India’s Global Garment Initiative: Part I – Governance

As we have discussed in the previous articles, India’s garment factories face strategic and systemic barriers, which by definition cannot be overcome by either the individual factories or even by the industry working as a whole.  Until Government is willing to phase out its policy of favoring the local textile industry against local garment makers (and farmers), thus creating a level playing field, India’s garment factories will not be able to compete effectively on the world market.

However, even with the removal of these barriers, India’s garment export factories will not be able to reach their full potential without overcoming their self-imposed operational obstacles.

Among the most important is the issue of governance — compliance and sustainability.

The whole business of governance is filled with misunderstanding, evasion, dissimulation and lies.

On the customer side, brand labels and retailers insist that they must impose code of governance to ensure their suppliers meet the minimum standards acceptable to the civilized world.

On the supplier side, many factories consider governance to be a public relations scam, imposed by their customers to sound good to their consumers.  Quite correctly they point to decades of unfair audits where factories where suppliers throughout Asia were branded as exploiters while those located in Bangladesh were given a free-pass for even the most egregious systematic failures.

To many in South and Southeast Asia governance is seen as an extension on 19th century Western colonialism.  Where previously the Western colonial powers filled with Western triumphalism and with little or no knowledge of Asian culture preached Christianity as an alternative to Eastern religious concepts that they deemed to be pagan, their 21st century progeny now preach Western governance, with the same degree of ignorance of Asian culture.

These criticisms are indeed valid. However, they are also irrelevant.

The short answer is that Corporate Social Responsibility (CSR) is simply a matter of customer specifications.  While this may appear to b glib and superficial, it is nevertheless accurate.

The customer ordering a shirt demands

80/2 combed cotton

Double mercerized

No worker below the age of 16.

These are the specs.  The factory that ships 40/1, semi-combed, or single mercerized is deemed to be an unreliable supplier.  So too is the factory that employs workers below the age of 16.

I do not know if AZO dyestuff is polluting.  I do know that AZO dyestuff is cheap and yields beautiful jewel-tone colors.  I have no idea if the stuff is polluting; nor do I care.  It is not my business.  My German customer specifies AZO dyestuff, I ship my shirts with no AZO dyestuff.  This is just a matter of specs.

There is another ore important reason why CSR is important.  Good Governance is a good investment.

I work in countries where their industries are in the grip of Nomadic Worker Syndrome, where sewers come to a factory work for 6 months and then move-on to another factory.  These countries are trapped producing basic commodities because they cannot train their workers to move up to higher value added products.  To move up to higher value added product, your sewers must be multi tasked for which need 12-18 months training.  If a factory wants to move up, management must first convince workers to stay.  To do so, they must first form a relationship between the worker and the factory:  better working conditions, better environment, reasonable working hours, better pay — in short compliance.

I work in countries where electricity costs are above 3.5% of FOB; where the grid operates less than half the time; and where the cost in-house power costs twice or three times the cost off the grid.  I know factories where the cost of electricity is $40,000 per month.  These factories complain that government must do something, but do not recognize that the solution lies with factory.  A factory with a $40,000 monthly electric bill can invest $2.5 million to cut that bill in half to $20,000.  For $2.5 million the factory can not only cut consumption, but can install in-house sustainable power generation to the point where the garment factory can supply excess power back to the grid.  This is called sustainability.

There is a natural meeting point between international standards of CSR and CSR as an investment.  Yes, the suppliers must make greater efforts to raise CSR standards, but at the same time, customers must scrap the current CSR system, which is both flawed and corrupt and replace that system with something new and viable.

As a first step, we must stop lying to ourselves and to the rest of the world.  We must accept that compliance is not an exercise in customer public relations.

We begin with the customers since much of the problem lies with customers who, over 20 years ago, voluntarily assumed responsibility to ensure that their suppliers were in compliance.

  • The customers invented compliance.
  • The customers created the standards of compliance.
  • The customers employed the auditors to ensure that factories are compliant.

Most of us do not need a fire or for a building to fall on our heads before admitting that we have a problem. Yet when disaster struck in Bangladesh, the customers collectively washed their hands abjuring any and all responsibility.

Only by removing the customers from the process can we begin to establish a new global reality-based compliance paradigm.  The first step is to recognize the parameters.

Compliance is not a country or government issue.

We cannot have a global standard of compliance if each country enacts its own individual legal standard.  In some cases, local laws, such as minimum age and minimum wages are unacceptable to the customers.  In other cases, local laws, such as severance and overtime regulations, are far stricter than customers’ standards but are rarely enforced.  It is not the job of the industry to ensure that factories abide by local laws.  No one expects the compliance auditors to ensure that the factories pay their taxes.  The role of the auditor is to ensure that factories meet the global compliance standards only.

Compliance is not a national industry issue. 

Every country is home to both good and bad factories.  We should not attack Vietnam’s garment industry because some state-owned enterprises use forced labor any more than we should attack the U.S. garment industry because some factories in New York and Los Angeles operate at compliance levels more common to Dhaka and Chittagong.

Compliance must be recognized as a factory issue.

Countries that are home to some of the world’s most corrupt governments, such as Vietnam and Cambodia, are also home to many factories that act responsibly and with a high level of compliance.

A factory’s compliance is irrelevant to its location.  No more free passes to Bangladesh-based suppliers.

A factory’s compliance is irrelevant to its customer base.  We must accept the fact that to some customers, compliance is of little or no importance. No more free passes to outlaw customers.

The only viable solution is for the good factories to disassociate themselves from the bad factories.

The good factories must initiate a new, totally independent and manifestly credible standard of compliance and sustainability that does not rely on the government, the customers, or even the factories themselves.

Once the good factories and the responsible customers recognize that the structure must be created externally, we can enroll the professionals in the process.  These are the steps:

  • Retain professional organizations acceptable to all e.g., Fair Labor and the Sustainable Apparel Coalition (SAC), to create new universal standards;
  • Retain a single audit organization to train personnel to bring factories to meet standards and later to carry out audits;
  • Factories that do not meet these standards and fail to take remedial action on a timely basis cannot be part of the Model Factory Program.

 

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