In Bangladesh factory aftermath, US and European firms take different paths

The deadly collapse of a Bangladesh garment factory has galvanized European firms to try and improve working conditions, but US companies have been slower to respond. Why?

Focus

The wear-and-toss “fast fashion” craze has swept Europe and the United States in equal measure, but concern about its underpinnings has not.

In the fashion world, the latest styles were once reserved for the haute couture houses of Paris and the collections introduced here or in London; Milan, Italy; and New York. This century has seen democratization in the form of big retailers selling cheap and trendy clothes that turn over at dizzying speed – thanks to cheap labor in places like Bangladesh – anywhere from Paris to Pittsburgh.

But when more than a thousand of these laborers sewing clothes for US and European consumers were buried alive April 24 in a Bangladesh building collapse, the transatlantic responses differed dramatically.

Clothing firms quickly came under activist and union pressure to sign the Accord on Fire and Building Safety in Bangladesh: a five-year, legally binding commitment from retailers, whose suppliers will be subject to independent inspections and public reports. A finance mechanism also requires each firm to contribute to safety upgrades, at a maximum of $2.5 million each over the five-year commitment.

Yet while major retailers across Europe, like Britain’s Marks & Spencer, France’s Carrefour, and the Swedish giant H&M, have signed on, US clothing labels, for the most part, have carried on with business as usual. Only two big American firms have joined the pact.

Tragedy at Rana Plaza

“I think European companies are more aware of a need to be proactive for their reputations,” says Elisabeth Laville, who founded Utopies, a Paris-based consultancy that has helped various organizations in Europe and the US on corporate responsibility strategies. “American companies are betting on the fact that consumers will not change ... the way they buy.”

So-called fast fashion, a consumer-driven model that offers buyers the latest “must haves” at low prices, has taken off in the past decade, with stores like H&M and Zara leading the way. This quick-response system employs thousands of workers across Asia: In Bangladesh alone, there are 4.5 million garment workers.

On April 24, like every other day, hundreds of Bangladeshis, the vast majority young rural women, filtered into work for their garment-making jobs at Rana Plaza. They shouldn’t be high-risk jobs, but in Bangladesh they are.

The day before the factory collapsed, cracks appeared on the walls of the eight-story building. But managers were focused on the bottom line, and the employees, toiling for the world’s lowest wages, couldn’t afford to stop working. So production continued until the building collapsed, killing 1,127 people inside – the deadliest accident in the garment industry’s history. A haunting photo of two workers buried alive, in an embrace, spread across social media, leading to public pressure for the accord.

The accord agreed upon in the accident’s aftermath draws on an earlier agreement forged by unions and activists in the wake of other deadly, if less publicized, incidents in Bangladesh. Then, only PVH, the owner of the Calvin Klein and Tommy Hilfiger brands, and Germany’s Tchibo, signed on.

But after Rana Plaza, Sweden’s H&M, the largest retailer operating in Bangladesh, also came on board: a key move, activists say, that paved the way for others, including Britain’s Primark and Spain’s Inditex, owner of Zara. With some 40 companies on board, the new agreement is singular in scope and covers more than 1,000 of Bangladesh’s 4,500 factories.

There are some doubts about its long-term impact, especially if consumers’ penchant for bargains remains strong and corruption rampant in Bangladesh. But others have called it a game changer for the country, the world’s second largest apparel exporter after China. They say the accord will inevitably raise standards and workers’ expectations – potentially causing a ripple effect on the global industry.

Why Europe and not the US?

“The fact that it’s binding, transparent, and independent, that is what is new,” says Nayla Ajaltouni, the coordinator for the Collectif Ethique sur l’étiquette, the French platform of the Clean Clothes Campaign. “It’s a big, real step forward.”

But it is an agreement that US companies, at least for now, have apparently been hesitant to sign onto – despite intense shaming campaigns. Some big European firms have not signed it, and many who did had to be pushed. Likewise, only two US firms have signed onto it, PVH and Abercrombie & Fitch. US retailers Cato and The Children’s Place, both of which had products made at Rana Plaza in the past year, have not signed on.

At first glance, the difference in response appears to be one of numbers. Sixty percent of the clothes sewn in Bangladesh head to Europe. The European Union is the country’s biggest market.

But there are cultural and historical reasons that Europe is forging the way, too. In general, says Ben Vanpeperstraete, a policy officer at World Solidarity in Brussels, there is a tradition of a functional working relationship between governments, unions, nongovernmental organizations, and companies. “In Europe, people look slightly differently toward a social dialogue,” he says. “Entering into an agreement with trade unions is more accepted, while a US brand like Wal-Mart is notorious for having a very anti-trade union stance both in rhetoric and actions.”

Allyson Stewart-Allen, director of International Marketing Partners in London and co- author of “Working with Americans,” says she also finds a healthy skepticism in European consumers, which could stem from a history dating back to the exploitative feudal systems of five centuries ago. “The Europeans are much more scrutinizing. They are more circumspect,” she says. “There is a suspicion in Europe, which [has] much older economies, over what big corporations get up to.”

Price versus responsibility

And that might influence how retailers act. US firms, which have cited legal liabilities, have embraced a lawyer-driven dialogue that favors a corporate instead of consumer response, Ms. Stewart-Allen says. North American re-tailers say they are drawing up their own safety plan.

Liz Leffman, a codirector at Clothesource, a sourcing agency for the apparel industry in Oxfordshire, England, says that Americans appear to be more concerned with the bottom line.

“Price is more important in the US. For companies like Wal-Mart, it’s key, whereas in Europe corporate responsibility is a bigger issue. There is more of an ethical thread,” she says.

The European activist network was particularly successful in connecting the dots between the disaster and stores in Europe, says Dara O’Rourke, who focuses on environmental and social impacts of global production systems at the University of California at Berkeley. “I think the European activists have been very effective at targeting European brands in public conversation and putting pressure on them,” he says.

Ms. Ajaltouni, the activist in France, says that she does not see a major split between continents – rather she sees differences between individual companies. But she does say that the organizing power of activists with the Clean Clothes Campaign multiplies pressure on European retailers.

If activists in Spain protest against Mango, for example, that retailer will know that the activist network across Europe will also be protesting in Germany, France, and everywhere they have outlets. “European countries will feel pressure in every country that they have re- tailers,” she says. Their challenge today, she says, is having that awareness trickle down to the buyer of clothes, and having consumers stop to reflect (“There must be a reason that these clothes are so cheap”).

‘You don’t know, do you?’

But while data show that US and European consumers say they care about ethical practices, it’s hard for them to know what exactly is ethical. And as opposed to consumer choices on fair-trade eggs, for example, when it comes to clothes, size, fit, color, and personal style are equally considered, says Jeffery Bray, a lecturer in marketing and consumer behavior at Bournemouth University in England.

In the midst of the economic crisis in Europe, so, too, is price.

Walking through Kingston upon Thames shopping center in south London is like visiting any major town center across Britain. Familiar names dot the high street and indoor Bentall Centre, tempting passersby to part with their money in what have been tough retail times.

In Kingston, that means endless sales and bargain hunters like Michelle Jenkins, who was accompanied by her three children on a recent day as she walked out of a Marks & Spencer store. “I do think about ... what happened in Bangladesh, but to be honest I have to think about house finances first. With three children to buy school uniforms for, I have to buy on cost, and if that means it’s come from Bangladesh or another developing country, then so be it,” she says. “I can’t afford to be choosy.”

Dodging the afternoon shoppers was student Daniel Jones, who said he wished there was more information for consumers to make ethical choices.

“I try and avoid some stores which sell cheap clothes because you don’t know, do you? I prefer designer labels, and I just assume [that] because they’re a bit more expensive, they’ve been sourced ethically,” he says.

A test for the industry

It often takes tragedy to drive real reform. The Triangle Shirtwaist Factory fire in 1911 in New York City, which killed 146 workers who could not escape through locked stairwell and exit doors, led to an overhaul of US labor laws and workers’ rights.

In Bangladesh, Rana Plaza was only the latest in a string of accidents due to poor infrastructure and shoddy construction. In the past five months alone, 1,254 people have been killed in collapses, fires, and stampedes, says Charles Kernaghan, director at the Pittsburgh-based Institute for Global Labour and Human Rights.

He sees the accord as crucial to improving standards, but the deeper problem – government corruption that has led to lax regulations and negligence – is still there. “The major problem with Bangladesh is it’s hollowed out. There’s nothing you can’t just buy out,” he says.

He and many others say that even though the accord does have a clause that increases the role of unions, if that part fails, the impact of the accord will be limited. Unions already exist on paper in Bangladesh, but in reality they are stifled. “If they had a voice, if they could negotiate with management, you wouldn’t have these fires or these collapses,” Mr. Kernaghan says.

“It’s very good that companies signed the agreement,” says Ms. Laville in France. But the social and environmental consequences will remain as long as fast fashion remains the rule, she says, “as long as people want the cheapest possible clothes changing every month, with people buying more clothes than they can wear.”