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Bangladesh Alliance Says Factory Remediation Progress Slower Than Expected

Since its establishment two years back, the Alliance for Bangladesh Worker Safety has been working to clean up the country’s readymade garment industry and make factories compliant, and remediation was the big item on the agenda this year.

In its second annual report released Tuesday, the Alliance—which works with 26 apparel companies including Macy’s, Gap and VF—said it has inspected 661 of its 662 member factories, eight have been fully closed and aren’t doing business at all, 12 have been partially closed and two have been subjected to load reductions.

The remediations, however, are taking longer than expected.

Factories, on average, needed 17 structurally related repairs, 32 fire related repairs and 37 electrical repairs.

Six factories in total have passed final post-remediation inspection, and when asked why that number wasn’t bigger, Alliance independent chair Ellen O’Kane Tauscher said simply, “The truth is that a number of different issues have caused the remediation to be slower than anybody wanted.” Chief among those reasons: Most factories can’t afford it.

“In most cases, most of those six factories had their own financing or used Alliance company financing,” Tauscher said on a conference call Tuesday. And factories that have completed their requisite upgrades are being sought out by buyers and considered premium because of their standards and safety, she added.

“We had concerns that these factories wouldn’t be competitive, that the process would be too difficult, but those concerns have been suitably mitigated,” Tauscher said.

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The Alliance has been working to help make funding available for factories to make improvements and recently completed an agreement with the International Finance Corporation (IFC), that makes $50 million in affordable long-term financing available for factory owners. The organization also just announced a still-in-work agreement with the United States Agency for International Development (USAID) under which USAID will provide $18 million in funding for factory upgrades for those that may not be eligible for the IFC program.

“This is the first lower-cost financing that’s accessible to factories,” Tauscher said. “The Alliance negotiated it because we perceived there was an incredible desire to get these remediations done.”

Since last month, 414 factories have had access to Alliance worker helplines, and to date, the organization has received more than 21,000 calls from employees.

Worker training has also been completed at 597 Alliance factories and another 47 have training in progress as of July. Nearly 14,000 factory guards have also undergone safety training.

And it seems the training has so far been paying off.

According to the Alliance report, when asked what to do if a fire alarm sounded, 73 percent of recently surveyed respondents said they would take it seriously and act accordingly, a figure more than double the pre-training total of just 34 percent.

Ninety percent of workers now feel they are obligated to report unsafe conditions, compared to 67 percent prior, and 82 percent (up from 51 percent) said they should report all injuries too.

James Moriarty, Alliance executive director who was also on the call Tuesday, spoke about the organization’s not yet formed safety and health committees, saying that the Alliance is still waiting for the Bangladeshi government to set the regulations for the committee and that moving forward without them would be premature.

“We have an agreement to go forward with various factories [to put the committees in place] but we believe we can’t really go forward if you don’t really know what you’re going forward with,” Moriarty said.

Tauscher followed up the comment saying, “We believe in the rule of law, but we also believe the country should promulgate these regulations. Until that happens I believe we’re in a holding position.”

The Alliance doesn’t yet have a timeline for the completion of additional remediations to add to the existing six, but Tauscher said she expects the factories to make the necessary investments to move forward with the upgrades.

“We don’t have anybody balking at going through the process, but obviously most of the factory owners in Bangladesh cannot fun anywhere from $200,000 to $300,000 in remediation through working capital,” she said. “We have removed from many factories that problem they had of accessing lower cost capital from the banking industry in Bangladesh.”