NYT-Bangladesh Is Surviving to Export Another Day

[oracle]

The article is posted full for the benfit of members who cannot log in to NYT.
DHAKA, Bangladesh - Not long ago, garment makers in the world's poorest countries were in utter dismay, fearing that the long-planned abolition of global trade quotas for textiles and apparel next month would wipe out their factories and send millions of jobs to more competitive operations in China. The International Monetary Fund warned that a quarter of Bangladesh's exports and 2.3 million jobs here could evaporate next year, shaking the entire economy.

So why, then, is Abu Taher tripling his work force, adding five floors to his cotton trousers factory here? And why is Annisul Huq, just down the road, hiring 2,000 more workers and building two new factories - adding to the eight he already has - to churn out more shirts and sweaters for Calvin Klein, Van Heusen and others?

It turns out that the outlook for the textile and apparel makers here and elsewhere is not as bleak as many experts had thought, at least for the bigger, more up-to-date factories in developing countries, especially those like Bangladesh and Pakistan with large, low-wage work forces. "Retailers are asking for better factories, more volume," said Mr. Huq, who got a master's degree in economics and did a stint in television before he started his apparel-making business. "I do not foresee immediately an earthquake in 2005."

[In an additional nod to countries like Bangladesh, China said on Sunday that it would tax clothing exports to stem excessive growth next year. And if that is not enough, the Bush administration is prepared to further limit Chinese imports.

Still, the end to decades of textile and clothing quotas on Jan. 1 is beginning to spin the economics of the developing world around and around. The expiration of the quotas is intended to allow for free-flowing trade in garment making. It used to be that by guaranteeing a certain level of clothing production from nearly every poor country in the world, quotas became a classic engine for just about every less-developed country with cheap labor and low skills to connect effectively with the global economy.

But now, without quotas to ensure access, quality and modernity will count as much, if not more, than low wages. Poor countries will have to compete on the scale and skill of their factories and on the efficiency of their roads, ports and electrical grids. Most of the cost of clothing lies not in the labor but in the logistics of moving it to stores for sale, so low manufacturing wages by themselves are not enough.

Of the typical $48 to $54 for delivering a dozen long-sleeve men's shirts to Bangladesh's main port, for example, most goes for the fabric, often imported from China. Just $5 goes to the foreman, technicians and assembly workers, who earn as little as 70 cents a day.

Yet, the savings on labor costs here and in some other developing countries are enough to keep retailers from switching suppliers for now.

"Our policy is to take a conservative position; we will continue to source from where we have been sourcing," Andrew Tsuei, Wal-Mart's vice president for global purchasing, said in an interview before the Chinese announcement. "Bangladesh is very competitive because the labor cost in Bangladesh is only half of what China is, and maybe less than that."

But in the longer run, the survival of the garment industry in Bangladesh and other developing countries depends upon how well governments respond to the demands of the global market. That will be affected, in part, by how much they invest in roads, ports and electricity grids; in the past, such infrastructure has been starved of investment here and elsewhere.

Small factories and their workers are the most vulnerable. Less than two miles from Mr. Huq's main factory, Shirin Akhter sat recently on a low wooden sleeping platform in her dirt-floored shack in one of this city's worst slums.

She lost her $15-a-month, full-time job in a pants factory a year ago and has been unable to find similar work. That wage, tiny as it was, was still significant in a country where workers rent shacks for $6.75 a month. She now juggles two jobs as a housemaid while her husband searches for temporary work at construction sites.

"I can barely live here, sometimes I cannot eat regularly," she said, cradling her 2-year-old son, Rifat.

The garment industry has drawn literally millions of women out of villages into large cities in poor countries around the world. For deeply traditional countries like Bangladesh, where girls who leave their villages are seldom welcomed back, the globalization of trade in apparel and textiles has helped transform a way of life unchanged for generations.

"It is a silent revolution that has taken place in our country," said Morshed Khan, the foreign minister of Bangladesh, one of the few democracies in the Muslim world. "For the first time in a Muslim country, hundreds of thousands of women in their late teens and early 20's are wearing cosmetics, carrying handbags and walking to work every day.

"There is no way in Bangladesh" he added, "that this government or any other government can send them back to the kitchen."

Just a few months ago, it seemed unlikely that Bangladesh could avoid that fate. But now the future seems a little brighter.

Here in Dhaka, Mr. Huq became a clothing magnate in much the same way Bangladesh became an international power in the garment industry: largely by luck.

The son of a senior civil servant, he earned a master's degree in economics, only to find himself jobless for two years. It was the late 1970's, and the country was struggling to recover from a devastating war of independence from Pakistan and the subsequent nationalization of many industries across Bangladesh.

"I was an unemployed man," he said, "and there are millions of unemployed men in this country."

Mr. Huq became the host of a variety show, and stumbled into some luck when he opened a door too quickly and hit a stranger who turned out to be Noorul Quader. Mr. Quader was a civil servant who had just negotiated agreements that allowed desperately poor Bangladesh to start exporting garments without facing any serious quotas.

Mr. Quader had started a garment manufacturing business himself, and Mr. Huq went to work for him for $200 a month. A year later, Mr. Huq left and started his own business with two friends and $1,700 that he borrowed from his father. As Bangladesh's garment exports grew from $32 million to $5.9 billion in the last two decades, his business grew, too.

He now lives in a three-story, impeccably decorated post-modern mansion and is chauffeured through Bangladesh's polluted, congested streets in a black BMW X5 sport utility vehicle.

Mr. Huq's spacious, well-ventilated and well-lighted factories are designed to appeal to multinationals concerned about protecting their image from criticisms that they are exploiting workers in poor countries. The factories are fully booked with orders from brands like Calvin Klein and Van Heusen through next August, so he is building two more.

Yet Mr. Huq still worries. His workers earn $15 to $85 a month, sometimes more, based on output. That gives him an advantage over Chinese factories that pay their workers $50 a month and up and also cover housing and food costs. But balancing the lower wages here are formidable disadvantages.

One problem lies in the hartals, national strikes called by political factions at short notice that can shut down almost all activity for one to three days. There have been 20 hartals in the last year, and even that is a decrease from recent years.

The biggest problem for Mr. Huq and other clothing makers here is Bangladesh's state-owned port in Chittagong. Studies have ranked it last or close to last in the world in turnaround time for big container ships. The ships must anchor in deep water offshore and then be unloaded and loaded by ancient, state-owned feeder vessels with shallow drafts.

Yet Mr. Huq's large factories have overcome these obstacles, sometimes even operating on Friday, the Islamic holy day, to meet deadlines.

"There are some concerns which need to be cured - you cannot change a bureaucracy overnight," Mr. Huq said. "We work overnight, we work Fridays, we work holidays, we ship the goods."

But if Bangladesh does not move quickly to raise the country's competitiveness, it will soon wind up with more unemployed workers living hand-to-mouth in slums like Banshtola.

Ms. Akhter moved here from her village four years ago, finding work as a "helper" in a small factory making short pants for men and boys. She used to clip stray threads after a more skilled worker sewed the pants.

But she lost the job a year ago when her employer ran low on orders. She has been unable to find new work, while her husband has cast about, unsuccessfully, for construction work. They rely on occasional profits from selling vegetables.
Banshtola is filled with tiny shacks, with corrugated steel roofs and walls that are simple bamboo mats, often riddled with holes. The monthly rent is $6.75, there is no running water, and the toilet is a hole in the ground at the end of one of the dirt alleys, which turn to mud during the rainy season.

Workers are often plagued by disease and malnutrition. And in the last two years, mosquitoes have brought an epidemic of dengue fever, which is sometimes fatal.

Ms. Akhter is resigned to her difficulties. But she looks on with a touch of jealousy at the new class of money-earners, women like Muhamad Zulekha, 27, a sweater factory worker whose nimble fingers allow her to earn $85 a month. She says that her husband now listens to her more because she can work outside the home and earn real money.

Until the infrastructure improves greatly, the burden still falls on cheap workers like Ms. Zulekha - and even Ms. Akhter when she was working - to give an edge to Bangladesh's factories, particularly if the country wants to keep a toehold as the quota system disappears.

Indeed, big international buyers and manufacturers have proved leery of relying too heavily on a single country like China, seeing greater security in diversity. Top Form, a Hong Kong company that is the world's largest bra manufacturer, has decided to make no change to its longstanding policy of keeping 55 percent of its production in China and 45 percent in Thailand and the Philippines.

"Unless we see a more strengthened trade relationship between China and the United States," Willie Fung, the chairman of Top Form, said, "we would not want to put all our eggs in one basket,"

Fearful governments in other developing countries are showing rare bursts of energy, addressing long-festering problems in the hope of saving their clothing makers. Bangladesh plans to train 40,000 garment workers next year to improve their skills in conjunction with BRAC, a local nonprofit group formerly known as the Bangladesh Rural Advancement Committee, and is eliminating taxes on electricity and other utilities used by garment factories.

But smaller or less populous developing countries like Brunei and Mongolia, and small factories practically everywhere, may still face serious losses. Executives at Wal-Mart, the world's largest retailer, say that they are likely to cut purchases from Fiji, Brunei, Turkmenistan and Macedonia, but plan to keep buying from the rest, and will actually increase their purchases next year from Bangladesh, their biggest single supplier of clothing, exceeding even China.

Bangladesh and other very poor countries have been lobbying Washington to grant them duty-free access to the American market. The $1.7 billion a year in apparel exports from Bangladesh to the United States currently face an average levy of 16 percent, or nearly $300 million a year, a burden that dwarfs the less than $70 million a year that the United States gives Bangladesh in foreign aid.

Women here have few alternatives to the garment industry if anything goes wrong. A slump in orders during the American economic slowdown in 2001 produced a surge in prostitution and a surge in the illegal trafficking of women to overseas brothels. Bangladesh officials fear what could happen if their country cannot stay competitive.

"If we try to take the women workers back to the home, back to the kitchen," Mr. Khan said, "that will be a bigger bombshell than any terrorist attack."

Correction: December 16, 2004, Thursday:

An article in Business Day on Tuesday about efforts by textile and apparel factories in Bangladesh to stay competitive as global trade quotas come to an end referred incompletely to working hours at plants operated by Annisul Huq. Mr. Huq said that while factories operated overnight or on weekends after production delays due to national strikes, natural disasters or port problems, the practice was not routine. He said workers also received compensatory time
NYT website

Source- New York Times



Edited on, December 17, 2004, 9:54 PM GMT, by oracle.

[TigerFan]

Oracle bhai, I couldn't read the rest of the article, 'cause they ask for id and I've none. So, can u kindly post the whole article here. Thanks.

[Fazal]

When they created "global trade quotas", people were screaming foul and expecting negative effect in Bangladeshi Garment Industry. But they survived and florished.

Removing "global trade quotas" will have short term negative effect, but in long run I am pretty much sure that will do ok. In the process we will clean up our own house by weeding out the bad one.

[pagol-chagol]

Thanks for posting this.