GPS Gap Inc

By Jon Emont 

DHAKA, Bangladesh -- Five years after a factory collapse killed 1,100 workers in Bangladesh's worst industrial disaster, organizations representing Western brands say that authorities in the country aren't ready to go it alone to ensure safety standards are up to scratch.

Shortly after the Rana Plaza tragedy, North American and European retailers established two parallel organizations to inspect Bangladeshi factories and mandate safety repairs. Both groups initially planned to phase out in 2018.

Instead, the Bangladesh Accord on Fire and Safety, backed by European brands such as Hennes & Mauritz AB and Zara owner Inditex SA has announced plans to extend its efforts for up to three more years.

The Alliance for Bangladesh Worker Safety, which includes North American companies such as Walmart Inc. and Gap Inc., will wind down its operations this year. It plans to establish a smaller safety monitoring organization to ensure the factories the Alliance's brands source from that are already up to code continue to maintain rigorous inspections.

"The national safety regulatory body that's supposed to be doing the work that we've been doing over the last five years is nowhere near prepared," said Rob Wayss, executive director of the Accord.

Bangladesh's government tried to upgrade its monitoring and inspection regime for factories after the disaster, but progress has been plodding, according to data compiled by the International Labor Organization from Bangladesh government sources.

Of 754 garment factories that are part of the Bangladeshi government's safety program, just 109 have resolved more than half of the safety issues identified, which include structural, fire, and electrical safety -- a significantly slower rate than factories covered by the Accord and Alliance. The Accord covers around 1,600 factories and the Alliance 666, although there is significant overlap.

Md. Shamsuzzaman Bhuiyan, Inspector General for the Department of Inspection for Factories and Establishments, said his unit has the resources to take over the inspections for factories currently being monitored by the Accord and Alliance. He said he didn't agree with the Accord's views on the matter. "We believe that DIFE is capable of conducting the inspections. A good number of engineers have been recruited," he said.

Bangladeshi authorities have "got their hands pretty full," said Jennifer Bair, associate professor of sociology at the University of Virginia, who has researched the Bangladesh apparel industry. "It's going to be a really tall order to both complete the remediation of the existing factories and also assume responsibilities that are currently under the jurisdiction of the Accord and Alliance."

Since the garment industry took off in Bangladesh in the 1980s, it has been plagued by industrial disasters, including the Tazreen fire of 2012, which killed more than 100 people after managers prevented workers from leaving their stations after a fire alarm sounded.

Industry analysts say garment factories have become less dangerous since 2013, though the Bangladeshi government doesn't compile comprehensive statistics on factory injuries and deaths. Still deadly incidents continue, including a boiler explosion at a garment factory last year that killed 10 workers and injured dozens more.

Under the Alliance and Accord, factories that don't invest in safety improvements are blacklisted from selling to major western retailers, a move designed to protect the roughly 3 million Bangladeshis making garments for the brands.

Western retailers have continued these efforts also because their biggest investors want to ensure that factory improvements made after the Rana Plaza collapse are maintained to lower the reputational risk of doing business in Bangladesh.

"You have to make sure that everything you have worked so hard for doesn't fall flat the moment you leave," said Anna-Sterre Nette, Senior Advisor Responsible Investment and Governance to MN, a major Dutch pension fund manager that invests in the apparel sector.

The Accord and Alliance report that over 80% of factory safety issues identified in safety inspections, such as inadequate fire escapes and dangerous electric wiring, have been fixed.

Such efforts have "helped to establish a culture of safety," said David Hayer, Senior Vice President of Global Sustainability at Gap, a member of the Alliance.

Walmart, a founding member of the Alliance said its goal was to transition to a "locally-run safety monitoring organization" that will maintain factory safety programs pioneered by the organization, such as a worker helpline.

The Accord has said it extended its efforts partly because it needed more time to complete its mandate. While it has successfully removed lockable and collapsible gates from nearly all factories that had them, preventing factory owners from locking their workers in during the workday, more expensive and complex operations are taking longer. For example, only 39% of Accord factories that had inadequate fire systems during initial inspections have since installed fire detection and prevention systems that are fully up to code.

Bangladesh still needs help when it comes to monitoring safety, said Sayeeful Islam, the managing Director of Concorde Garments, a company that sells to a range of western retailers including Walmart. If the Accord and Alliance were to leave Bangladesh, "I would be worried for my country."

Write to Jon Emont at jonathan.emont@wsj.com

(END) Dow Jones Newswires

March 29, 2018 08:14 ET (12:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.