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A solution to a garment industry crisis?

A shirt with a Benetton label lies in the rubble three days after a Bangladeshi garment eight-storey building collapsed in Savar, on the outskirts of Dhaka, on April 27, 2013.

UPDATE 8/8/13: The owner of the 1,000-store Uniqlo chain, Fast Retailing, joined the European iniative to improve factory safety in Bangladesh, after initially opting out.

The list of big global retailers that have declined to sign an agreement to improve worker safety in Bangladesh grows even longer. Uniqlo, the fourth biggest company in Japan announced yesterday that it’s opting out. They join Wal-Mart, The Gap, and JCPenney to name a few.

Improving those poor conditions is a problem that has landed on the shoulders of factory owners in Bangladesh. Western brands put pressure on manufacturers “to maintain or improve standards while producing the same goods at the same rate if not faster, same quality, price -- when in fact, their input costs, their transportation costs are going up," says Richard Locke, professor of management at MIT and author of “Promoting Labor Standards in a Global Economy.”

He says the Bangladesh factory owners “all kind of resent that they’re the ones being held accountable for something that is partially their doing but partially the doing of we, as consumers, and the brands and retailers.”

Locke says Bangladesh garment factories could do some simple things to widen their profit margins. However, factory owners can be hesitant to spend money on upgrading their systems when they “have no guarantees that the buyers, whether they’re global brands or large retailers will come back next year or even next season to give them the kinds of orders that they need.”

Another problem?  The factories are often managed by people who were “basically really good workers that got promoted to supervisors.” They don’t have any experience in training workers or keeping track of inventory to make the company more efficient.  

Inefficiencies plague the Bangladesh garment industry. Locke says it’s not uncommon to see bolts of fabric lying haphazardly: “You wonder how will they ever know which bolt do they need to get for that order? They may not even find it, so then they order another one.”

Some have suggested real change could come from consumers, but Locke says past experiments suggest most consumers wouldn’t pay more for items, even if they’re produced in better working conditions. That’s especially true for people at lower price points.

That, says Locke, is where Wal-Mart could come on. The retail chain has amassed huge amounts of wealth because of their ability to manage their supply chain, “to make sure they could get those products, at the right price points, into their stores. “

Locke says, “if they can do it for fish or they can do it with some electronics or they can do it with organic vegetables, I don’t understand why they can’t do it for sneakers and garments.”

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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