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jueves, 14 de marzo de 2013

Articulo Renee Dudley,Arun Devnath, and Matt Townsend. Businessweek. 07/02/2013

Renee Dudley,Arun Devnath, and Matt Townsend
Reporter for Bloomberg News in New York, in Dhaka, in New York

“The American consumer wants the widest variety possible, and they want it now”
“The American consumer wants the widest variety possible, and they want it now”

Shoppers have become accustomed to the steady stream of colorful clothing that so-called fast-fashion apparel chains churn out. Rather than launching lines only at the beginning of each season, chains such as Inditex’s (ITX) Zara and Hennes & Mauritz’s (HMB) H&M introduce styles as often as every two weeks. The constant replenishment keeps fashion-conscious customers coming back for the generally low-priced goods.

But worker rights advocates say fast fashion has another, darker cost: Demands for constant product turns may be putting workers’ lives at risk in developing nations such as Bangladesh, which suffered two fatal garment factory fires in as many months.

Apparel sold by Spain’s Inditex, the world’s largest apparel company and a pioneer of faster fashion cycles, was found at a factory that caught fire on Jan. 26, killing at least seven people. More than 100 were killed on Nov. 24 at another Bangladeshi plant producing garments for companies including Sears Holdings (SHLD) and Wal-Mart Stores (WMT).

A Bangladeshi factory for Western fashion lines burned down on Nov. 24

A Bangladeshi factory for Western fashion lines burned down

At issue is the industry’s growing dependence on a business model that encourages some fashion chains to push for the lowest prices from subcontracted factories in countries that already have some of the leanest production costs in the world. To keep their contracts, factories may put concerns about production schedules before those of worker rights or safety. “If they don’t get the products to the customers on time, at quality, and in the specifications they want, customers will switch to a competitor,” says Richard Locke, a professor at the Massachusetts Institute of Technology Sloan School of Management, whose supply chain research has taken him to factories around the globe.

In Nike’s (NKE) 2010 Corporate Responsibility Report, the company noted, “asking factories to manufacture too many styles is one of the highest contributors to factory overtime in apparel.” And when workers don’t take enough breaks, Locke says, accidents can happen. Rapidly changing orders adds to the pressure.

Garments from Inditex’s Lefties and Bershka brands were found among the wreckage at the site of the Jan. 26 blaze, according to the Institute for Global Labour and Human Rights. Inditex sent its own investigators to the scene and has stopped doing business with Spanish supplier Wonnover and Bangladeshi subcontractor Centex Textile & Apparels as a precautionary measure, says Inditex spokesman Jesús Echevarria.

Surging wages and inflation in China have prompted global retailers to shift production to Bangladesh. An $18 billion industry has sprung up, marked by factories in buildings with poor electrical wiring, an insufficient number of exits, and little firefighting equipment. More than 700 garment workers have died since 2005 in Bangladesh, says the International Labor Rights Forum, a Washington-based advocacy group. Labor rights activists are urging global merchants to help pay for safety upgrades at about 4,500 Bangladesh factories. Doing so would amount to 10¢ per garment, or $3 billion over five years, according to an analysis by the Worker Rights Consortium, a Washington-based monitoring group.

Retailers are wedded to the sales-driving power of fast fashion crafted in low-cost Asian factories as a way to draw Western shoppers wrestling with joblessness and higher taxes. “The American consumer wants the widest variety possible, and they want it now,” says Nate Herman, vice president of international trade for the American Apparel & Footwear Association. “They don’t want to wait.”

Even Bangladesh Commerce Minister Ghulam Muhammed Quader acknowledges there are problems. “The ready-made garments industry grew in Bangladesh all of a sudden, at a very high pace,” he told reporters on Jan. 30. “The industry grew out of proportion compared to our facilities or our controlling capacities.” Quader says fresh inspections are being carried out in all of the nation’s nearly 5,000 apparel and textile factories to ensure they have sufficient safety and fire protection equipment.

The apparel industry’s shift to Bangladesh coincided with fast fashion’s spread. Previously, companies ordered clothes for each season, and a garment took as long as a year to travel from concept to store. While apparel makers could rush orders to market to meet unexpected demand, doing so was costly. Then Inditex and H&M in the 1990s changed the game by proving it was possible to cut lead times while still keeping costs low. H&M, among the largest buyers of ready-made garments in Bangladesh, has posted gross margins higher than 50 percent for the past 10 years. Rivals including Gap (GPS) and Urban Outfitters (URBN) never exceeded the low 40s during that time. That’s why much of the industry, including some U.S. chains, boarded the fast-fashion express for a lot of their clothes. Gap declined to comment for this story, while Urban Outfitters and Hennes & Mauritz didn’t respond to requests for comment.

Commerce Minister Quader says Western apparel chains could do more. “If they can allow some sort of margin [added payments] for the improvement of the working conditions and some other things, maybe that can help us,” he says. “The branding of Bangladesh as a country which doesn’t look after the interest of the workers or the safety of the workers is not acceptable to us.”

Factories often feel at the mercy of big customers. Two months ago, Fazlul Hoque, who runs Bangladesh garment maker Plummy Fashions, got a request from a European apparel maker, whom he declines to name, for a design change to the belt loops of 30,000 women’s trousers. The switch came two months before the garments were due to ship, forcing Hoque to run his factory overtime and absorb the extra costs. “It’s like a chain reaction,” Hoque says. “Consumers always want new designs; they always want to stay in season. Clothing companies follow the new trend, and we pay the price.”

Asking a factory to switch an order of 20,000 black shorts to 15,000 black and 5,000 red doesn’t sound like much, “but has a bullwhip effect,” MIT’s Locke says. The suppliers’ plants might be forced to order new materials, work longer hours, or subcontract some of the manufacturing to meet the new demands. “They still have to ship on time,” Locke says. The desire for flexibility means apparel companies are loath to sign long-term contracts with suppliers, which labor rights groups say would boost safety as retailers establish relationships with factories that produce their merchandise.

Ultimately the apparel industry will have to offer fewer choices, Locke says. That’s anathema to retailers, who say they’re only responding to consumer demand. Scott Nova, the Worker Rights Consortium’s executive director, doesn’t buy the idea that consumers are hooked on fast fashion. “It’s an expectation retailers have created,” he says. “Consumers weren’t demanding that 20 years ago. Retailers need to step back from this absurd approach of changing styles every 15 minutes if factories are going to be minimally safe.”

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