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Bangladesh: Non compliance to Accord, Alliance leads to dip in RMG orders

"The recent business accord has sent shivers among Bangladesh clothing manufacturers with most either getting termination order or registering a fall business. Global fashion brands and retailers detached business ties with them on their failure to comply and latest data reflects the total number of factories with which platforms — Accord on Fire and Building Safety and Alliance for Bangladesh Worker Safety — cut ties reached 238. Of them, the Alliance terminated ties with 162 RMG units, and the Accord with 76."

 

 

Bangladesh Non compliance to Accord Alliance leads to dip in RMG

 

The recent business accord has sent shivers among Bangladesh clothing manufacturers with most either getting termination order or registering a fall business. Global fashion brands and retailers detached business ties with them on their failure to comply and latest data reflects the total number of factories with which platforms — Accord on Fire and Building Safety and Alliance for Bangladesh Worker Safety — cut ties reached 238. Of them, the Alliance terminated ties with 162 RMG units, and the Accord with 76.

Manufacturers in a fix

Bangladesh Non compliance to Accord Alliance leads to dip in RMG orders

 

Retailers and signatory brands covered under the Accord and the Alliance sent a letter urging them not to continue business with such factories. As MG Fattah, MD, Sincere Knit Garments points out after termination of business by buyers’ platforms, it is difficult for them to establish contact with buyers and get work orders. With buyers backtracking on agreements signed with producers, it resulted in a downward spiral in overall production capacity of the country’s apparel industry.

Manufacturers need to work hard to find new buyers and to keep the wheels of the business moving after the stringent laws enforced on them. Another manufacturer cited insufficient number of orders after retailers under the Accord cut ties. Taking advantage of the termination, buyers who are not affiliated to the platform are offering lower prices. In such a situation, companies have to incur massive losses as orders declined substantially. It would have been better had the Accord allowed them to continue production in existing factory for a few more months and to give them leeway in adhering to compliance with all safety rules.

Mozammel Haque, MD, Deshone Apparels says he had an order from a Polish buyer that was supposed to be in effect until February 2018. But following the termination, the buyer wants the deal to be revoked by the end of this year. He has already withdrawn orders for products supposed to be produced between January and February. Even after asking for some more time, the buyer is in no mood to change his mind.

Should the government take onus

Industry feels the Bangladesh government and Bangladesh Garment Manufacturers and Exporters Association (BGMEA) should be blamed for the losses as they have been unable to negotiate terms with buyers and manufacturers have to borne the burden. They argue how did Bangladesh accept this despite being a sovereign country? Recent data on RMG sector reveals no recent record of accidents in factories. Nevertheless, these two platforms keep labeling factories dangerous. It is high time they informed foreign buyers their RMG factories have already become the safest in the world.

Latest data shows 81 per cent of safety concerns identified in 1,620 Accord-inspected factories were addressed, and 84 per cent of highest priority risks and non-compliance issues addressed in 655 Alliance-inspected factories. During the inspection, only 2 per cent of total garment factories were found to be risky, which have already been shut.

Presenting other side of the story, Faruq Hassan, Senior-VP, BGMEA, says though the business termination has caused a decline in the number of work orders, foreign buyers will ultimately depend on Bangladesh as they sell quality products at affordable prices. A large number of owners are relocating factories in a bid to ensure workers’ safety and meet international standards. He suggested factory owners meet minimum safety standards as any accidents may tarnish the image of the entire industry.

 
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