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Factory Deaths in Bangladesh Fail to Spur Inspections

Photographer: Jeff Holt/Bloomberg

Rescue workers and volunteers search by hand for victims amongst the debris of the collapsed Rana Plaza building in Dhaka, Bangladesh, on Friday, April 26, 2013. Close

Rescue workers and volunteers search by hand for victims amongst the debris of the... Read More

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Photographer: Jeff Holt/Bloomberg

Rescue workers and volunteers search by hand for victims amongst the debris of the collapsed Rana Plaza building in Dhaka, Bangladesh, on Friday, April 26, 2013.

Six months ago, when 1,127 Bangladeshi workers were killed in the collapse of a high-rise warren of garment factories, international outcry led to pledges by western retailers and the government to set up a large-scale inspection regime and a new wage system.

Today, not a single Bangladeshi garment factory has been inspected under any of the three programs that sprang from those promises, according to officials at the programs. Nor has danger ceased in the $19 billion industry: Two weeks ago, a fire ripped through a factory in a Dhaka suburb that provided material for plants supplying clothing to companies including Wal-Mart Stores Inc. (WMT) Nine workers died.

The slow implementation comes against a backdrop of worker unrest that has stalled production in factories and led to massive street demonstrations over safety conditions and wages, which are set at $39 a month before overtime. One, on Oct. 15, was quelled by the Industrial Police, a rubber-bullet-firing riot force set up two years ago to bring protesting garment workers under control.

“There is no time to lose any more,” said Gerben Sjoerd de Jong, the Dutch ambassador, on Oct. 22. “The inspections need to begin now.” He was announcing a $24.2 million program funded by the Dutch and British governments and the International Labor Organization to support the Bangladeshi government inspections.

An inspections system led by European retailers including Hennes & Mauritz AB (HMB) called the Accord on Fire and Building Safety in Bangladesh will see its first international staff people arrive next week. The Alliance for Bangladesh Worker Safety, a group of mostly North American retailers, says the list of the factories its signatories use is a work in progress and no inspections staff is in place in the country.

No List

The Bangladeshi government, which will inspect the remaining plants under the Tripartite National Action Plan hasn’t finalized the list of plants that fall under its purview or beefed up staffing to enable the inspections.

And so far, the three groups have yet to agree upon what a universally acceptable inspection will look like, a delay that De Jong said was holding up the process and endangering the lives of workers. Until then, retailers are conducting their own independent reviews.

An hour-and-a-half drive from Dhaka, in a suburb called Gazipur, the fire-scarred building that burned on Oct. 8 shows the costs of poor working conditions.

Shouting Fire

Emdad Hossain, director of the Aswad Composite Mills Ltd. factory, was in his second-floor office at 5:33 p.m. when he heard somebody scream out “fire.” Flames were leaping from floor to floor.

Hossain and his men began deploying the plant’s fire-fighting equipment while waiting for fire trucks that had to navigate a traffic-clogged highway and a narrow, potholed road to get to the four story-building. By the time the blaze was controlled, nine men had either burned to death or died from smoke inhalation, according to the police. Television footage showed flames shooting out of the roof.

“It was completely unbelievable,” said Hossain in an interview two days afterward, straining from a back injury sustained when he was knocked to the ground while trying to fight the fire. “We never imagined it would spread so fast.”

On Oct. 13, the Department of Inspections of Factories and Establishments filed criminal charges against the factory’s owners, Palmal Group. The department alleged the company had been warned that it didn’t have adequate fire extinguishers, didn’t fully report its electrical machinery, had expanded the facility without proper approvals and that its walkways were too narrow, according to a statement.

No Notice

Nafis Sikder, a director at Dhaka-based Palmal, denied the allegations in an Oct. 22 phone interview. He said the company had never received any notice of the violations from the department.

Palmal had supplied clothing to retailers such as H&M, Wal-Mart subsidiary Asda and Primark Stores Ltd., a U.K.-based unit of Associated British Foods Plc (ABF), according to statements from the companies.

As the joint inspection process gets underway, the European retailers-led Accord group will have a safety inspector in Dhaka starting Nov. 1, said Andy York, a member of the Accord’s steering committee, in an Oct. 20 interview.

Brad Loewen, an ex-fireman and safety inspector from Winnipeg, Canada, will move to Dhaka to work with an executive director, Rob Wayss, from the ILO. Both men are to operate under an annual budget of about $10 million for inspections and safety training, York said. The Accord also provides for additional funds from participating brands to help pay for repairs at factories after violations are found.

Data Collection

H&M spokeswoman Elin Hallerby said data collection about the factories has been completed and key appointments filled. H&M also will continue its own audits in Bangladesh, she said.

The immediate goal is to agree upon a common inspection standard, so that each of Bangladesh’s 5,000 or so factories are reviewed only once, said York at the Radisson Hotel in Dhaka. The group doesn’t yet have an office.

That requires coordination with the local garment lobbying group, the Bangladesh Garment Manufacturer’s and Exporter’s Association. The Washington, D.C.-based International Labor Rights Forum, in a December 2010 report, listed the BGMEA as a top offender in failing to enforce labor-rights violations.

BGMEA President Atiqul Islam said in a phone interview yesterday that his organization supports the creation of worker committees, training of workers and monitoring for illnesses. Rules passed by the government to make it easier to unionize were supported by the association.

Company Audits

Many companies are continuing their regular audits of suppliers and will compare them to the final standards, York said. In one case, the challenges became clear.

An independent inspection carried out in June by Tesco Plc (TSCO), Debenhams Plc, Primark and Hong Kong-based Li & Fung Ltd. (494) found that a sewing unit for a factory called Liberty Fashion Wears Ltd. was close to collapse. The retailers said in an Oct. 2 statement that “it would be dangerous to allow workers to return to work” in the factory.

The building was shut down and workers idled while the buyers negotiated with the factory owner, Mozammel Huq, over how to bring the factory up to acceptable standards.

Huq disagreed with the findings, and arranged for an alternate inspection by the BGMEA and the Bangladesh University of Engineering and Technology. Both the BGMEA and BUET reports said the factory was safe, Huq said in an interview.

The way the reviews were done “is completely unethical,” he said. “For more than 10 years they have bought from this factory, and suddenly they have decided it is unsafe?”

Eid Bonus

The retailers provided $400,000 to pay the idled workers their wages and a bonus for the Muslim holiday of Eid, according to a person with knowledge of the negotiations. On Oct. 15, the day before Eid, hundreds of workers protested outside the factory, demanding a resolution to the situation.

“I have been borrowing money from family for months to pay for food and medicine, and now it’s Eid, and I can’t even buy my son a new shirt for the holidays,” said Rahima Begum, a 28-year-old woman who carried an ID card from her job at the company. She asked a reporter for $5 so she could pay off some of her loans. “All the buyers have their money, and the owner has his money and his big cars, and we are left with nothing.”

Minimum Wage

The minimum wages she’s getting of $45 a month are less than her normal take-home earnings since she normally put in at least three hours of overtime each day and worked weekends when she could.

The Alliance, whose founders include Wal-Mart and Gap Inc., (GPS) two of the biggest buyers sourcing in Bangladesh, hasn’t begun its own independent inspections, said Rosanna Maita, a spokeswoman for the Alliance.

Of the 620 factories identified by brands in the Alliance, more 300 have been audited by the brands themselves under standards that could be considered equivalent to Alliance levels, said Jeffrey Krilla, president of the program. He declined to make public the results of those audits, saying they would eventually be posted and updated on the Alliance website.

The Alliance expects to have inspected all of the factories on its lists within the year, he said. In addition, Alliance brands will contribute to a capital improvement fund so that factory owners can get low-cost loans for repairs and modifications, and share responsibilities for paying workers for any work lost during repairs.

‘High Standards’

“The good news is that the companies in the Alliance have very high standards,” said Krilla in a phone interview from Washington. “One of the big challenges for factory owners was having to meet so many different standards, and what we are hearing from inspectors is that the owners welcome unified standards, and that they are interested in being inspected.”

Earlier this year, Wal-Mart pledged more rigorous inspections of the 279 factories it sources from in Bangladesh and said it would begin making those results public in June. The company pledged to complete and publicly report all the reviews by mid-November. As of yesterday, Wal-Mart hadn’t released any results. Spokesman Kevin Gardner said in an e-mail that the company was “planning to post the final results of these inspections soon.”

While the Accord covers about 1,600 factories and the Alliance an additional 620, Bangladesh has in all about 5,000 garment plants, according to a database maintained by the BGMEA.

The ones that fall outside the Accord and the Alliance will be inspected by a group of Bangladeshi government agencies under the agreement with the ILO and supplemented by the $24.2 million in funding over a 3 1/2-year period.

One Line

Bangladesh’s chief inspector of factories, Mushiur Rehman, was unavailable for comment, his personal assistant said. His office, on the eighth floor of a building shared with other government ministries, is a cramped room, with no computer, a single functioning phone line and a filing cabinet overflowing with documents.

His colleagues work in a different building, in old Dhaka, where a half-hour of rain this week made the building difficult to access and workers snoozed after the lunch hour. The deputy chief inspector of factories turned off a stereo playing Bengali pop when a reporter visited on Oct. 22, and declined to comment or to spell out his name. The department has fewer than 50 safety inspectors for some 8,000 factories, according to a presentation in Bangladesh’s parliament earlier this year.

Rajuk, which is what the Dhaka Development Authority is called locally, has asked for funding to expand its total number of inspection engineers to about 240, said Chief Engineer Emdadul Islam.

In the days after the Rana Plaza collapse, Rajuk had started its own survey of buildings, seeking to get a headstart on the process by collecting engineering plans and digitizing them. The process was finally abandoned after a lack of resources, including broken-down cars, exhausted engineers and reluctant factory owners bogged it down, said Islam.

“It’s a very difficult task,” he said, sitting on the couch in his offices, juggling two phones that rang nonstop. “We don’t have enough engineers, we don’t have enough resources.”

To contact the reporter on this story: Mehul Srivastava in New Delhi at msrivastava6@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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