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Retailers Clueless Which Bangladeshi Factories Make Their Apparel

Although their apparel is made in Bangladesh, many retailers say they don’t know which factories manufacture their goods.

Following Bangladeshi factory collapses and destructive fires, the apparel of major brands was found in the ruins of these disasters.  The contractors involved, however, claimed they were unaware that their production contracts were sub-contracted to these unsafe facilities.

Sub-contracting is widespread in Bangladesh, and production is often re-assigned to factories which have not been inspected for structural safety and have not established worker safety programs.

Despite recently-established inspection programs by North American and EU brands and retailers, only about 20 percent of Bangladeshi factories will be covered, according to industry sources.

An independent inspection program set up by Gap Inc. and Walmart reportedly conducted preliminary assessments of some seventy Bangladeshi garment factories, finding only six  that were safe.  Bangladesh has an estimated 4,000 to 5,000 garment factories.

A joint safety inspection agreement between the Bangladeshi government and private apparel and textile makers is scheduled to begin this fall, with many US and UK firms participating. Both nations have pledged financing to make needed repairs and enhancements to structurally defective buildings.

Gap and Walmart are among the brands which chose not to participate in the government program, instead conducting their own inspections and repairs.

Some industry experts are not optimistic about the success of either of these inspection programs, citing the widespread Bangladeshi practice of sub-contracting to other “middle men” who sub-contract again to factories that have not undergone inspection and whose safety conditions remain undetermined.

Dividing a production contract into multiple sub-contracts is called “sweating,” and has long been a practice in Bangladesh.  Besides the gradual erosion of profit margins, the major downside of sweating is that the least safe facilities fall under the regulatory radar, avoiding inspection. And the slicing of a contract into multiple sub-contracts makes it difficult for a retailer to trace their products to their manufacturing origin.

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The practice of sub-contracting is motivated by several factors: the manufacturer’s need for fast turnaround, increasing compliance and shipping costs and the need to capture increasingly thin margins.

Workers’ rights advocates have called for an open dialogue on these issues, as well as for a more comprehensive system that regulates all factories, no matter how far down the supply chain.