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IRII to Retailers: Time to Get Serious about Compliance

Recent chaos in Cambodia over too-low wages struck a chord with many retailers and factories as the government’s heavy-handed response led police to fire into a crowd of protesting workers, resulting in four deaths and dozens of injuries earlier this month.

The violence in Cambodia followed a string of similar wage protests in other low-cost sourcing countries last year after the Rana Plaza building collapse and the Tazreen factory fire shed a light on unfavorable working conditions and sparked general discontent in the textile and apparel sectors.

With garment workers increasingly fighting for fair working conditions and pay, some organizations are considering ways to reshape the industry and start to quell the uprisings.

Rob Broggi, CEO and co-founder of Industrial Revolution II (IRII), a modern-minded manufacturer in Haiti, said the first step is getting retailers to realize compliance isn’t just a matter of ticking required boxes and also getting consumers to demand the brands they buy from are really being responsible.

“Brands and retailers need to do more than just pay lip service to this idea of responsible sourcing and they can’t just rely on third party auditors to say ‘yeah that factory is fine’ and as soon as the auditors leave the building the exits are closed again and the dangerous conditions go right back to where they were,” Broggi said. “It’s got to be more than ‘cover your ass.’ Brands and retailers really need to make a more concerted effort to ensure that these factories really are safe and treating workers well, and that takes more of an effort than what has been made in the industry.”

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IRII’s business model is built around social responsibility and the company is working to create a paradigm shift toward responsible sourcing and consumerism in the apparel industry, Broggi said. IRII set up shop in a 35,000 square foot Port-au-Prince factory last year with the capacity to cut, sew and digitally print up to five million knit and woven units annually. They started full production in September 2013.

What’s different from models being implemented in other parts of the developing world, like Cambodia and Bangladesh, Broggi said, is that IRII is striving to offer good working conditions, pay a good wage and respect workers.

In addition, a sizable 50 percent of IRII’s profits will be invested into workers and the local community, going toward healthcare, education, training and infrastructure, a practice that supports the company’s “train the brain, not the hands” mantra.

At IRII, every worker makes the minimum wage, Broggi said. “There’s a lot of press suggesting that many factories in Haiti and certainly other parts of the world don’t pay the legal minimum wage which absolutely does happen, no question about it, but we pay at least the minimum.” As a potential salary supplement, depending on production and efficiency, a worker could earn multiple times the minimum wage.

With this model, Broggi said IRII “can keep workers longer because they’re happier, healthier and not worried about whether their kid is going to get proper health care,” and that consistency in the staff means consistency for the company, which will ultimately be a boon for business.

“Even though we’re not approaching this with a living wage strategy like others may do, we’re not paying three or four times the minimum wage and looking to completely upend a wage structure in the region,” he said, “But we are trying to create a model where the workers’ direct participation in these programs is clearly an added benefit for them and positively incremental to their lives.”

The brand new, and well-kept, factory was such a novelty in Haiti’s garment industry at the onset that apparel workers surveying the new space prior to its opening gathered around the bathroom in awe of its pristine condition, Broggi said. “Something as simple as a clean bathroom means so much to these workers,” he added.

Broggi said, “If they’re being treated with dignity and respect, in a positive working environment, the demand for higher wages becomes less of a sticking point. If they’re being treated very unfairly and have to work in horrible working conditions, they want to get paid for that suffering.”

The issue of whether to raise or not to raise wages is a controversial one as workers say they don’t earn enough to make a living and factory owners and country leaders argue that higher wages could cost the country its competitiveness.

For many of these developing nations, it’s difficult for governments to really assess whether a wage is too low, Broggi said, and it’s a fine line between setting acceptable wages and remaining a relevant player in the market. “You obviously want to pay workers enough so that they can live a decent life but if your wage structure is too high the nature of the industry is that, you won’t get that production. And what’s better, a job that pays a minimum wage where you can survive, or a place that has no jobs? So it’s a difficult decision for these governments to make.”

The apparel industry is in the first phase of the shift to more compliant factories and more ethical sourcing, now it’s just a matter of how quickly brands and consumers force this issue along and to what extent, Broggi said. “Once consumers start to push this issue, that’s when I think the trend is going to become more powerful.”

IRII has plans in place for another factory in Haiti, which once built, would be the first Leadership in Energy and Environmental Design (LEED) certified apparel manufacturing company in the Caribbean. Broggi said he hopes the factory will be up and running in the next three to five years, and beyond that, IRII plans to evaluate building in other developing regions like Africa and Asia when the time is right.

“If we can create this brand that retailers or fashion brands want to use as something instrumental to their own brand, then I think we will have made an impact because, at that point, other manufactures will see the value in what we’re doing and hopefully that will raise the bar across the board,” Broggi said. “It’s going to take time, but if we can be the catalyst for that and demonstrate success creating a responsible manufacturing brand that gets traction in the minds of both retailers brands, and even consumers, then I think the impact could be significant to the industry.”