NPR Story
10:14 pm
Wed July 10, 2013

90 Cents: The Cost Of Safely-Made Jeans In Bangladesh

Originally published on Thu July 11, 2013 8:50 am

Bangladesh is the world’s second largest exporter of garments, after China and the industry is crucial to its economy.

Bloomberg News reporter Mehul Srivastava went to Dhaka to see what factory conditions are like and find out what it would cost to improve those conditions.

Factory owners told him they can produce a pair of jeans under safe and humane conditions if they are paid 90 cents per pair. But buyers consistently ask them to do it for as little as seventy five cents. At those numbers, the factories are forced to cut corners, and owners say they cannot recoup the cost of building improvements.

“What has to happen is there has to be a sea change in how people drive prices down to the bottom.”
–Mehul Srivastava

“There’s a vast variety in the quality of factories over there,” Srivastava told Here & Now. “Some are obviously unsafe, but then there are really good ones also.”

Srivastava mentions a factory owner who spent half a million dollars to set up a sophisticated sprinkler system, in case there was a fire.

Ensuring that factories are up-to-standard is difficult because of the number of players involved in the supply chain, all of whom want to drive down costs in order to increase profits.

Another challenge is that the government of Bangladesh doesn’t have the resources to regulate the thousands of factories, which close and open and move without notice.

“It’s a very chaotic, Wild West industry,” Srivastava said.

There’s been increasing pressure to improve conditions for garment workers in Bangladesh since the building collapse that killed over eleven hundred workers in April. It was the worst garment industry disaster in history.

A group of about 70 clothing retailers and brands announced this week they will inspect all the Bangladeshi factories which supply them with garments. Most of the companies are European. American companies including Walmart, Gap, and Target say they will announce their own plans soon.

“I really don’t think consumers have to pay more to get a safer pair of jeans. What has to happen is there has to be a sea change in how people drive prices down to the bottom,” Srivastava said. “They’re not going to get any cheaper by haggling over pennies, but they are going to get a lot more unsafe.”

Reporting by Mehul Srivastava:

Guest:

Copyright 2014 WBUR-FM. To see more, visit http://www.wbur.org.

Transcript

JEREMY HOBSON, HOST:

Well, more than a dozen American retailers, including Wal-Mart, Gap and Target, have just come out with their plan to improve safety for garment workers in Bangladesh. But U.S. labor groups say a European plan is stronger because retailers there have pledged to make sure that there are enough funds to fix the problems they find.

This all, of course, after the collapse in April of a building called Rana Plaza in Bangladesh that houses several factories. More than 1,100 workers died in that incident. It's the worst garment industry disaster in history. Workers are calling for improved conditions and pay. Here is Kalpona Akter, who is a factory worker who spoke with NPR's Julie McCarthy today on MORNING EDITION.

KALPONA AKTER: We want safe working place, and we want union voice in our workplace. We are not talking about you have to give us $15 per hour, but we don't want 24 cents per hour.

HOBSON: Well, our next guest has been looking into just how much more we'd have to pay as consumers here in this country to substantially improve conditions for factory workers in Bangladesh. He is Mehul Srivastava of Bloomberg News, and he's with us now from London. Welcome.

MEHUL SRIVASTAVA: Hi, thanks for having me.

HOBSON: Well, thanks for being here, and I want to start with this idea that you write that just a few pennies extra for a T-shirt or maybe some jeans could end these factory disasters.

SRIVASTAVA: Well, I was down in Taka, and I met with a lot of garment makers, these factory owners who do business with Western retailers: Wal-Mart, Primark, you name it. And they have their own costing system and the way they figure out how much it costs them to make a pair of jeans. Mostly what happens in Bangladesh is what's called the cutting and making.

The fabric is brought in from China. It's cut into little pieces in these factories and then sewn together by seamstresses. And these factory managers, they know exactly how much it costs for a pair of jeans. So we went down to the safest factories that we could find, and we said look, if you were making a pair of jeans for a Western client, in this case it was ASDA, a Wal-Mart subsidiary here in the U.K., and the pair of jeans was $22, how much does it cost for you to make it in a safe factory.

And it was 90 cents in that factory.

HOBSON: For a $22 pair of jeans.

SRIVASTAVA: For the cutting and making, the part where they put it together, put on the zippers, the buttons and sew the sides and put the pockets in there, 90 cents.

HOBSON: Wow.

SRIVASTAVA: And then they told me something surprising, which is when they sit down to negotiate with buyers, and these buyers are not necessarily Wal-Mart or ASDA directly, they could be subsidiaries, there's a Hong Kong company called Li & Fung, there's another company called Worldwide Apparel, when those guys come down to negotiate, 90 cents, hey how about you do it for 85 cents instead, because you competitor can do it for 82 cents. Or can you do it for 75?

And these guys are very clear that the cost of safety improvements in their factories is included into the cost of cutting and making this and selling it to these buyers. But if they do it for less than 90 cents, they're going to cut corners that'll eventually result in something like Rana Plaza.

HOBSON: And I see that you've gone through the costs of the different parts of the items that people will be buying. It's a zipper is 15 and a half cents, the rivets one and a half cents each, the button 5.7 cents. So these factory owners have figured this out right down to the very specific parts.

SRIVASTAVA: I mean, they're making millions of these over the year. I mean, we get about 7 billion garments a year exported out of Bangladesh. If you're going to be making a lot of these things, they bring in industrial engineers, who sit down, and they figure out exactly how much every minute of the factory costs, how much every piece costs, how much overtime should cost. I mean, they're doing pretty sophisticated math so that they can come up with a costing that allows them to make a profit.

HOBSON: So why would they decide, then, to pay more just to make the working conditions better?

SRIVASTAVA: Like in any industry, there are good factory owners, there are bad factory owners, there are greedy factory owners, there's illegal factory owners. These are the guys who want to have long-term contracts with Western companies. They want to work with the value chain and see if maybe they can make more expensive items of clothing for them.

They don't want their factory to burn down and lose all the investment. They don't want to deal with bad press or get thrown in jail. So these are the bigger factory owners, and they're building new factory buildings. They're building new infrastructure.

So the one guy that we went to, the one who did this $22 pair of jeans for ASDA - and to be clear in this case ASDA was paying him the 90 cents he needed to do it safely - he was building a brand new factory on the outskirts of the city, which was going to be, by his description, one of the safest factories in Bangladesh.

But he wasn't sure that in the future, when he sat down and negotiated with people, he would be able to recoup the cost of his safety investments.

HOBSON: It sounds like it's not really the consumer who could make the decision to pay more and get what they want because it's going through so many levels. I mean, you mentioned ASDA Wal-Mart, but then beyond that there's the buyer, this Li & Fung, that decides to buy from the factory. There are many steps between me and the clothes that I buy.

SRIVASTAVA: It's a very layered supply chain. I mean, your contact with the factory owner, as a consumer, is almost minimal, and you're not in a position to tell the company, you know, maybe you join a protest, maybe you write a letter to the board of the company to say look, if you paid your business owners a little bit more, I would be more likely to buy your product.

But it's a complicated situation in that everybody there is trying to make a profit. The factory owner wants to make a profit, and the buyer wants to make a profit. The retailer has to make a profit. But because the difference is so small, it's just a few pennies here and there, I really don't think consumers have to pay more to get a safer pair of jeans.

What has to happen is to be a sea change in how people are driving prices down to the bottom. You're already getting a very cheap pair of jeans. Your seamstress in Bangladesh, who's making your jeans, probably makes no more than $50, $80 a month. They're not going to get much cheaper by haggling over pennies, but they will get a lot more unsafe.

HOBSON: That's Bloomberg News reporter Mehul Srivastava. He was recently in the Bangladeshi capital of Dhaka to look at garment factories. It's such an important issue, something that affects all of us because we all use these products that are being made in these factories in Bangladesh.

When we come back, is the Bangladeshi government up to the task of regulating this industry? And where are the Bangladeshi union leaders?

ROBIN YOUNG, HOST:

And some other stories we're following until then, a federal judge ruled today that Apple engaged in price-fixing to raise the cost of ebooks. Apple says it plans to appeal the ruling. They say they are merely trying to break Amazon's monopoly on the publishing industry by adding innovation and competition.

The Taliban has closed the doors of its new office in Qatar. Afghan officials accused the Taliban of trying to use the offices as an embassy. The House GOP is meeting behind closed doors to come up with its own immigration reform plan. And while some people want to beat the summer hear, in California's Death Valley tourists are flocking to the home of some of the most brutal conditions on Earth. We'll have that and other stories later today on ALL THINGS CONSIDERED. Back soon, HERE AND NOW.

(SOUNDBITE OF MUSIC)

HOBSON: It's HERE AND NOW. We're talking about the garment industry in Bangladesh with Bloomberg News reporter Mehul Srivastava. Bangladesh is the world's second-largest exporter of garments after China. The industry, therefore, is crucial to the country's economy. But it is reeling after that tragic building collapse in April, which killed more than 1,100 workers.

Mehul has been telling us that it would only take pennies more per garment to make conditions safer for workers, and Mehul, you've toured some of those factories in Bangladesh. What did you find?

SRIVASTAVA: They are - there's a vast variety in the quality of factories over there: good factories; bad factories; medium factories; factories that are close to being just as good as Western factories; factories that are terrible. I spent a day touring these factories with the Dhaka Development Corporation(ph) because they're doing these surveys now, after Rana Plaza, where about 1,100 people died.

And they would just walk into these factories and ask for documentation and walk around. And I saw a wide swath of factories during those tours. There are factories there where I can tell, as a journalist, not even as a trained engineer, that if there was a fire, people would find it difficult to get out because the hallways are blocked, there's not enough gap between these - the seats where the people sit, and there's material lying around everywhere.

There's cracks on the walls. There's one place we went to where there was a massive water tank on the roof, and there were maybe four more of those and two cell phone towers on top of that, whereas the engineering, the report said you could only have maybe one water tank on the roof, maybe that.

So some are obviously unsafe. But then there are really good ones, also, for instance where this pair of jeans was being made. And then there's one other person that we spoke to who had spent half a million dollars to set up a very sophisticated sprinkler system and a (unintelligible) alarm system, all kinds of special safety features in his factory.

None of these are indicative as a whole of what every factory in Bangladesh is like. But you have good factories, you have bad factories, and you have terrible factories, too.

HOBSON: And you write that it would cost about $3 billion to repair 95 percent of the factories in Bangladesh.

SRIVASTAVA: Yeah, that's an estimate from a worker rights consortium based out of Washington, D.C. And they did some pretty sophisticated math on this also. And this is - it would cost $3 billion to upgrade every Bangladeshi factory to U.S. standards.

No, nobody really expects Bangladeshi factories to reach U.S. standards, but if you got to a few rungs below that, you'd be saving a lot of lives. You'd be making working conditions far more tolerable for these people who work there.

HOBSON: What would that be per pair of jeans?

SRIVASTAVA: Oh, I don't know how many jeans are sold out of Bangladesh, but it would barely be a few pennies per garment, 10 cents a garment I think is what the worker rights consortium says.

HOBSON: So do you have any evidence that consumers would want to do that, that consumers would be willing to pay more for something that they knew came from a humane factory?

SRIVASTAVA: You know, I've thought a lot about this, and that we don't know as consumers - until I went to Bangladesh I didn't know which companies I should prefer buying from, and even now I don't know the answer because I didn't see every factory every company was using.

But I think about things like the fair trade coffee or other movements that have been there to enforce a consumer demand for safety, a consumer demand for...

HOBSON: Cage-free eggs or whatever, yeah.

SRIVASTAVA: Cage-free eggs, if you want to think of that. So I imagine, you know, there's a clean clothes campaign out of Cambodia, where the Cambodian government enforces better safety standards. There are other issues that can come into play. But, you know, if a bunch of very famous American celebrities got involved and said look, we're going to have a green sticker with at thumbs-up on it on the factories that we know are good, I have a feeling people would move in that direction because I don't think anybody feels good about buying a pair of jeans that they know could have been made in horrible, immoral conditions where somebody could have died making them.

But when you and I walk into a store, if we walk into a Wal-Mart, if you walk into a massive mall, there's no way for us to tell one way or the other whether the extra money that we're spending will actually benefit the people who are on the ground.

HOBSON: Obviously one of the key players in this is the government of Bangladesh or the regulators there, who would have to decide whether these factories should be up to a certain standard. Are they willing to play ball on something like this, or is the industry just too important to them, they can't sit there and stop factory production while they make these changes?

SRIVASTAVA: It's a very, very difficult scenario. The Bangladeshi government, for them the garment industry has been a boon. It's a lifesaver. It's produced about 4 million jobs, $18 billion worth of exports out of an incredibly poor country. And a lot of these jobs have gone to women. So everybody understands that you're not going to shut these factories down because the trickle-down benefit to Bangladeshis is real. It's not massive, but it is real.

The question is: Does the Bangladeshi government have the resources to regulate an industry this large? And so far the answer is no. I mean, the Dhaka Development Corporation, which has about - so Bangladesh has 5,000 factories, 3,500 of them fall within the Bangladeshi capital in Dhaka. Their development authority only has 50 structural engineers.

On the one day that I went out to go look at these buildings, the structural engineer was able to inspect maybe three or four of them, and this is a very cursory, you know, take a look at the building kind of inspection. They didn't take concrete samples. They didn't go back and test the design of the buildings through computer programs.

I mean, they just went there, took a look at the building and made a couple of tick marks on a piece of paper. So are they going to be able to regulate 3,500 factories? I seriously doubt that. This accord that's been signed in Europe, where about 30 or 50 European retailers have signed up, is meant to correct that. It's supposed to produce an alternate, a parallel inspection regime where Western retailers would pay for the cost of having these factories inspected, and if the factories had, you know, manageable flaws in them, they would continue to work with the factory owner, pay them a little extra per garment so they can repair these factories.

It's a step in the right direction, but 5,000 factories in a country with as little resources on behalf of the government, that's a really large number to regulate. And these factories grow, they shut down overnight, they move to the other side of the street. The owner loses a contract, he shuts down for six weeks, open up again. It's a very chaotic, Wild West industry.

HOBSON: Well, how long are the workers going to put up with it if nobody does anything about it?

SRIVASTAVA: So that's a really complicated situation in that you'd imagine that when you've got 4 million workers, they either provide a significant vote bank, or they're able to unionize. But the Bangladeshi government is not very union-friendly. A lot of the trade leaders that we met with, there are no national federations, for instance, they said, and they themselves, you know, they're followed around by the cops. It's not entirely clear whether their efforts to unionize are considered legal or illegal or kind of a gray area.

So far there's less than 50 factory-level unions out of 5,000 factories, and there's no national federation. There's no single place where they can, you know, have a collective bargaining conversation with the government or factory owner. So they are...

HOBSON: But there have been protests, big protests.

SRIVASTAVA: And that's exactly what it is. I mean, they go out on the streets, and they shut down these factories, and they're protesting in the streets. The police show up. There's a police force there created just in the last few years called the Industrial Police whose only job is to keep these rare protests manageable, if not shut them down.

And there's rubber bullets and tear gas. And so it's a lot of mayhem and chaos, but the structures within which an organized union would sit down with a factory owner and the government and negotiate better working conditions, you know, in back-and-forth compromise manner, the way we understand union processes to work, that does not exist in Bangladesh just now, and it's not going to exist anytime soon.

HOBSON: Well, Mehul Srivastava, reporter at large at Bloomberg News, thank you so much for your reporting on this and for speaking with us.

SRIVASTAVA: Thanks for having me.

HOBSON: So how much would you be willing to pay for a pair of jeans made in a factory where workers are paid a living wage? You can go to hereandnow.org to leave your two cents.

YOUNG: And by the way, we're also hearing from listeners on Facebook about the George Zimmerman trial as it nears an end. Here's a sample. Jeff Hunter(ph) says: If Zimmerman is found not guilty, that verdict will make it legal to hunt and kill black teenagers. But Ryan Frost(ph) poses a provocative question. He asks: Maybe the media is guilty of racism. Does the media think that the lives of black children are only precious when taken by someone of a different race?

And David Winkle(ph) says - and it has to be a discussion about what he calls the stupidity of gun laws and the stand your ground law in public spaces. Weigh in if you'd like, Facebook.com/hereandnowradio. Latest news is next, HERE AND NOW. Transcript provided by NPR, Copyright NPR.