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New Report Finds More Than Half of Bangladesh Factories Engaged in Subcontracting

Turns out Bangladesh has more than 7,000 garment factories, nearly 65 percent more than previous estimates pegged—and more than half of that total are indirect sourcing, or subcontracting factories.

The staggering figures are part of a report released Thursday by the NYU Stern Center for Business and Human Rights, “Beyond the Tip of the Iceberg: Bangladesh’s Forgotten Apparel Workers,” highlighting Bangladesh’s unregulated factories and the thousands of workers likely at risk as a result.

After a year’s worth of field work in Bangladesh and reviews of five publically available data sets of factories, researchers found that nearly three million workers are producing goods for global brands at factories that fall outside the purview of regulation and international safety improvement initiatives.

“Our research shows that indirect sourcing is an essential element of Bangladesh’s low-cost, high-volume model of garment production,” said Sarah Labowitz, co-director of the Stern Center for Business and Human Rights and co-author of the report. “Though global brands assert that they have strict policies against unauthorized subcontracting, in reality, millions of workers at thousands of smaller factories are producing their goods. Working in these factories is often highly risky, yet virtually no international resources are being applied to them.”

On learning of the report, Siddiqur Rahman, the new president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Reuters there weren’t 7,000 factories in Bangladesh making for international brands.

“Buyers don’t place orders in non-compliant factories,” Rahman said. “Subcontracting factories don’t exist.”

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In reviewing the two factory safety initiatives that followed the 2013 Rana Plaza tragedy in Bangladesh, the Accord on Fire and Building Safety for Bangladesh and the Alliance for Bangladesh Worker Safety—both of which the country’s commerce minister recently said wouldn’t be renewed after their 2018 end—researchers found them to be “narrowly focused.”

North American brands like Macy’s and Gap, which back the Alliance, and European brands like Inditex and H&M that support the Accord, made commitments to spend as much as $100 million over five years to improve factory safety, but according to the report, efforts have gone to a small subset of direct exporters accounting for only 27 percent of factories in Bangladesh.

Stern’s Business and Human Rights center researchers are calling on the Bangladesh government, industry leaders, brands and unions to acknowledge the full scope of the country’s garment sector and the true cost it will take to upgrade it—subcontractor factories included.

The funds required to fix all of Bangladesh’s garment factories, according to the report, is likely to be “much higher” that what’s been committed thus far. The center is also calling for a plan to formalize and regulate indirect sourcing factories.

“Achieving minimum standards in all factories, including indirect suppliers, will require significant additional financial resources,” Labowitz said. “If brands, local manufacturers, governments, international development and financial institutions, and private philanthropy work together and share responsibility for the true costs of a safe and sustainable garment sector, these challenges can be overcome.”

An interactive map with the locations of every registered garment factory in Bangladesh also accompanied the report, and shows facilities by name, details where they are registered, their principal products, capacity and number of employees.