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Made in USA?

Made in USA?

28.5.2013 10:02

The devastating collapse in April 2013 of the Rana Plaza building in Bangladesh, which housed at least four garment factories, made the headlines worldwide. The building showed large structural cracks on 23 April and shops and a bank at the premises were immediately closed. The garment factory workers were however ordered to return the following day. The building collapsed during the morning rush-hour. The search for the dead at the site of the collapsed building ended in mid-May with the death toll of 1,127 and approximately 2,500 injured, mostly women.

Many Western garment companies which have activities in Bangladesh have engaged in significant public relations campaigns to minimize the fallout from revelations about their worker's inhumane conditions. But words are cheap.

So far only two companies, the US-based PVH which owns Calvin Klein and Timberland, and German retailer Tchibo, signed the Bangladesh Fire and Building Safety Agreement, which provides for independent structural inspections of factory buildings. Walmart, on the other hand, in 2011 rejected reforms that would have had retailers pay more for apparel to help Bangladeshi factories improve safety standards. Walmart, along with 14 other North American companies, also refused to sign the Accord on Fire and Building Safety in Bangladesh as the deadline passed on 14 May 2013.

Since 1980, Bangladesh has risen from the 76th to the world’s fourth biggest garment exporter as clothing manufacturers globally search for the lowest cost sites. The $2tn rag trade is one of the world's most mobile industries. With minimal barriers to entry it is all about low costs - and chasing those low costs around the globe.

In 1980, Hong Kong was the no. 1 clothing exporter in the world with $5bn in sales at current prices, followed by Italy ($4.6bn), South Korea and Germany (each just under $3bn). The other countries in top ten were, in this order, Taiwan, France, UK, China, US and Belgium. China exported $1.6bn worth of garments then. China became the no. 1 clothes manufacturer in 1994 but it was a very close race with Hong Kong then. In 2011, the situation was completely different. China’s dominance was absolutely staggering. It exported $154bn worth of garments, followed by a great nothing, still more nothing, and then Hong Kong with $24bn and Italy and Bangladesh with $23 and $20bn, respectively. The rest of top ten was made up of Germany, India, Turkey, Vietnam, France and Spain.

Why did this happen? Let’s look at the cost structure of the garment trade first. Percentage split of costs sold in this industry is very telling: 31% cut/make/trim/labour, 23% yarn and textile manufacturing (energy, labour), 11% raw materials, 8% supply chain overheads, 8% duty, 5% freight, 8% other manufacturing costs and 7% profit.

Obviously, the slightly tedious statistics show quite clearly that the largest component of costs in production of clothes by far is labour. And labour in our western world is expensive. We believe in all kind or rules and regulations such as minimum wages, ban on child labour and health and safety regulations in the workplace, which all cost a lot of money. There are many countries in the third world which are much more benevolent to employers who promise to open a new clothing factory. Hence the bulk of the trade, other than the highest-end designer fashion and specialized production is gradually shifting to such countries and their sweat shops.

What do we do about sweat shops? Shall we all buy just locally-made clothes, should Americans e.g. only buy “Made in USA” T-shirts? Well, the "Made in USA" assurance doesn't necessarily guarantee the clothes were actually made within the 50 states of the US. The Commonwealth of the Northern Mariana Islands, for example, otherwise 15 islands in Western Pacific, entered into a political union with the United States that exempted it from federal immigration and minimum-wage laws. Workers were imported from other parts of Asia, paid poorly and kept in conditions akin to involuntary servitude. But the clothes could boast the "Made in USA" label.

Here is some food-for-thought: What if we added a label on each piece of apparel, stating that it was -- or was not -- sweat-free? Clearly, introducing obligatory “sweat-free” labels is not on the legislative agenda anywhere at the moment. But it could work quite nicely to solve a long-standing problem.

Our society has developed somewhat since the great industrialization of Europe and USA in the 19th century. Did you for example know that the U.S. Supreme Court noted about a century ago, when it struck down a federal law limiting child labor, that there was nothing inherently evil in the textiles produced by children? Well, people changed their mind about this. When it comes to American children at least, that is. As far as clothes produced in Bangladesh or China, we are more likely to follow the rule “out of sight, out of mind”. A required label would change that, and be a proclamation of a garment's “evil”. Of course, contemporary garment corporations would oppose it with all their lobbying might, the same way the food companies successfully fought the labeling of genetically modified food in California and elsewhere to-date, just as the Southern cotton manufacturers of the early 20th century challenged child labor laws or big tobacco challenged the health warnings on cigarette packaging.

But still, it is hard to imagine that concerns about worker abuse in Bangladesh or India would stop globalization of the garment trade. It is equally naive to believe that the working conditions in Bangladesh are going to significantly change on the account of so many people dying at Rana Plaza.

So perhaps we should go back and consider the labeling. Afterall, despite all the lobbying to the contrary, tastefully printed warnings, and in some countries even very graphic images, adorn cigarette packs everywhere now. Required disclosures for items containing "conflict minerals" are being litigated. Just as it once seemed impossible that the government could interfere with the rights of companies to contract for labor at any price, it may seem unthinkable soon for the government to let companies be ignorant of abuse in their supply chains. The child labor laws in the western countries did change, too, eventually…

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