Part One: Introduction

An Unspeakable Disaster It has been five years since the horrific collapse of a Bangladeshi garment factory complex called Rana Plaza. The dead numbered 1,134, mostly young women; the injured, some 2,500. It was the worst accident in the history of the apparel industry and one of the deadliest industrial disasters of any kind.

This report marking the fifth anniversary operating on floors three through of Rana Plaza describes the economic eight produced t-shirts, pants, and forces that contributed to the catastro- blouses for such Western brands phe and evaluates what has happened as Benetton, Bonmarché, , since. It then charts a path toward a Mango, , and . Called Bangladesh deserves safer and more secure future for the to the scene, a local engineer declared Bangladeshi garment sector. the building unsafe. Police ordered it attention, not only because“ emptied pending further inspection. it ranks as the world’s Bangladesh deserves attention, not But the owner, Mohammad Sohel only because it ranks as the world’s Rana, insisted that, despite indications second-largest second-largest clothing manufacturer, his building had begun to come apart, behind only China, but because the manufacturer, behind only all was well. Factory managers ordered human rights concerns affecting its employees to return the next day or China, but because the workers also affect workers in garment- risk losing their jobs. manufacturing countries around the human rights concerns world. Since the 2013 disaster, Most did return. Just before 9 a.m. affecting its workers also Bangladesh has served as a laboratory on April 24, a power outage stopped for international brands and retailers, work. On the upper floors, diesel affect workers in garment- unions, and civil society organizations generators weighing several tons seeking to address factory safety. One apiece rumbled into action. Vibrations manufacturing countries of the central questions posed by this rippled downward. Built illegally, the around the world. report is whether Bangladesh offers top four floors lacked necessary support lessons for protecting human rights in walls. The building’s foundation rested global supply chains for apparel and on swampy ground that compromised other goods. We conclude that to a its integrity. Destabilized by the degree it does, but the experiment is generators, the entire structure incomplete, and more work needs to crumpled inward, story by story, ” be done. creating a nightmare pile of concrete slabs, shattered columns, mangled Before looking at the responses to sewing machines, and crushed bodies.4 Rana Plaza or the industry’s future, the disaster itself warrants recalling. Rana, the owner of the fatally flawed building, made a run for the Indian On April 23, 2013, workers at the border, but Bangladeshi authorities massive eight-story structure on the caught up with him four days later. outskirts of Dhaka, the Bangladeshi So far, he has been sentenced to three capital, noticed deep cracks forming years in prison on corruption charges in the building’s walls and support and still faces prosecution for murder. pillars. Five separate factories

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 5 Blame also shadowed the Western International Responses fashion brands and chains that patronized Rana Plaza’s factories— and Their Limitations Whatever the precise and thousands of other manufacturing To their credit, Western brands and facilities in Bangladesh. The catastrophe number of garment-“ retailers responded swiftly to the humani- raised anew questions first posed in tarian and public relations crises of April exporting factories in the 1990s about the global garment 2013. Within months, they formed a pair industry’s responsibility for working Bangladesh—the figure of unusual initiatives—the European-led conditions in places like Dhaka: Accord on Fire and Building Safety in shifts as facilities open By driving down prices they pay to Bangladesh and the American-led suppliers, do corporations such as Alliance for Bangladesh Worker Safety— and close—we remain Gap, Walmart, and Inditex create designed to get garment factories up to incentives for factory owners to convinced that existing international standards. The initiatives scrimp on safety and put worker were different in some important inspection and remediation lives at risk? How far would Western respects, such as the involvement of companies go to please consumers regimes are not sufficient European-based trade unions and in the United States and Europe who non-governmental organizations in the to protect all of the demand ever-cheaper casual clothes? Accord. But they shared the basic goal And in a country such as Bangladesh— country’s workers. of leveraging the economic power of whose economic fortunes turn on the member companies to see that factories success of its apparel sector, but whose were inspected and then made safe. government so far has proven unable Bangladeshi suppliers that refused to or unwilling to protect workers—how comply with the process faced a can foreign corporations ensure the draconian punishment: being cut off safety of supply chains made up of ” by the participating Western buyers. factories they don’t own or operate Nothing quite like this had been tried to prevent more Rana Plazas? before, certainly not at this scale.

How Bangladesh Stacks Up Globally Top clothing exporters*; US$ billion and (percentage of merchandise exports)+

China $161 (8.0%)

Bangladesh $28 (80.9%)

Vietnam $25 (13.0%)

India $18 (5.5%)

Hong Kong $16 (3.9%)

Turkey $15 (10.6%)

Indonesia $7 (4.4%)

Cambodia $6 (54.3%)

USA $6 (0.4%)

050 100 150 200

*2016 statistics, most recent available; +2014 statistics Source: World Trade Organization

6 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD The foreign initiatives have improved Other researchers at such institutions conditions in many factories. They are as Pennsylvania State University have not, however, panaceas. In two earlier contested NYU Stern’s analysis, Western brands gravitated reports, published in April 2014 and estimating that the figure is between December 2015,5 the NYU Stern Center 4,000 and 5,000.9 “to Bangladesh because for Business and Human Rights pointed out some of their built-in limitations. Whatever the precise number of export of its extraordinarily low The chief constraint is that between them, factories in Bangladesh—the figure prices, which over time the they now cover only about 2,300 shifts as facilities open and close— active factories serving their member we remain convinced that in the long brands drove even lower. companies. The Bangladeshi government run, existing inspection and remediation separately retains oversight for another regimes are not sufficient to protect all of 1,650 or so. But that total of nearly the country’s workers. This conclusion seems self-evident, as the industry- 4,000 leaves out thousands of additional What made Bangladesh successful as backed programs initially were designed factories—and their workers. a supplier of casual fashion, however, to last for only five years. The Alliance ” has also historically made its garment Many of the left-out factories primarily is essentially phasing out in 2018. business dangerous. Western brands do subcontracting work and don’t have The Accord has announced it will gravitated to Bangladesh because of direct relationships with the large continue provisionally for up to three its extraordinarily low prices, which Western buyers, which often are not additional years, through 2021. Once over time the brands drove even lower. even aware of the subcontracting of their the foreign-funded programs pull Rock-bottom prices reinforced low orders. “Unauthorized subcontracting is out, the Bangladeshi government will wage levels and translated into paltry a significant challenge in Bangladesh’s inherit responsibility for all factories investment in factory safety. Even before [garment] industry,” the U.S. Senate and workers, despite widespread Rana Plaza, Bangladeshi garment Committee on Foreign Relations said in a concern that it lacks the resources facilities were perilous: Between 2005 report in November 2013. The committee and determination to meet the need. and 2012, more than 500 workers died went on to describe “unknown factories in fires and building collapses.11 that operate in the shadows” and are The Deeper History of a “often the most dangerous in terms of To understand how apparel making 6 worker safety.” While some subcontrac- Vital Business evolved into such an economically vital tors have closed down in recent years but often-hazardous business, one has to The ready-made garment sector, or RMG, because of greater vigilance by Western go back to the decade after Bangladesh’s as the industry calls itself, has fueled the companies, others have opened, and the War of Independence in 1971, when Bangladeshi economy for three decades. practice remains common. Networks of the country broke away from Pakistan. With annual sales now exceeding $28 subcontractors play a vital role in helping The Bangladeshi military, which took billion, the sector generates 80 percent larger mother factories handle the ebb over by coup in 1975, reversed an initial of Bangladesh’s export revenue and and flow of export orders. Operating on move toward socialism and instead employs close to five million people. very slim margins, subcontractors also encouraged private enterprise and Since the mid-1990s, it has helped help maintain low production costs. foreign investment. Later in the report, we describe our propel, on average, a 6% overall annual recent visits to subcontracting facilities. growth rate. Despite a reputation for Bangladesh wasn’t an obvious place government corruption, monsoon- to start a new industry. Its roads were In part because of uncertainty over the season floods, and rural destitution, poor, its electrical grid unreliable; it number of subcontractors, there isn’t a Bangladesh actually presents a case lacked raw materials and a deep-water consensus on how many factories in study of successful development. port. But a global export-quota system Bangladesh make clothing for export. Largely because of the garment industry, worked in Bangladesh’s favor. The system The government has not done an the portion of Bangladeshis living below exempted the south Asian country from industry census. Comparing various the poverty line has fallen from more restrictions on sales to Europe and the databases, the NYU Stern Center in than 44 percent in 1991 to less than United States. And when Korean and 7 2015 calculated a total of about 7,100. 13 percent. In 2014, the World Bank Taiwanese companies hit limits on how Using a similar methodology, BRAC promoted Bangladesh to “lower middle- much clothing they could sell in the West, 10 University’s Centre for Entrepreneurship income country status.” The country they began opening factories in places 050 100 150 200 Development in Dhaka in 2016 generated today has a population of 165 million, like Bangladesh. Scores of educated a count of more than 8,000.8 more than Russia.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 7 Bangladeshi Garment Factory Accidents by the Numbers*

Total Number of Factory Accidents by Year Number of Significant* Accidents by Year

40 38 34 20 17 35 30 26 15 25 21 20 20 10 15 5 5 4 10 2 3 5

0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

*Resulting in more than five deaths and/or 10 injuries.

Factory Accidents by Cause Repeat Incidents in the Same Factory

5 Factories Fire Boiler False Alarm have had more 130 5 1 than one incident

100% Machine Building Collapse Water of reoccuring incidents 1 1 1 at factories are fires

*The statistics on this page refer not only to export-oriented cut-and-sew factories, but also to facilities performing such tasks as knitting, weaving, spinning, washing, dyeing, printing, and making accessories.

Data visualization by Hovsep Agop, based on information compiled by the NYU Stern Center

8 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Bangladeshis were sent to Korea for The Cost of ‘Fast Fashion’ authorized the factory to do this work— management training and went on to an illustration of the shadowy arrange- start their own factories back home. Low Bangladesh’s extreme low-wage, ments that characterize significant parts barriers to entry amounted to the cost of low-price approach to manufacturing of the industry.15 buying a batch of sewing machines and intersected with a consolidating global renting a building in which to put equip- apparel industry aggressively searching The sudden disintegration of Rana ment and workers. The country had few for cheap, plentiful labor; high-volume Plaza, snuffing out so many lives all industrial premises, so many entrepreneurs production; fast turn-around times; at once, brought home the need for a opened factories in flimsy tenements. and light regulation. Beginning in the dramatic departure from past practices. 1990s, retailers and brands increasingly How garment manufacturers, their Promoting the garment industry used point-of-sale technology to follow North American and European clients, became Bangladeshi national policy. consumer trends in what became known and the government of Bangladesh In the 1980s, military rulers made it as “fast fashion.” Chain stores kept reacted to Rana Plaza has helped easier for factory owners to finance smaller inventories and changed orders determine the future of the country’s fabric purchases and warehouse their more frequently, putting pressure on their most important industry. goods duty free. The government suppliers in Bangladesh and elsewhere Other forces are shaping that future, signaled to foreign fashion brands that to comply or risk losing business. as well. Ethiopia, Myanmar, and other the country’s poor rural population Consumers in the U.S. and Europe grew new challengers are seeking larger provided a large labor pool eager for accustomed to choosing from ever- shares of the global garment business. $1-a-day jobs. “They used words like changing arrays of inexpensive clothing. Automation, meanwhile, may eventually ‘value,’ ‘good bargain,’ and ‘reliable The real dollar price of apparel entering displace hundreds of thousands, even workforce,’ and the brands understood the U.S. declined 48% from 1989 to 2010, millions, of low-skilled employees in what they meant—low wages and low squeezing the already-slight margins of Bangladesh, creating a daunting social prices for the clothes,” says Sanchita Bangladeshi factory owners.12 One study challenge for the country. But for the Saxena, director of the Chowdhury Center that focused on men’s and boy’s cotton foreseeable future, Bangladeshis in large for Bangladesh Studies at the University pants produced in Bangladesh for export numbers will continue to make clothing. of California, Berkeley. to the U.S., found that prices fell 41% Worker well-being will remain a concern. from 2000 to 2014.13 Growth continued when civilian demo- And as a result, the response to Rana cratic government was reestablished Small profit margins, usually hovering Plaza and current gaps in factory safety in the early 1990s. From 384 factories in the low single digits, exacerbated a deserve urgent attention. employing 120,000 workers in 1984, tendency on the part of Bangladeshi the industry expanded to 2,000 factories suppliers to cut corners on safety. employing more than 1 million in 1994. Making matters worse, Bangladesh’s As garment manufacturing eased extraordinarily weak regulatory apparatus Bangladesh’s poverty, the country provided inadequate oversight. And Small profit margins, saw gains in a wide range of human- an underdeveloped, highly politicized “usually hovering in the low development measures. Life expectancy, local union movement did not provide literacy, and per-capita food intake workers with widespread protection. single digits, exacerbated increased, while child mortality decreased. a tendency on the part Unemployed young rural women streamed A grim litany told the resulting story: into Dhaka and other cities to take jobs The Spectrum Sweater factory collapse of Bangladeshi suppliers that brought previously unimaginable in 2005 killed 64. Twenty-two died in the economic and social independence. Phoenix Garments building collapse in to cut corners on safety. 2006. The Garib & Garib sweater factory Making matters worse, Not that anyone gets rich laboring in a fire left 21 dead in 2010. Later the same garment factory. Bangladeshi wages year, a fire at That’s It Sportswear killed Bangladesh’s extraordinarily have long been the lowest among major 29. In November 2012, five months weak regulatory apparatus apparel-exporting countries. Rana Plaza before Rana Plaza, a fire at the nine-story led to an impressive-sounding 77% Tazreen Fashions factory resulted in 112 provided inadequate increase in the minimum wage, but that 14 deaths and more than 200 injuries. oversight. translates to the equivalent of only $64 Tazreen made clothes for Walmart as a month, or 31 cents per hour. Higher a subcontractor, although the giant prevailing wages still do not cover the American chain said it had not living needs of many workers. ” FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 9