Official data shows that many garment factories have lost business in the past one year since the Rana Plaza collapse, but stakeholders say cancellations have not affected the compliant units.
In fact, compliant factories are more optimistic about rising from the slump that followed the collapse, because the industry overall has been making progress in terms of ensuring fire safety and workers’ security.
According to a BGMEA survey covering over 400 factories, foreign buyers have cancelled orders worth $110m from 37 factories over the last year.
Industry insiders said most of these factories had not done much to become fire and safety compliant.
Since the collapse that claimed the lives of more than 1,100 workers, compliance has become the single most important issue for foreign buyers to consider while placing orders.
Many factories that faced cancellation were small units. Becoming fire and security compliant takes a lot of investment, which many of these factories cannot afford.
Over the last year, foreign buyers have also strengthened monitoring. Accord – an inspection group sponsored by European buyers – and Alliance – a US-backed inspection team – have been constantly surveying RMG factories in Bangladesh. These two groups have inspected more than 800 factories in recent months.
Following recommendations from Accord and Alliance, the authorities concerned have even shut down many factories because they lacked compliance.
However, the government has also taken a number of major steps to enhance the overall safety compliance in the industry. Some of these steps are: raising the wage structure; amending the Labour Law; training 13,000 mid-level RMG employees with fire safety; appointing 67 inspector; and so on.
The entrepreneurs have also stepped out. According to the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), many factories now have fire doors and exits. The number of trade unions has also risen significantly.
“It is unfortunate that although we are working hard to make the sector safe and fully compliant, the buyers are cancelling orders from the factories, especially those that share buildings,” BGMEA President Atiqul Islam told the Dhaka Tribune.
In fact, some apparel makers have told the Dhaka Tribune that they are having to chase the buyers for getting orders.
“In my 17 years in the RMG sector, I never did marketing. But, after the Rana Plaza collapse, as the buyers are not placing orders, I am doing it,” said Abdul Kashem, deputy managing director of AKH Group.
“Orders used to pour into Bangladesh because we ensured high quality at reasonable prices,” Kashem reminded.
The termination of orders has badly hurt the factories that operate on sub-contracts. According to unofficial data, out of the 3,600 active RMG units in the country, at least 1,200 or around one-third operate on sub-contracts. Around 10 lakh workers are employed in these factories.
Seeking anonymity, the owner of one such factory located in Gazipur said: “It is impossible for owners like me to implement the new wage structure. Bills have remained the same but the wages have increased by 77%. I am trying hard to ensure safety of the workers, but it is very tough for me because the costs are very high.”
After the Rana Plaza and Tazreen disasters, Apex Holdings installed 700 sprinklers at a cost of TK6.5 crore in its Gazipur warehouse in line with buyers’ recommendation. The company also removed all water tanks from the rooftop and spent Tk1.5 crore to build an underground reservoir that can store up to 10 lakh litres of water to be used only for fire incidents. Fire doors and special lights that can see through smokes, were also installed.
“We have sufficient work order now and the buyers have expressed satisfaction with the work that we have done in terms of improving safety,” said MD Abul Kalam, a deputy general manager of Apex Holdings.
Another ex-BGMEA chief Anwar-Ul-Alam Chowdhury, also the MD of Evince Group, said: “If the factory is compliant orders will come. My orders have increased because we are working on compliance.”
Recently, Envoy Group, owned by former BGMEA president Abdus Salam Murshedy, imported and installed 130 fire doors in its factories. Despite the initiative, he said he had lost 10% orders.
“Bangladeshi exporters have lost competitiveness as production cost has increased. Now they are having to spend more for compliance issues and the new wage structure,” he said.
He however said if the industry got compliant, orders would start coming back. “The Rana Plaza collapse tarnished our global image. We need to rebuild it by ensuring workers’ safety.”
Rokeya Begum, a sewing machine operator at the factory of the IDS Group in the capital, told the Dhaka Tribune that: “As a worker, I feel safer than before. Fire exits now remain open during working hours. Earlier, the doors used to be locked.”
Sumon, who works at the factory of Brothers Fashion in the capital’s Karwan Bazaar, said: “We are enjoying a new wage structure, but at what cost. We lost so many brothers and sisters in the worst ever factory disaster.”
Srinivas B Reddy, country director of the International Labour Organisation, recently said: “Freedom of association in the RMG sector in Bangladesh is getting a shape. During the last 15 months, a total of 134 trade unions got registered with the government. This is very significant in terms of freedom of association in collective bargaining.”
BGMEA President Atiqul Islam told the Dhaka Tribune that: “The RMG sector is ready to set a new paradigm in safety and security because many initiatives have been taken. If the buyers and the stakeholders continue their efforts, the RMG sector would become safe and matured.”
