An Accident in History

The collapse of the Rana Plaza garment factory complex near Dhaka in April  2013—killing 1,132 souls and injuring nearly 2,000 more—is unquestionably the most horrific human tragedy in garment industry world history. Whether this enormous loss of life will be balanced by a new era of social reform remains an open question. But it seems just possible that Rana Plaza may well represent the same sort of moral and political shock to an exploitative and dysfunctional production system as did the 1911 Triangle Shirtwaist fire in New York City, which ushered in a generation of social reform and labor rights.

Even before the Rana Plaza collapse, the death toll from Bangladesh factory fires rose to more than seven hundred over the previous decade.

Like the blaze that killed 146 immigrant workers in lower Manhattan, Rana Plaza was an accident but hardly an accident of history. Garment factory fires, building collapses, and other tragedies in East Asia and the Indian sub- continent have become endemic across the far reaches of the supply chains that put clothing and other consumer goods on the shelves of thousands of big box stores in Europe and North America. Even before the Rana Plaza collapse, the death toll from Bangladesh factory fires rose to more than 700 over the previous decade. As recently as November 2012, a devastating fire killed 112 people at the Tazreen garment factory, a sometime vendor to Walmart.

Two things are notable even in the headline news. First, the system of subcontracting and outsourcing that constitutes the bottom of the supply chain remains opaque not only to the government, the public, and the workers but also to the retailers who pay for the product and set standards for its price, quality, and production schedule. Such was the backdrop to the Tazreen fire. The factory was working flat-out to meet the Christmas rush in the West. Walmart had terminated its relationship with the factory due to safety concerns, but one of its sub-contractors continued to use Tazreen (reportedly without its knowledge), and clothes for the huge American retailer were still being produced there months later. Smoldering remains of the store’s “Faded Glory” brand were found in the embers.[1]

But if even corporate headquarters in Bentonville could not quite determine the set of manufacturers who actually produced all the products designated for company stores, there was little doubt, either among outside observers or corporate insiders that Walmart and other retail giants bore some responsibility for the tragedies, if only because they were the ultimate paymasters and orchestrators of the production and distribution chain that sustained nearly four thousand Bangladesh garment factories. Echoing long-standing demands from anti-sweatshop organizers and South Asian unionists, the New York Times editorialized that only stiff government safety regulations and a renewed sense of social responsibility on the part of the big garment buyers could avert future tragedies. “Lawmakers began improving industrial safety in earnest after the 1911 fire at New York’s Triangle Shirtwaist factory,” noted the Times. “The collapse of Rana Plaza should play a similar galvanizing role now.”[2]

We have before us a failure of corporate accountability not just in terms of any individual set of companies doing business in South Asia but systematically as a function of the nature of the supply chains that combine two seemingly contradictory phenomena: a high level of integration between manufacturers and the brands and retailers that source their product from these far-flung vendors, combined with a legal regime that absolves those who command the various links in the supply chain of the kind of responsibility, moral as well as economic, that attached to those in formal leadership of the vertically structured corporation, which once seemed so central to the American polity.

In the Progressive Era, the National Consumers League and the Women’s Trade Union League deployed the weapons of the weak—investigation, exposure, moral suasion, and boycott—to civilize American capitalism. Today, these same tactics are used by numerous non-governmental organizations that monitor, expose, berate, and measure the working conditions and environmental standards that exist in the factories from which Walmart and other retailers source their product. Human Rights Watch, the Worker Rights Consortium (WRC), and numerous Hong Kong- based groups keep the pressure on Walmart, Nike, Disney, and Target, which fear that a decline in their “reputational” status might damage them with millions of consumers. Thus, contemporary NGOs play a role that, in part, fills the vacuum once occupied by trade unions or the regulatory state during the era of vertically integrated corporations and continental markets.

NGOs fill the vacuum once occupied by trade unions or the regulatory state during the era of vertically integrated corporations and continental markets.

In response to the reputational threat that the NGOs can episodically mount, brands and retailers have developed their own (sometimes quite elaborate) codes of social responsibility, staffed by hundreds of company employees at home and abroad. They first arose in the early 1970s when IBM, Ford, GM, and other major U.S. companies faced accusations that their operations in South Africa condoned apartheid. The codes proliferated in the 1990s when it became clear that many of the garments, shoes, toys, and electronics imported from Central America and East Asia were produced under appalling conditions. By 2007, 86 percent of the Fortune Global 200 had some sort of corporate code of conduct, double the rate of a decade before.[3] These codes of conduct have some impact at the margins, especially in terms of environmental standards and standardization of working hours, but studies conducted by sociologists on the ground in Asia and elsewhere have also found that in actual operation, such codes make no fundamental transformation in the way big retailers go about purchasing their goods or in the way its contractors and sub-con- tractors go about producing them. The resultant squeeze on workers’ wages and working conditions remains intact.[4]

Such codes have been notably ineffective in Bangladesh, now the second largest exporter of apparel in the world. There, an utter dependence on cheap labor and cheap exports, a corrupt and ineffective state apparatus, and a powerful and autonomous set of garment manufacturers have generated something close to a lawless industrial frontier. Building permits are routinely ignored, resulting in the construction of poorly engineered multi-story factories on land not far above the water table. Fire codes have been flouted, exit doors locked, and work hours lengthened. The current Western vogue for “fast fashion” means production requirements on the other side of the world change in an instant; should a manufacturer fail to deliver on time, accepted practice in much of the industry is for the buyer to deduct 5 percent for each week of delay. Not unexpectedly, workers get squeezed and safety standards ignored in the rush to make deadline.[5]

In a study of recent factory fires and other loss of life in Bangladesh, the American sociologist Robert Ross found that in virtually every instance, the production facility had been visited a few weeks or months before and approved for operation by inspectors working for companies with well-established codes of conduct.[6] At the Tazreen apparel factory, where 112 workers died, mortality was exacerbated by the lack of open and secure fire exits, the extra floors illegally added to the building, failure to use fire extinguishers, and the refusal of floor managers to let workers leave their sewing machines even after fire alarms had begun. Tazreen produced clothing for Walmart,  Sears,  K.I.K,  Dickies, and Disney among others, all of whom had well-established codes of conduct. Walmart had audited the factory twice in 2011: in May of that year, inspectors gave Tazreen an “orange” rating, meaning there were “higher-risk violations.” But three months later, the factory grade improved to “yellow,” meaning the violations were only “medium-risk.” At Rana Plaza on the morning of April 24, 2013, a government engineer warned workers milling outside the facility that visible cracks in support columns indicated the building was unsafe. But despite the fact that virtually every brand and retailer that sourced from the complex—Bon Marche, Primark, Carrefour, Benetton, Inditex, J.C. Penney, Walmart, Store Twenty-One, and others—administered their own code of conduct, none proved a barrier to the demand by managers that employees get back to work.

Given this dismal and deadly record, in Bangladesh and elsewhere, the main effort put forward by labor-oriented NGOs has been to push the brands and retailers to assume responsibility, on a legal and financial basis, of the global supply chains from which they buy their shirts, shoes, and other consumer goods. Prodded by United Students Against Sweatshops (USAS) and the Worker Rights Consortium, several universities have demanded the establishment of a “designated supplier program,” which would force retailers and brands to source their product from a few, large, carefully monitored factories. Leveraging the power inherent in the $4 billion collegiate apparel market, USAS and the WRC forced Russell Athletic to reopen a factory in Honduras that had been shut down after workers successfully unionized, at the same time persuading the brand not to fight unionization at its seven other Honduras factories.[7]

Likewise, supply chain reformers have insisted that those who source products from distant contractors and sub-contractors acquire a legal obligation to the workers at the bottom of the supply chain, even when sub-contractors fail local laws and abridge their contracts. Thus, after much wrangling and protest, Adidas agreed to pay severance to two thousand seven hundred Indonesian factory workers when their employer, PT Kizone, failed to pay the $1.8 million in severance owed them, under Indonesian law, when the company abruptly shut down in 2011.[8] Not unexpectedly, some domestically made brands have tried to take promotional advantage of such controversy, boasting of the moral and material superiority of their production setup. On the storefront of every American Apparel outlet is the slogan, “Made in Downtown L. A.: Vertically Integrated Manufacturing.”[9]

The Past as Prologue

The most important initiative undertaken by the anti-sweatshop NGOs has come in the wake of the 2013 Rana Plaza disaster in Bangladesh. But before discussing the provisions of this precedent-setting Accord on Fire and Building Safety, it is important to recognize that the com- pact, which seeks to advance a legal, contractual reintegration of employment obligations and relations in the global supply chains of our day, has had a remarkable historical antecedent, based on reforms in the U.S. garment industry during an era when the structure of production and distribution in that economic sector resembled those of East Asia today.

In the early twentieth century, there were some vertically integrated firms, such as Hart, Schaffner & Marx, and Hickey Freeman, which were also pioneers in the sort of welfare and collective bargaining arrangements that prefigured the New Deal. But most of the rest of the garment industry was fragmented and disorganized. “Jobbers” were designers, apparel firms, retailers, or even big manufacturers like H&M who contracted out all or part of their work to “a protean sea of tiny enterprises,” as historian Steve Fraser described the “rag trade” in his biography of the labor leader Sidney Hillman. “They inhabited an economic underworld where chiseling, subterfuge, and tainted goods were the common currency.” As in East and South Asia today, where manufacturers scramble for contracts from Nike, Zara, Target, and H&M, the outside manufacturers of early-twentieth- century New York “defended [their] razor-thin margin of profit by means both legitimate and shady, but especially by exerting a constant downward pressure on wages and working conditions.”[10]

During the first third of the twentieth century, the International Ladies’ Garment Workers’ Union exerted little more real power than its Bangladeshi counterparts today. Militant strikes, mass demonstrations, and radical cries for social justice were common to garment manufacturing both on the Lower East Side and in contemporary Bangladesh. To stabilize the industry, raise wages, and improve safety, the ILGWU argued that jobbers and contractors were actually “joint employers” in an “integrated process of production,” if only because the small, labor-intensive firms that actually did the sewing and assembling of the garments did not own, design, invest in, or purchase any of the materials needed for production. The contractors did not maintain any showrooms or employ salesmen. Their sole task was to provide a service function, to supervise the productive process in the same way a foreman or plant supervisor got out production  and  controlled  labor  costs  in  an “inside shop.”[11]

Reflecting the sentiment that would later be common coin among the brands and retailers anxious to limit their responsibility for working conditions in the twenty-first-century global supply chains over which they presided, the jobbers and merchants of New York ridiculed the ILGWU determination that ultimate responsibility for conditions in the industry lay with those who designed, purchased, and sold the garments produced by the small contract shops. As asserted by a lawyer for the Merchant Ladies’ Garment Association,

The union is endeavoring to call the jobbers manufacturers. The union has tried to reduce the contractor to the status of a foreman for the purposes of these negotiations. . . . If the contractors of this industry are not living up to union rules, that is the union’s problem. If the contractors do not produce in sufficiently large shops to suit the union, that is their problem. If the contractors are in any way obnoxious to the union in their methods of treating workers, the union knows how to handle that situation.[12]

This brand or jobber effort to foist responsibility for work and wages onto an ever shifting sea of petty producers failed. With the coming of the New Deal in 1933, the ILGWU emerged as an economically and politically potent source of worker power and industry governance. For two mid-century generations, the half-million- member ILGWU prevailed in its insistence that the big merchants were party to the bargaining arrangements and outcomes negotiated by labor and capital. The New Deal’s National Recovery Administration, upon which ILG leaders exerted considerable influence, created codes of fair competition that did in fact mandate joint liability for jobbers and contractors, eliminating the capacity of the jobber to evade industrial responsibility and thereby greatly ameliorate “the jobber-contractor evil.”[13]

Although the NRA itself imploded in 1935, the garment unions created a stable system of triangular bargaining in which the union first negotiated a collective bargaining agreement with the jobber, then reached an agreement with the contractors, and then finally the jobber and the contractors negotiated a contract with each other. As a retired union official told sociologist Jennifer Bair decades later, “The ILGWU recognized that the jobber was the lynchpin of the industry. Contractors couldn’t pay anything unless the jobber paid it to him or for him. The trick was to get as much as you could in the con- tract to protect the workers and the union.”[14]

These jobber agreements regulated not only wages and working conditions but also the structure of the relationship between the merchants and the contract manufacturers. Jobbers were required to submit a list of all their key contractors and were not permitted to remove any of these designated contracts from their production networks. They could not shop around for lower wages or even for a more productive sub-con- tractor. These agreements integrated the industry by discouraging arms-length, one-shot deals between jobbers and contractors;  instead  the ILGWU successfully sought to lock jobbers into longer term relationships of mutual dependence with their contractors. And because union jobbers were obligated to use union contractors, contract manufacturers had an incentive to join the relevant employers association and thereby become party to the collective contract signed between that association and the union.[15]  By 1935, the ILGWU represented approximately 70 percent of all women’s apparel workers in America, and by the late 1940s, garment industry weekly earnings stood at nearly 85 percent of those in manufacturing.[16]

All this is not ancient history. To the extent that garment manufacturing in Bangladesh retains an industrial ecology not  dissimilar from that of 7th Avenue a century before, it is not an accident that similar solutions are now on the agenda. The May 2013 Accord on Fire and Building Safety (currently signed by more than 150 global brands and retailers, by the powerful Bangladesh Garment Manufacturers Association, and by two international union federations, IndustriALL and UNI) replicates key features of the ILGWU jobber agreements. Pushed forward by NGOs like the college- and university-based Worker Rights Consortium and the European Clean Clothes Campaign, the Accord on Fire and Building Safety was the product of a multi-year series of negotiations that only reached resolution in the immediate wake of the Rana Plaza tragedy. The Accord rejects the voluntary Corporate Social Responsibility codes of conduct model and instead mandates that all signatories sign legally binding contracts that generate a joint financial responsibility on the part of the Bangladesh contract manufacturers and the global brands and retailers that use them.[17]

Although the Bangladeshi unions do not at present represent the level of worker organization and political power achieved by the ILGWU in its heyday, there are nevertheless three ways in which the Accord reflects core principles of the old jobbers’ agreements. First, the Accord regulates the buying practices of apparel brands and retailers. It requires them to make a multi-year commitment to supplier factories, a major deviation from the industry’s footloose norm.  And these lead firms are specifically required to help pay for factory safety upgrades if the factories cannot cover the costs themselves. Article 22 of the Accord includes such options as joint investments, loans, accessing donor or government support, offering business incentives, and (significantly) paying for renovations directly.[18] This generates something closer to the top of the supply chain investing in the bottom.

The Accord requires [apparel brands and retailers] to make a multi-year commitment to supplier factories.

Second, the Accord calls for workers’ representatives to be empowered participants, with a steering committee composed equally of union representatives and officials from participating companies. The Bangladeshi unions are comparatively far weaker than the New Deal-era ILGWU, but their hand is strengthened by the role played by the international union confederations, the International Labor Organization, and the NGO community, which today plays a role not dissimilar from that of the middle-class, labor-oriented National Consumers League of a century ago. And as with the muckraking agitation and reform impulses of a century and more ago, the Bangladeshi unions and their Western allies legitimize the efforts of each other, justifying both strikes and demonstrations on the ground and the international standard-setting efforts of their North Atlantic supporters.

Bangladeshi unions and their Western allies legitimize the efforts of each other, justifying both strikes and demonstrations on the ground and international standard-setting efforts.

And finally, the Accord’s terms, like the jobbers’ agreements and collective bargaining agreements generally, are not mere general statements of intent or privately promulgated corporate codes of conduct. Instead, they are legally binding, contractual obligations, whose enforcement, should consultation and ILO arbitration fail, can take place in the court of the home country of the signatory party against whom enforcement is sought. This is important because of the corruption, politicization, and systematic employer bias of so many judicial systems in Bangladesh and many other Asian apparel-manufacturing countries.[19]

Significantly, the new legal obligations inherent in the Accord generated resistance from those American retailers, including the Gap, Walmart, and at least fifteen other companies that source products in Bangladesh, who refused to sign the Accord and instead established a rival Alliance for Bangladesh Worker Safety.[20] Unlike the Accord, the Alliance does not require its signatories to cover the costs of factory remediation should other alternatives prove unworkable. Nor does the Alliance include unions as counterparties to the signatory brands, instead incorporating factory owners as part of its governance structure. This is consistent with the failed CSR approach, which marginalizes workers’ voices in favor of a “trust me” partnership between brands, retailers, and factory owners.

Unlike the Accord, the Alliance does not require its signatories to cover the costs of factory remediation should other alternatives prove unworkable.

The most important difference between the Accord and the Alliance, however, is that the American-dominated group resists legal accountability. “The liability issue is of great concern, at least on this side of the Atlantic,” asserted a lawyer for the National Retail Federation. “For U.S. corporations, there is a fear that someone will try to impose liability and responsibility if something goes awry in the global supply chain.”[21] Precisely.

Asserts Rob Wayss, head of Accord operations in Bangladesh, “The Accord has teeth that the alliance simply does not have. The Accord is a transformational agreement. The Alliance is a modified version of the monitoring and auditing and corporate social responsibility that have been employer- led and executed and not rigorous enough.”[22]

The Bangladesh Accord on Fire and Building Safety is therefore of potentially far-reaching import. It represents a step toward the moral, legal, and financial reintegration of a set of sup- ply chains that today constitute the essence of our neoliberal globalization. It encourages and legitimizes the role of workers and their unions in one small but vital aspect of industry governance. The principles inherent in the Accord should, therefore, spread not only to those low- wage or unsafe enterprises of the global South that fill big box shelves but also to the increasingly fissured workplaces of the United States, where a Rube Goldberg set of franchises, sub- contractors, and temporary work agencies have enabled highly profitable big companies to shed responsibility and steal wages and benefits from an increasingly precarious slice of the American working class.

NOTES


[1] “Garment  Factory  Fires: A ‘Distinctly  South Asian’ Tragedy,” The Economist, December 6, 2012, available at http://www.economist.com/blogs/banyan/2012/12/garment-factory-fires.
[2] “Worker  Safety  in  Bangladesh  and  Beyond,” New York Times, May 4, 2013, available at http://www.nytimes.com/2013/05/05/opinion/ sunday/worker-safety-in-bangladesh-and- beyond.html?_r=0.
[3] Robert Ross, “The Twilight of CSR: Life and Death Illuminated by Fire,” unpublished essay in author’s possession.
[4] Pun Ngai and Yu Xiaomin, “Wal-Martization, Corporate Social Responsibility and the Labor Standards of Toy Factories in South China,” in Walmart in China, ed. Anita Chan (Ithaca, NY: Cornell University Press, 2012), 54–70.
[5] Jason   Burke,   “Rana Plaza: One Year on from the Bangladesh Factory Disaster,” The Guardian, April 18, 2014, available at http://www.theguardian.com/world/2014/apr/19/rana-plaza-bangladesh-one-year-on.
[6] Ross, “The Twilight of CSR.”
[7] Allie Robbins, “The Future of the Student Anti- sweatshop Movement: Providing Access to U.S. Courts for Garment Workers Worldwide,” Labor & Employment Law Forum 3, no. 1 (2013): 120–51.
[8] Christopher Yates, “Adidas Agrees to Pay Severance to Workers,” Cornell Daily Sun, April 25, 2013, available at http://cornellsun. com/blog/2013/04/25/adidas-agrees-to-pay- severance-to-workers/.  The  money  was  not an issue since Adidas had voluntarily agreed to provide various kinds of food and living expenses support. The real issue was that of legal and financial obligations, which the company sought strenuously to avoid.
[9] See www.americanapparel.net/contact/vertical. html.
[10] Steve Fraser, Labor Will Rule: Sidney Hillman and the Rise of American Labor (New York: Free Press, 1991), 26.
[11] Emil Schlesinger, The Outside System of Production in the Women’s Garment Industry in the New York Market (New York: ILGWU, 1951), 5–6.
[12] “Garment  Jobbers  Lay All  to  Unions:  Deny They Are Employers,” New York Times, May 30, 1924, E14.
[13] Louis Stark, “Garment Industry Nears Agreement,” New York Times, July 22, 1933, 20.
[14] Jennifer Bair, “The Limits to Embeddedness: Triangular Bargaining and the Institutional Foundations of Organizational Networks” (working paper, Institute of Behavioral Science, University of Colorado, Boulder, August 2012), 8.
[15] Ibid., 10.
[16] Robert Ross, Slaves to Fashion: Poverty and Abuse in the New Sweatshops (Ann Arbor: University of Michigan Press, 2004), 97.
[17] Richard Appelbaum, “Achieving Workers’ Rights in the Global Economy” (paper offered at the American Sociological Association Meeting, New York, August 12, 2013); Mark Anner, Jennifer Bair, and Jeremy Blasi, “Toward Joint Liability in Global Supply Chains: Addressing the Root Causes of Labor Violations in International Subcontracting Networks,” unpublished paper in author’s possession.
[18] §22 reads in full: “[P]articipating brands and retailers will negotiate commercial terms with their suppliers which ensure that it is financially feasible for the  factories  to  maintain safe workplaces and comply with upgrade and remediation requirements instituted by the Safety Inspector. Each signatory company may, at its option, use alternative means to ensure factories have the financial capacity to com- ply with remediation requirements, including but not limited to joint investments, providing loans, accessing donor or government support, through offering business incentives or through paying for renovations directly” (www.bangladeshaccord.org/wp-content/uploads/2013/10/ the_accord.pdf).
[19] Robbins, “The Future  of  the Anti-sweatshop Movement,” 131–36.
[20] Anner, Bair, and Blasi, “Toward Joint Liability in Global Supply Chains.”
[21] Steven Greenhouse, “U.S.  Retailers See Big Risk in Safety Plan for Factories in Bangladesh,” New York Times, May 22, 2013, available at http://www.nytimes.com/2013/05/23/business/ legal-experts-debate-us-retailers-risks-of-signing-bangladesh-accord.html?pagewanted=all.
[22] Kevin Short, “5 Reasons American Companies Refused to Sign Bangladesh Safety Accord,” Huffington Post, July 11, 2013, available at http:// www.huffingtonpost.com/2013/07/11/rival-ban- gladesh-factory-safety-plans_n_3574260.html.

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