Apparel Sourcing Intelligence - Worldwide

Gap, Walmart and the AFBSB are the last things to demonise over factory safety

It’s as silly to demonise Gap and Walmart for not signing the Accord on Fire & Building Safety in Bangladesh (AFBSB) as to think it differentiates European and US attitudes to business.

But that hasn’t stopped the usual vitriol being hurled at Gap and Walmart over not signing it, or new, sillier, vitriol from people who ought to know better about its substance. And all mask the real issues
First, when it comes to safety, there are far bigger demons in this world than Gap and Walmart.
There were a few names missing from the list of Western businesses with garments going through the factories at Rana Plaza when it collapsed. And Gap, Walmart, Nike and Levi were high among them. Activists quibble that such businesses can’t be guaranteed to keep on supporting the upgrading of Bangladeshi factories forever without a legally enforceable contract. But the absence of such a contract hasn’t stopped Nike and Levi from almost impeccable operations in Bangladesh for some year now. And both Gap and Walmart have been pouring money into Bangladesh for the past few months.
Both have shown some commitment to the country in the future as well. Which is more than, for example, Disney has. And a lot more than anyone in Japan has.
Second, this isn’t about the difference between Europe and America. It’s silly to pretend that attitudes to safety in Bangladesh show some kind of difference between Europe and America. Here’s a list of the top 11 national apparel markets, in order of size (billion dollars at retail prices, 2012) apparel imports from Bangladesh (million dollars at landed prices, 2011) and the percentage of their national apparel market controlled by  businesses that have signed the AFBSB
It’s clear that the real difference is between the UK and the rest of the world: roughly half all Bangladeshi purchases by buyers singing the AFBSB appear to end up in Britain. And what screams out from this chart is the complete lack of involvement by ANY Japanese buyers, even though Japan is the world’s third largest garment market, and the fastest growing major destination for Bangladeshi exports.
Third, it doesn’t show Americans don’t care about safety. The table above shows the proportion of each county’s apparel market held by AFBSB signatories. But I’d argue that what Nike, Levi, Walmart and Gap are doing is pretty much as good. Add their share of the US and Canadian markets into that table, and buyers in North America who’ve made real, tangible commitments to Bangladeshi safety have over twice the share of their national apparel markets as buyers in France and Italy.
So if activists want to beat buyers up, why aren’t they picketing Uniqlo, Disney, Etam, Kiabi, Camaieu and OVS?
Fourth, what does it tell us about culture?
Gap said the AFBSB would “open legal flood gates” to plaintiffs to sue US companies, because the US “is a more litigious culture than its European counterparts” said  Gap   spokesman Bill Chandler.
It’s really hard to reconcile Chandler’s argument with the AFBSB, which says just this about litigation:
“Any dispute between the parties… shall first be presented to…the Steering Committee… Any arbitration award shall be enforceable in a court of law of the domicile of the signatory.
It’s impossible to see what that’s got to do with America’s litigious culture. Injured or bereaved Bangladeshi victims can’t sue in America under this agreement. America’s “litigious culture” has nothing to do with Gap being sued by the victims of another tragedy. But it’s crucial to understanding US opposition – and it really is likely to get AFBSA signatories sued in the US by a completely different group of people.
The really contentious bit of the AFBSA hasn’t been mentioned by any US retailer, and all US retailers know why it’s contentious and why it’s dynamite to mention it.
“Signatory companies shall continue business at order volumes comparable to or
greater than those that existed in the year preceding the inception of this Agreement with Tier 1 and Tier 2 factories at least through the first two years of the term of this Agreement”
This clause is dynamite because it stops signatories from cutting production in Bangladesh. Women’s Wear Daily recently reported that’s exactly what Walmart wanted to do, it’s what Disney has already announced and it’s highly likely many other US retailers are working out how to do the same thing.
The issue is affected by America’s litigious culture because a shareholder could easily sue a US company committing to maintain Bangladeshi production if such a commitment turned out to damage the company commercially: something every business operating there knows is a real risk.
The AFBSB can’t ensure safe factories tomorrow. It’s a five year programme and all its more fervent enthusiast can say is that at the end of those five years, if factories meticulously follow the fire prevention and management practices in their training, the chance of further fatalities will be dramatically reduced.
And the AFBSB doesn’t even try to deal with the awful risks to the industry from Bangladesh’s horrendous stability problems: its political system and public order are as unstable as the ground it’s built on. In straight commercial terms, many businesses would be doing the right thing by their shareholders if they got out of the country – and the American system makes legal action by a disaffected shareholder highly plausible if a garment buyer suffered from the consequences of getting caught up in another tragedy or political mess.
Fifth: but what of the criticisms American retailers have thrown at the AFBSB? 

Apart from the safety problems, American retailers really do have a cheek. “[American] retailers are committed to a plan of action that is both workable and sustainable,” the US National Retail Federation (NRF) President Matthew Shay said on May 15, explaining why most of them rejected the AFBSB. Well they’re not. The NRF proudly presented its plan the following day – but all it consisted of was a name.
Just as he described the AFBSB, the “Safer Factories Initiative the NRF announced “isn’t a plan at all; it gives no clear path to practical and immediate solutions to the challenges facing the Bangladeshi garment industry”. It won’t be ready for at least a week, in spite of Shay’s telling us the previous day that his “group has been working with stakeholders for a number of months to come up with a solution to address the safety issues in Bangladesh”. But we can be sure it won’t be “a process that serves only the unions”, because the NRF doesn’t like such things
The truth is that Philip Green of Arcadia doesn’t need advice from a lawyer like Shay, whose entire career has been spent working for trade associations, in how to run his business. The NRF was no use to Tesco when it got savaged for resisting union closed shops in California, and Tesco doesn’t need career consultants  to tell it how to avoid “a process that serves only the unions”. There’s not a retailer in America who’s shown the commitment to building a real business that’s been shown by the Albrecht brothers who’ve built Aldi.
And the idea being put about in the US that the AFBSB is a Euro-wimp invention designed for countries run by unions is completely at odds with the reality of industrial relations in Britain – the country where the AFBSB has the strongest following.
The NRF’s criticisms of the AFBSB are silly and ill-informed. Almost as silly as the activists’ criticisms of the NRF.  There are good reasons many US buyers are nervous of the AFBSB, and it’d help if they were honest about them.
In the meantime, the activists might try exercising their anger at businesses less committed to worker safety than Gap or Nike. France, Italy and Japan are full of them, there are a fair few in the US, and they’re everywhere in China and Russia.