Reshma just rode an ambulance after 17 days, rescued from the rubble in Savar. We can rise from the ashes, over and over again. But even faith comes with a shelf life and the next time a tragedy strikes this land, the RMG sector is going to crumble to dust, just like Rana Plaza.
In spite of Disney pulling out, Bangladesh will continue to soar in manufacturing. Considering the capacity, price and efficiency we offer on basic products, there’ll be no other takers in the world market. At least not in the next two years or so. But before we take that for granted, we need to identify who we are.
We are a bunch of manufacturers who may be classified into three tiers: first, second and third. The first tier factories also run many third tier factories as their own or as their sub-contract establishments. Out of the 5,000 factories that we say we have, at least 2,500 factories would fall under the third tier. Another 1,500 would fall under the second and the other 1,000 under the first one.
Now how do we define the first, second and the third tier ones?
The third tier factories lack basic fire and safety equipment, have no second exits and are set up in risky factory buildings.
An audit of a third tier factory would possibly reveal a second staircase made of cast iron, rotting due to an absence of maintenance. It would also possibly expose that the lines are congested, and in place of a 3 line set-up has 4 line layouts, in which case, the floor would not leave any space for operators to evacuate in the case of an emergency. The audit findings would also give us a grim picture of the wiring in the factory where load has not been calculated properly and the distribution board would probably have wires exposed on the walls that host these boards.
Second tier factories could be in old buildings or shared tenancy, where a few issues may arise like the generator or the boiler being on the floor, or it may also have a few compliance issues such as extra hours or a one-day rest policy. Those would all be remediable.
The first tier would have no issues but would have a huge responsibility to undertake.
I humbly suggest that at least 250 first tier factories, identified by BGMEA, should focus on the 2,500 third tier factories and work towards auditing them and suggesting possible and minimal changes, so that disasters can be immediately avoided.
Every first tier factory has an audit team that can inspect at least 10 factories. The initial audit findings could be shared with BGMEA and the ministry. With every audit, the corrective action plan should also be listed.
If one were to assume that BGMEA, along with its team of inspectors, Rajuk and Buet engineers would be able to finish auditing the factories, then one would grossly err.
It is not humanly possible for BGMEA to list, inspect, audit, suggest, and finally close down with accuracy, and at such a short notice. Therefore, the manufacturers could come forward and do self-audits on their own premises and carry out the additional responsibility of auditing 10 others belonging to the third tier.
In order to maintain basic safety and security, how much money do we require for the sector? An average second tier factory would need to address possible areas like updating licenses, ensuring good housekeeping including drinking water, provision of a doctor’s room, and child care, etc. These would cost any average 1,500sq-m factory a total of $20,000. If we are to assume that there are 1,500 second tier factories in the country, then in total we could urge the government to allocate at least 150 crores to save these units and to ensure minimum compliance, in the national budget.
A third tier factory would probably have to be relocated and would require at least 200 acres. An investment of at least 2,500 crores is required in terms of simply purchasing the land and building the factories, considering that it would cost 10 crores per factory to be set up.
Only one Hallmark group cost us that same amount.
Could the banks and the government help these third tier companies out and finally create the one special economic zone based on these special considerations?
Is this too much to ask of the government? When the international and the local media blast the manufacturers, or when the late night talk show gurus give us a dose of ethics, we quietly bear it all. Let’s just simply say, we deserve it.
But when a minister lashes out and adds sarcasm to his statement while announcing the closure of 18 factories, we react … simply because, so far, we have had no government support for this God-forsaken sector of ours.
Three solid suggestions have been framed by Professor Yunus. His suggestions on forming an Action Group, raising minimum wage and forming the Workers Welfare Trust are all worth studying.
As far as the Action Group is concerned, yes, a pressure group needs to be formed. This pressure group should be formed both with members of the civil society and should also include people from the trade. Without inside information on how the businesses are run, there is no way, one could make pragmatic suggestions to improve the lot of the industry.
With regard to increasing the minimum wage, he has suggested doubling it. The maximum increase one could reason with the buyer is an up-charge of 5 cents per piece, at the maximum. Unfortunately, I sense that an increase in minimum wage is going to be borne by the manufacturers’ pockets alone.
Professor Yunus has also written: “No buyer will give any salary below this rate, and no industry owners will fix salary below this limit. It would be an integral part of compliance.” I assume he meant that no buyers would agree to place orders if that particular factory did not pay minimum wages as per the revised ceiling.
If we come to his third suggestion, I think appealing to the consumers through the retailers to pay a few cents more to build a fund for the Workers Welfare Trust is an idea that can be floated with all.
We can alternatively, of course, ask for three cents a piece from the buyer and match that three cents from our end, making the total fund contribution six cents a piece.
This way, an average four-line factory producing 80,000 pieces of shirts/blouses would also be able to have a trust fund of $4,800 a month. This fund may be controlled both by the buyer and the supplier. And just in case the consumer, as per Prof Yunus’s proposal decides to pay that extra 50 cents, then of course Bangladesh will gain substantially from the world market.
How BGMEA will piece everything together, how it’ll do damage control with the international retailers, and how it’ll deal with the government and effectively strike a balance between the West and local reality is up to the 27 members of the board to decide.
The phoenix has to have a safe landing and can’t afford to burn anymore.
Rubana Huq is Managing Director, Mohammadi Group.