THE NEED TO NEGOTIATE IS NOW


KNOT SO TRUE

THE NEED TO NEGOTIATE IS NOW

bangladesh-892x1024Rubana Huq

It’s a condolence meet. Heads have gathered around a single figure and are seen consoling. The loss was inevitable. Whatever happened has happened. And finally the ultimate Nietzschean monologue: This too shall pass has been uttered. After all we all live for hope. The person who has suffered the loss is the only one knows what grief truly means. He knows what it was to nurture and then finally lose out to uncertain winds that uproot him. Special prayers are offered. All pray for a graceful closure. All pray for such a tragedy never to happen again.

This is not a family scene and this is not home. The venue is the office of a company that exports garments; the people grieving are all merchants of the office soothing their colleague who has just had to air 100,000 pieces of garments which cost the company US $130,000. The price was US $ 7.00 and the cutting and making charge was US $1.5 per piece. Air freight has eaten into the CM and the company will now have only 20 cents in hand that will obviously not cover not even 10% of costs.

The session of grieving would have ended with colleague gathering around the aggrieved party, but the extra long stretch to the prayer session was simply because the company is also facing a reputation loss. The buyer at the brand head office has panicked because of a 12 days delay and since the stores have empty shelves, he has had to impose airfreight on the manufacturer. While the manufacturer goes on to talk about the 12 days delay not being “that” deviant specially taking the Eid holidays in consideration, the buyer considers even a single day’s delay as a delay, and therefore a penalty is obvious. Meantime, the entire head office of the brand is experiencing Chinese Whisper. All are talking about how that particular supplier has failed the flow.

This is a regular scenario for many manufacturers. For many, a 5% discount and airfreight is a happening thing in peak months specially when the national calendar has a 10-day holiday cycle at the factories with both the Eids happening at a two and a half months difference. Why should the buyer be festival-sensitive anyway? Shop floors don’t slow down because factories in the third world are closed. Therefore, during any crisis or emergency, hundreds of manufacturers end up being super eager to procure business and as a result just end up not negotiating hard enough for a better price and a better lead-time. Hundreds of manufacturers in this country are busy trying to deal with the outcome of their audits and guess what, at the end of the day, they are mostly ending up with a list labeled: Corrective Action Plan which specifies dates and promises remediation.

There are huge investments to be made and even without much pressure from the brands, most of the owners are busy buying “fire resistant” doors and building “fire resistive” walls. Point is, where is the picture of labor here? What about the basic Workers’ Welfare Fund that we should have meaningfully invested in long ago, where the buyer and the seller would match each other’s contribution and set up a substantial fund from where the workers would be able to draw money from in case of need.

Truth is, the garment manufacturers are busy defending their positions in media where Tuba/Tazreen seems to be the general picture for the entire industry, where Rana Plaza seems to have sent out the message of overall non-compliance out to the world, where Hallmark stands as the face of bad loans, bad news and bad name. So at a time when this community needs to negotiate harder and make a mark with investing in workers and technology, more than half of the community is busy responding to emergency situations. In the process, most manufacturers are unable to bargain the right terms with the buyers. By right terms, your columnist means better arrangements of delivery that will give the brands and the manufacturers the prestigious label of a sustained sourcing-supply chain. And that prestige can only come from working with labor and improving their lot.

At a global level, there are retailers, importers and European manufacturers who are pressing the EU policymakers for a clearer and stringent trade agenda which includes a feasibility assessment of EU-China FTA and the total overall of EU trade law which stressed on working conditions.

At the same time, ASEAN member states and China have agreed on a negotiation to upgrade the ASEAN China Free Trade Area (ACTFA), the largest FTA in the world that will give the economies a target to achieve US$500 billion in trade by 2015 whereas the current figure rests at US$350.5 billion that accounts fro 14% of ASEAN’s total trade including a 9.7% increase year on year. In the meantime, Chinese model is also being seriously questioned by the US that focuses on the historically under-valued renminbi, air pollution that caused more than 470,000 deaths in 2008, widespread corruption, lack of regulation of contracts, poor protection of intellectual property rights and treatment of labor. But there are more countries like India that are keen to explore ties with China, and have just signed an MoU with China to promote businesses to exchange technologies and enter into joint ventures.

Bilateral trade between India and China has reached US$75.5 billion in 2011-12 with a trade deficit of $40billion. In the meantime, in Myanmar, brands have detected poor pay, poor working conditions, proof of under-age workers, excessive working hours, lack of disciplinary policies, lack of fire safety and weak structural integrity in the Myanmar factories. Yet, the US and Myanmar have just announced going ahead with promoting fundamental labor rights in Myanmar. The strategy will promote internationally recognized labor standards and encourage decent business practices in Myanmar.

Needless to say, in spite of any negative observation, in paper, Myanmar will still end up being the international model in the next 5 years. That’s it. This is how a particular nation is promotion or dropped. Bangladesh probably happens to be in the West’s current drop list.

In order to fight the negativity that hangs around like an ominous cloud over the country’s manufacturing sector, the entrepreneurs have little choice but to improve their commitments to labor. With every negotiation, the manufacturers will need to plead for improved working conditions in the sector that can only be brought about with a decent price. While China will continue being the giant of this century, while India will always manage to carve out an innovative economic landscape, while Myanmar will continue being showcased by the West, Bangladeshi entrepreneurs too must emphasize on labor, make meaningful changes and maximize opportunities that come their way.

Long ago, in a journal, Young India on December 20, 1928, Gandhi had pleaded against industrialization. He wrote: “God forbid that India should ever take to industrialization after the manner of the West. The economic imperialism of a single tiny island kingdom (England) is keeping the world in chains. If an entire nation of 300 million took to a similar economic exploitation, it would strip the world bare like locusts.” The same India today boasts of growth and instead of the concept of the evolving Gandhian villages, India’s space has towns popping up like popcorns bursting in a microwave. Let us not allow industry to dehumanize us. Let the careful consideration of working through our challenges, prioritizing labor be our route-map. While we focus on worker’s training, awareness and drills, the checklist of ‘just’ compliance relating to ‘just’ sprinklers and ‘just’ fire doors can wait a few more years.

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The writer is Managing Director, Mohammadi Group.
SEPTEMBER 08, 2014

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About Ehsan Abdullah

An aware citizen..
This entry was posted in CHALLENGES, CURRENT ISSUES, ECONOMY, GROWTH & TARGET, INDUSTRIES, STRATEGY & POLICY. Bookmark the permalink.

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