Published in CommPro.biz 2013.04.30

A Better People

 

OK! We get it. We understand that manufacturing economics too often makes outsourcing the creation of goods a necessity, especially when a major hand assembly component is involved. And when horrific calamities strike in faraway places, such as the building collapse last week (2013.04.24) in Savar, a suburb of Dhaka, the capital of Bangladesh, the American companies whose goods come from these factories wring their hands and say they are doing everything they can. That is simply untrue.  There is an alternative.

A low wage outsourcing model that works indefinitely better. It’s better for the workers and still allows the production of goods at competitive price levels. Born in the mid-1960s – 30 years before NAFTA – the Maquiladoro concept continues to be a cost-effective outsourcing alternative for American manufacturers. This concept flourishes along the US border with Mexico. American companies build factories in Mexican free trade zones. The workers and most managers are Mexican nationals, but the working conditions and standards are firmly in the hands of the American owners.

That’s very different from the 5,000 +/- factories in Bangladesh. Their owners, Bangladesh nationals, are driven by nothing but cost. The disaster that saw an eight-story building collapse in a pile of rubble came one day after cracks in the building made it apparent that it was unsafe. The owners were told to close it, an order they simply ignored. This calamity that took hundreds of lives cannot be ignored by the brands that used this facility and others like it.

It’s not enough for these brands to promise to put pressure on the factory owners. It’s time for them to build their own factories in countries where labor costs are favorable. It’s time for the major global clothing companies, Walmart, Gap, Sears, Tommy Hilfiger and all the rest, to act. They owe it to the more than three million workers in Bangladesh that sew their goods for minimum wage, under $40.00 a month. It’s not enough for Apple to say that FoxConn, a manufacturer in China, is making improvements. Apple could buy out FoxConn and make things right for the workers in those factories. Americans can afford the tiny bump up in prices that these ethical moves would bring.

The Maquiladoro concept works. For half a century most Maquiladoro workers have had clean, safe working conditions. Many have access to free healthcare on site, to nutritious meals at reasonable cost, to simple things like showers that we take for granted. While their wages are low by American standards, they make what is a living wage in their society, and we benefit from the cost of the goods they produce. Ethically, how can we accept anything less in the creation of what we wear on our backs and carry in our pockets? We have been blessed with much. How can we see those who make these goods suffer, even die to save us pennies? We are a better people than that.

Walmart,,, Again?

Tazreen Fashions Ltd., that’s the company where a fire left scores injured and 112 dead. At first Walmart claimed they had no connection to the Bangladesh factory. Then they said they had cut their association before the fire. Then when it turned out that more than a third of the massive eight-story factory was producing goods for five Walmart suppliers, they claimed the suppliers acted on their own against instructions from the company. It may be true that Walmart told their suppliers that Tazreen was no longer to produce their goods. However, that message was likely lost under the pricing pressure the retail giant exerts on all their suppliers.

The details of this fire are horrific. When the fire alarm went off the stairwells that served as the sole exit from the upper floors were blocked by managers who told the workers that it was just a drill, to return to their sewing machines. In a few minutes screams from below and smoke filled the workspace, the managers had disappeared and a stampede of workers jammed the narrow stairwells. The windows were covered with iron grilles. Sixty-nine of the dead were found on one floor. Scores were saved by a worker who escaped. He then climbed a scaffolding, smashed a window grille and helped workers out and down the scaffold.

Bloomberg reporters Renee Dudley and Arun Devnath dug up information on a retailers’ meeting in the spring of 2011. Concerned with safety lapses and deaths from fires in Bangladesh, the group attempted to forge an agreement that would provide support for the factory owners to create safer working conditions. Only two brands, Tommy Hilfiger and German retailer Tchibo, were willing to sign on. Minutes from that meeting included this statement: “We are talking about 4,500 factories, and in most cases very extensive and costly modifications would need to be undertaken to some factories. It is not financially feasible for the brands to make such investments.” 

According to published reports Walmart “most strongly advocated this position.” Walmart says their objections were taken out of context. Gap, however, has put forward a plan to, “Make Bangladesh garment factories safer. It includes hiring a chief fire safety inspector to inspect factories, giving suppliers as much as $20 million in capital to make safety improvements.” 

Walmart and the others feeling pushed on one hand for higher shareholder value and on the other to lower prices, have chosen the wrong path in Bangladesh. To put the lives of human beings at extreme risk to cut a buck or two off the cost of some piece of clothing, tool or toy is not an acceptable choice. Walmart and the others struggling to meet the demands of the marketplace as they see it ignore the evidence that an ethical business model makes you more competitive and more profitable.