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WWD CEO Summit: 'Bangladesh: The Fallout'

The panelists discussed where the ultimate responsibility lies for a series of garment factory tragedies over the last year.

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The buck stops here.

That blunt Trumanesque motto can best describe the bottom-line approach from three panelists discussing “Bangladesh: The Fallout” and where the ultimate responsibility lies for a series of garment factory tragedies that have taken the lives of more than 1,000 workers over the last year.

The trio — Rick Helfenbein, president of Luen Thai USA, Rep. George Miller (D., Calif.) and Charles Kernaghan, director of the Institute for Global Labor and Human Rights — were in general agreement that the “here” are the retailers and brands that choose to manufacture in the country despite its poor track record of safety and labor abuses. They also found some consensus that the Bangladesh factory fires and building collapses were both an inflection point and a call to action for government, industry and the public to change the supply system and attitude that allows for ongoing disasters such as the Rana Plaza building collapse in April that killed 1,132 people, and the fire at Tazreen Fashions last November in which 112 workers perished.

“The black eye is deserved,” Helfenbein said. “I don’t think there’s anybody in this room, or anybody in retail or manufacturing, that intended for this to happen. But it was the old expression, ‘It was an accident waiting to happen.’ If you look at all the history, all the background, you just knew it was going to happen.”

Helfenbein said one of the reasons his company never manufactured in Bangladesh is, “When you make goods in a place that’s essentially lawless, you’re going to have problems.”

He also blamed the end of the global quota system in 2005 for opening up manufacturing and eliminating some checks and balances that it included.

“When quotas went away, the teeth marks went away and the inspections weren’t as rigorous and the penalty went away,” he said.

Miller said the blame lies in a combination of the companies, the government and industry in Bangladesh, and the consumer.

“Clearly in the case of Bangladesh, it’s a self-inflicted wound,” said Miller, who has been an outspoken critic of the country and firms doing business there. “You can blame a lot of people, but the fact is that the responsibility lies with the brands and retailers that decide. Bangladesh is the end of 50 years of planning these commercial arrangements so that there was quick entry and quick escape anywhere in the world given whatever circumstances were taking place.”

He said Bangladesh happens to be on the stage now, noting problems when China was first being developed.

“There’s always a little shadow, what the old Nixon White House used to call ‘plausible deniability.’ The industry knew exactly what it was doing,” Miller said.

Kernaghan, a veteran labor and human rights advocate, said, “The retailers have to play a major role, without a doubt.”

He noted an exposé his institute just published on Bangladesh’s Next Collections Ltd. group of factories in which workers were found to labor in 16-hour shifts seven days a week, making 19 cents an hour, with women denied maternity benefits, and in which workers were beaten and imprisoned.

“It is the most illegal factory I’ve ever seen in my life, and this is after Rana Plaza,” Kernaghan said. “So, the message is not getting through. If the factory owners don’t get the message, then the message is going to have to come from the retailers that we cannot allow this.”

Miller said the retailers have the power to change the system.

“The government is terrified of them, the manufacturers are afraid of them, the landlords are terrified of them, the mayor of the town is terrified of them, because they know if they make that decision, they’re done,” Miller said. “That decision is always threatened, but the conditions are always tolerated. Something has to give here. I have talked to companies and executives that make a conscious decision not to manufacture there…they know there is something very wrong in Bangladesh, and they don’t want to be left with the blood on their label.”

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As for two plans retailers and brands have created in an effort to address the problems in Bangladesh — the Accord on Fire & Building Safety in Bangladesh led by the IndustriALL Global Union and UNI Global Union, and including 100 mostly European companies and a handful of U.S. ones, and the North American-based Alliance for Bangladesh Worker Safety, which includes Wal-Mart Stores Inc., Gap Inc., VF Corp. and Target Corp., Helfenbein said, “You have one plan that’s an accord that has some teeth in it and you have one plan that’s an alliance, and that’s a dubious word at best.

“The problem I have with the accord and the alliance is that they become skirts to hide behind — ‘I signed the accord or the alliance, so I’m OK.’”

Miller said, “You can argue the accord assumes more responsibility and the alliance assumes no responsibility, but has a lot of process. They’re both inspecting the same factories now.” Either way, he said, “There’s power to be exercised here, but there’s a reluctance and an unwillingness to do it.”

Kernaghan said companies also have to step up and start paying compensation to the victims of the tragedies — so far only the U.K.’s Primark and Canada’s Loblaw Cos. have done so.

Miller noted that he met with women in Bangladesh who were injured in the Tazreen fire and had jumped out of the third floor not expecting to live — many lost limbs and suffered head traumas and other injuries — “just to make sure their families would be able to find their bodies and know what happened to them.”

Helfenbein said a broader problem is that the industry grew so fast and too many factories have been allowed to open without the ability of the government to control and oversee them.

“If you, as a retailer or brand or manufacturer, are overstuffing the factories, it’s going out to these subcontractors that nobody knows about, and that’s why it’s going to happen again,” he said.

On the issue of whether consumers would be willing to pay more for a garment if they can ensure it was made safely, which in most surveys they answer in the affirmative, but anecdotally some claim is untrue, Miller said: “I think Bangladesh may be a little bit of an inflection point because when you look at Bangladesh and analyze it, and look at its history and culture, and what’s taking place in factories, you now have a system that’s really maintaining and organized around physical and economic violence against women. That’s what holds it all together and is underpinning the system. I don’t know if this industry can handle that.

“There’s already been a backlash against ‘Blood on your labels,’ and the next thing is going to be ‘Violence against women on your labels,’” he added.

Kernaghan noted that from around 1938 and for about 50 years, sweatshops were wiped out in the U.S. because the industry became unionized and legitimate.

“What you need in the developing world are rules-based, legal-based entities,” he said. “It can’t be handled by codes of conduct — they don’t work. There has to be the ability for unions to form across the developing world. Bangladesh is a clear example. The workers are smart, the hardest workers we’ve ever seen. Give them a chance to have unions and we’ll see a transformation. It has to come from the workers, but it also has to come from the retailers. You can’t just go there as bystanders. We have to really search our hearts and our souls as to whether we will stand up for the rights of human beings, especially in places like Bangladesh and other developing countries.…This can be a turning point.”

Responding to a question from the audience of whether change will only occur if brands are “shamed into it,” Miller said, “There are players that can change it for everyone and not lose their competitive edge. Begin with basic human rights and if you don’t, we’re out of here.”

But Helfenbein added that in the end, the risk of bad publicity and desire to maintain brand integrity could be bring about the most change.