Business news : Bangladesh collapse puts garment industry at crossroads

DHAKA BANGLADESH — In the aftermath of a building collapse that killed more than 500 people, Bangladesh's garment manufacturers might face a choice of reform or perish. Home to five factories that supplied clothing to retailers in Europe and the United States, the shoddily constructed building's collapse has put a focus on the high human price paid when Bangladeshi government ineptitude, Western consumer apathy and global retailing's drive for the lowest cost of production intersect.

The eight-story Rana Plaza building collapsed nine days ago, sparking desperate rescue efforts, a national outpouring of grief and violent street protests. The tragedy followed the deaths of 112 people five months ago in a blaze that swept through the Tazreen Fashions garment factory in Dhaka and the death of seven in a January blaze.

With three disasters in quick succession, Bangladesh's $20 billion garment industry fears that a backlash has been set in motion that threatens fortunes and livelihoods in a business that employs more than 3 million people and accounts for about 80 percent of the impoverished country's exports.

"It's a crucial time for us," said Atiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association. "We are doing our best to improve the safety measures in the factories. We expect our buyers to bear with us."

The most potent warning so far has come from the European Union, which said it could restrict Bangladesh's access to the crucial EU market if it fails to immediately take steps to ensure that basic labor standards are enforced. Bangladesh is a member of Europe's "Everything But Arms" program for the world's poorest nations that exempts it from quotas and tariffs on all exports to the 27-nation EU except armaments. The EU is Bangladesh's single biggest market with exports of 8 billion euros in 2011.

The United States is also reviewing Bangladesh's preferential trade status, a lengthy process that gained urgency after the killing last year of a Bangladeshi labor rights organizer who had campaigned for years to improve factory safety. Garments are not included in the American trade preferences for Bangladesh but loss of its special market access would further taint its reputation in the U.S.

As a U.S. decision nears, the building collapse gives additional momentum to members of Congress who wrote to Bangladeshi Prime Minister Shiekh Hasina to protest a climate of fear created by the killing of Aminul Islam, the labor organizer, and lobbied then-U.S. Trade Representative Ron Kirk to speed up a review of Bangladesh's trade access after the Tazreen fire.

The Bangladeshi garment association met earlier this week with representatives of 40 garment buyers including H&M, JC Penny, Gap, Nike, Li & Fung and Tesco. It said the companies have doubts about whether the industry can meet their production deadlines.

The Bangladesh government, however, may be the least willing of all to accept any responsibility. "I am not worried," said Finance Minister Abul Maal Abdul Muhith on Friday. "These are individual cases of ... accidents. It happens everywhere."


By Farid Hossain and Stephen Wright
The Associated Press

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