High Price of Low-Cost Apparel
Retailers face tough choices after the latest Bangladesh factory tragedy.
The collapse of the New Wave Style factory near Dhaka is being compared to New York City’s Triangle Shirtwaist factory fire just over 100 years ago – a deadly industrial disaster that roused public outrage and strengthened the political will to mandate improved working conditions in the US. Certainly, labor activists hope this latest in a string of Bangladeshi workplace disasters will spur reforms there.
But, as the Wall Street Journal reports, big apparel retailers trying to do the right thing face some tough choices.
Companies are hard put to find sources that meet higher workplace standards and can keep production costs low enough to support the inexpensive prices consumers expect. “It’s the ugliest race to the bottom because the financial crisis in America and Europe means that people are getting very scared of buying expensive things,” Sanjiv Pandita of the Asia Monitor Resource Center tells the WSJ.
As the trade data shows, Bangladesh, source for 5.59% of US apparel imports in 2012, ranks well below China with its 38.59% share. While Bangladesh’s share of this trade has grown 45.32% since 2007, it is behind the pace set by Vietnam with a current share of 9.02%, reflecting a 63.7% gain since 2007. Closest competitor Indonesia was the source for 6.37% of US apparel imports last year, representing 24.34% growth since 2007.
The only loser in the top five has been Mexico, arguably the better place to work. The second-ranked source in 2007, shipping 6.13% of US apparel imports, saw its share slip 16.96% to 4.93% in 2012.
While consumers like bargains, they are becoming sensitized to labor issues. Lifestyle brands that rely on off-shore contract manufacturers are especially at risk of being tarnished by stories of their clothing being made by ill-treated workers.
Simply walking away may not be the way out: Disney’s decision in March to stop sourcing from Bangladesh following a fatal factory fire has its critics who think the company should stay and use its buying power to push for reform.
Indeed, the new trend for clothing labels is to embrace transparency in their management of supply chains. Many have published codes of conduct for their suppliers (Disney’s is one). Last month, H&M published the names and address of its suppliers in 23 countries, including Bangladesh, where it is the biggest buyer of clothing. Deckers Outdoor Corporation, a company we covered in Down-Under Brand UGG on Top, has also published its list of suppliers for its Uggs, Teva and other lifestyle brands.
Datamyne’s trade date provides some transparency. For instance, our US import bill of lading data yields details about the companies on both side of the US-Bangladesh apparel trade. Here’s a sample – the top five shippers and consignees during first-quarter 2013, ranked by volume.
For companies looking for alternate sources, our US import bill of lading data, along with our Profiles of shippers and consignees, is a rich source of information useful to identify and prequalify potential suppliers. Ask us to show you more
Date posted: May 13, 2013