Josh Green, chief executive of New York-based Panjiva, which tracks shipments for factories outside the U.S.
“The reality is you have to have round-the-clock monitoring of every aspect of the supplier’s operations,” he said. “It’s just not feasible.”
Green noted that subcontracting is pervasive as suppliers look for ways to cut costs.
“You have relentless pressure that consumers put on retailers and that retailers put on suppliers to deliver lower and lower prices,” he said. “And that pressure is a key reason why you see factories cutting corners.”
Bangladesh’s garment industry – second only to China’s in exports – has long provided jobs and revenue for the desperately poor country, while turning out the low-priced products shoppers in the U.S. and other countries have come to enjoy.
This is certainly a very sad story and one that didn’t need to happen. The factory windows were all chained up, so factory workers could not escape the fire. Nor did the factory have the normal fire protections in place, because it doesn’t have to. Working conditions (poor ventilation, poor heating, no air conditioning, hazardous environment) in these factories are poor. This is common in Third World countries. So who is responsible for this? Since the 1970s, we have started on this race to the bottom: low prices trump low prices – I would have to say it is both the consumer and the retailer. Obviously, it was the retailer that started this race. Wal-Mart with the “lowest prices” lured people in. And with Wal-Mart’s success other businesses entered the low price race war. And because one needs to increase profits on these low cost products, the retailers have continually cut their costs by pressuring suppliers to make clothing much cheaper – and this has caused the outsourcing problem, the loss of American manufacturing and a less than stable American economy. The American consumer is equally to blame. By continuing to put cost as the only criteria, it has fueled this race to the bottom.
In the race to the bottom, retailers have pressured suppliers to keep their own costs down. In fact, Wal-Mart has had a habit of going from factory to factory to get the lowest prices possible. The cost from the supplier to Wal-Mart is so low that the supplier really doesn’t make a profit. The supplier (or manufacturer) is usually a start-up company trying to gain experience. Once the factory gains experience they charge a more reasonable rate, and then Wal-Mart drops them to find another lower price supplier. For these suppliers, there are two ways that they make money: one, as already mentioned in the article, is that they cut corners; and two, which is abstractly referenced in the article, is making counterfeit products. This is actually quite simple. Let us say Wal-Mart contracts with the factory for 10,000 units. The factory then makes 12,000 units, gives the contracted 10,000 to Wal-Mart and sells the other 2,000 on the Black Market.
Counterfeit products is a well-known phenomenon in these countries. The reason given why this goes unchecked is a cop-out. Josh Green, chief executive of New-York based Panjiva, which tracks shipments for factories outside the U.S. said: “The reality is you have to have round-the-clock monitoring of every aspect of the supplier’s operations. It’s just not feasible.” But, let us say the factory is located in New York City. Do you think that counterfeiting from this factory would be found out? The answer is yes and very easily. The problem is there is not the effort. If Mr. Green would leave New York and go to Bangladesh more than once or twice a year on an announced trip, he would find more corruption. Or he could hire people to do surveillance or install cameras. Wasn’t he hired to find out corruption or maybe he was hired NOT to find out what goes on in the henhouse?
The retailers give the same reason why they can not track the vendors and middlemen who stock the items on their shelves. They say it is too difficult. I find this very hard to believe. For example, Wal-Mart keeps track of almost virtually item it sells, and can tell you instantly what store has them and how many items are in that particular store as well as the other stores and they also know how many items they have in their warehouses. The problem regarding the vendors is that they don’t make the effort, because consumers don’t care. If consumers don’t care, and the retailers happen to profit by it, why should they care as well? Nobody seems to care about this unless something happens – something like a fire in a garment factory that kills over a hundred people because of unsafe working conditions. Maybe people should care. Maybe people should do something about it. Boycotting the cheapest slave labor products that are made in unsafe working conditions ( and instead buying better quality possibly American made products) might be the correct first step, because retailers will not change their behavior unless something effects their profits (it is obvious that we can’t count on their ethics to alter their behavior or they wouldn’t have waited this long before a tragedy occurs). For further information, I recommend a link from Salon.