DHAKA -
Undaunted
by a run of horrific factory accidents that have hit Bangladesh's
garments industry, two entrepreneurs bought Adorn Knitwear Ltd earlier
this year.
It
is a small business not far from the rubble of Rana Plaza, a Dhaka
suburb building that collapsed in April 2013 killing more than 1,100
people, most low-paid seamstresses, and prompting a costly safety
overhaul at plants large and small.
Whether
people like Rezaul Karim Chowdhury, one of Adorn's new owners, can
afford those improvements will be critical for the future of a sector
that accounts for over 80 percent of this South Asian nation's export
earnings, industry leaders say.
Last
month, Adorn's production lines were silent and its sewing machines
gathering dust as the lengthy process of checking the building for
structural weakness was underway.
"We're
losing money every minute," said Chowdhury, 35, as he looked around his
factory, which has a list of potentially expensive fixes to be
completed before reopening.
Many
high-volume factories depend on smaller firms, contracting out work to
meet orders from big Western retailers under tight deadlines.
Today,
up to 20 percent of the 3,500 exporting garment factories subcontract,
says the Bangladesh Garment Manufacturers and Exporters Association
(BGMEA).
If
that support system crumbles, some factory owners worry Bangladesh's
$24 billion industry could lose the agility that took it to number two
in the global league of garment exporters.
Since Rana Plaza, nearly two-thirds of the country's exporting garment factories have been inspected.
Many
have been handed lists of structural, electrical and fire safety fixes
and upgrades that could cost hundreds of millions of dollars.
Larger
factories can generally pay for those changes independently, or have
access to a growing number of affordable financing arrangements backed
by wealthy customers.
Hundreds
of smaller factories do not, leaving them exposed at a time when owners
say they are grappling with a slide in orders and an increase in
minimum wages for the industry's workforce of more than 4 million.
Already about 450 factories have gone to the wall since last year's disaster, the BGMEA says.
"If
all the factories are becoming big, who will do the smaller things?"
said Anwar-ul Alam Chowdhury, chairman of Evince Group and a former
BGMEA president. "Then who will come to Bangladesh?"
A STITCH IN TIME
At
Adorn, labourers ripped up flooring to expose steel rods that needed
testing. Above them, the word "crack" was spray-painted in red in three
spots, all to be analysed by engineers in a weeks-long assessment.
Getting
factories up to speed after inspections may cost owners from $100,000
to $1 million apiece, according to the World Bank's International
Finance Corporation (IFC).
The
Accord on Fire and Building Safety in Bangladesh and the Alliance for
Bangladesh Worker Safety, brand-backed initiatives that have inspected
some 1,700 factories, offer mechanisms through which members are helping
suppliers compensate workers for lost wages due to closures and finance
factory revamps.
Several
major apparel firms belonging to the Alliance or the Accord said they
had made significant investments to help suppliers improve safety. Not
all factories have needed outside funding.
The
U.S.-based VF Corporation, an Alliance member whose brands include The
North Face and Wrangler, announced it would guarantee up to $10 million
for the IFC and Bangladesh's BRAC bank to lend its suppliers. So far,
three VF supplier factories have received $1.3 million in loans.
The IFC is in talks to do the same with several more Accord and Alliance brands.
"NATURAL CORRECTION"
Even
with more help coming, there are fewer options for the exporting
factories that do not sell to Accord or Alliance companies. According to
the International Labour Organization, they number roughly 1,800.
The
BGMEA says it has asked the government to help these factories get up
to speed by setting up a fund offering them low-cost loans, but the
government says it is up to owners to find a way to meet safety
standards after inspections.
"It
will be the responsibility of the owner to pay, or he'll have to close
it," said Mikail Shipar, secretary of the Ministry of Labour and
Employment.
Some
suppliers may be too unhealthy to secure another bank loan to stay
afloat, said Ian Spaulding, senior adviser to the Alliance.
"It's going to happen throughout the market, and that's a natural correction that needs to happen."
Saving
smaller factories is crucial for the local industry to keep its edge,
but also for the economy, said Mohammad A. Rumi Ali, a director at BRAC
Bank.
"If 75,000 people lose their jobs, and the majority are women, it's a big cost," he said.
Down
a dirt road clogged with bicycle rickshaws in Badda, a congested area
on the edge of Dhaka, a small garment factory is squeezed into a row of
buildings.
The
owner, who requested anonymity, said he could not meet all the
inspectors' requirements, primarily because his business is in a rented
building and the landlord refuses to help.
"I can't do all of it," he said. "Lower-class factories aren't getting any help."
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