Ever since a building with garment factories collapsed in Bangladesh last week, killing more than 400 people, Western apparel companies with ties to the country have scrambled to address public concerns about working conditions there.
Benetton repeatedly revised its accounts of goods produced at one of the factories, while officials at Gap, the Children’s Place and other retailers huddled to figure out how to improve conditions, and some debated whether to remain in Bangladesh at all.
At least one big American company, however, had already decided to leave the country — pushed by the last devastating disaster, a fire just six months ago that killed 112 people.
The Walt Disney Company, considered the world’s largest licenser with sales of nearly $40 billion, in March ordered an end to the production of branded merchandise in Bangladesh. A Disney official told The New York Times on Wednesday that the company had sent a letter to thousands of licensees and vendors on March 4 setting out new rules for overseas production.
Less than 1 percent of the factories used by Disney’s contractors are in Bangladesh, according to the official, who spoke on the condition of anonymity. The company’s efforts had accelerated because of the November fire at a factory that labor advocates asserted had made Disney apparel. The Disney ban also extends to other countries, including Pakistan, where a fire last September killed 262 garment workers.
Disney’s move reflects the difficult calculus that companies with operations in countries like Bangladesh are facing as they balance profit and reputation against the backdrop of a wrenching human disaster.
Bangladesh has some of the lowest wages in the world, its government is eager to lure Western companies and their jobs, and many labor groups want those big corporations to stay to improve conditions, not cut their losses and run.
But as the recent string of disasters has shown, there are great perils to operating there.
“These are complicated global issues and there is no ‘one size fits all’ solution,” said Bob Chapek, president of Disney Consumer Products. “Disney is a publicly held company accountable to its shareholders, and after much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain.”
The public disclosure of Disney’s directive came two days after officials from two dozen retailers and apparel companies, including Walmart, Gap, Carrefour and Li & Fung, met near Frankfurt with representatives from the German government and nongovernment organizations to try to negotiate a plan to ensure safety at the more than 4,000 garment factories in Bangladesh.
With 3.6 million garment workers and more than $18 billion in apparel exports last year, Bangladesh is the world’s second-largest apparel exporter after China.
Walmart, Gap and other companies said on Wednesday that they were already taking action, including paying for Bangladesh factory managers to be trained in fire safety. But labor advocacy groups are pushing them to do more, especially to help finance factory improvements like fire escapes.
“Companies feel tremendous pressure now,” said Scott Nova, the executive director of the Worker Rights Consortium, a factory-monitoring group based in Washington. “The apparel brands and retailers face a greater level of reputation risk of being associated with abusive and dangerous conditions in Bangladesh than ever before.”
On Wednesday, thousands of people continued to gather around the collapsed Rana Plaza building in Savar, a suburb of Dhaka, Bangladesh’s capital. As emergency personnel dug through the rubble for yet another day, many relatives of the missing carried signs, holding out diminishing hope that a loved one would be found. A mass burial of unclaimed bodies was conducted as the death count climbed above 400.
In Rome, Pope Francis voiced sympathy for Bangladeshi garment workers on Wednesday, saying he was shocked to learn that many of them earned just $40 a month. “This is called slave labor,” he said.
European Union officials called for immediate safety improvements, and said they were considering changes in Bangladesh’s duty-free and quota-free status to encourage more responsible management by the country’s garment industry.
With some labor groups urging Western companies to stay and fix problems rather than leave, Disney said in its letter to licensees that it would pursue “a responsible transition that mitigates the impact to affected workers and business.” It set out a yearlong transitional period for its contractors to phase out production in Bangladesh, Pakistan, Belarus, Ecuador and Venezuela by March 31, 2014.
In that letter, Josh Silverman, executive vice president for global licensing for Disney Consumer Products, wrote that because Disney did not do manufacturing itself and licensed its brand for so many goods produced in so many countries, “we must rely more heavily upon our licensees and vendors to help ensure working conditions that are consistent with Disney’s standards.”
In deciding in which countries to permit production, the company relied heavily on the World Bank’s Governing Indicators, which evaluate performance on issues like government effectiveness, rule of law, accountability and control of corruption. Disney decided to prohibit production in several dozen countries that had a combined low score on the World Bank indicators.
Western retailers and brands that sell apparel made in Bangladesh say they use only factories that monitoring firms have inspected and approved. One prominent monitoring group, the Business Social Compliance Initiative, based in Brussels, has acknowledged that it had approved two of the factories inside Rana Plaza, although it said its inspections did not consider the structural soundness of the building.
Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, said on Wednesday that her country’s government building inspectors were so ineffectual that it was vital that Western companies make sure that their inspectors also examined the structural integrity of factory buildings.
Adam M. Kanzer, managing director and general counsel at Domini Social Investments, praised Disney’s move.
“Disney is trying to focus their effort where they feel they have sufficient leverage and buying power and where they’re really involved,” he said. “They don’t have much of a presence in Bangladesh. At the same time, I feel that Western companies that have a significant economic presence in Bangladesh should stay there and try to fix these problems.”
After the Tazreen fire last November, Bangladeshi labor groups said they had found Disney-brand apparel and production documents inside the factory. Disney officials deny that any licensees had production there.
On Wednesday, Kevin Gardner, a Walmart spokesman, said his company “has been advocating for improved fire safety with the Bangladeshi government, with industry groups and with suppliers.” He added, “We know that continued engagement is critical to ensure that reliable, proactive measures are in place to reduce the chance of factory fires.”
The Children’s Place, a New Jersey-based apparel chain of 1,100 stores that obtains about 15 percent of its total goods from Bangladesh, said it was working with Bangladeshi officials, retailers and nongovernment organizations to avoid future safety problems. The company said it “will be active in supporting important, systemic reform.”
The Disney letter listed 172 countries where it would allow its contractors to produce branded merchandise, emblazoned with popular characters like Wreck-it Ralph, Buzz Lightyear, the Little Mermaid and Mickey Mouse, as well as toys and other goods. But in 101 of those countries, it said it would let licensees do production only if independent monitors approved the factories.
A Disney official said production in Haiti and Cambodia would be allowed only in factories cooperating with the Better Work program, a partnership of the International Labor Organization and the International Finance Corporation, that works with government officials, factory owners and labor groups to ensure safe and decent workplace conditions.
The Disney official said the company would consider permitting its licensees to again produce in Bangladesh and Pakistan if those countries get the Better Work program to help their factories.
Dan Rees, director of Better Work, said that before his group would get involved in Bangladesh, the country needed to enact stronger labor protections and stop suppressing trade unions.
“Disney has sent a strong message to the excluded countries that if they’re willing to take responsibility for labor standards, Disney will take another look at them in the future,” he said.
Source: NYTimes