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The Bangladesh Tragedy: The Tipping Point From Hell

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By John Paluszek, Johnp.bis@gmail.com

This time it is different.
 
But the question remains: Is it different enough? Let us, then, count the ways.
 
The “tipping point” may seem facile, but the current dramatic increment of tragic incidents is now more toxic to more corporate reputations.  That’s a big deal, generating a new dimension of company action.
 
This so-called “international sweatshop” issue is by no means new. Many apparel, sporting goods – and, more recently, computer – manufacturers and their retail outlets have been dealing with it for decades. But the momentum of recent worker tragedies in less developed countries and sustained media attention has generated new urgency.
 
The sudden, violent deaths of some twelve hundred Bangladeshi apparel workers at Rana Plaza came in the wake of similar recent tragedies in Bangladesh and Pakistan (and, to come forward, subsequently in Cambodia).
 
This is, of course, a greatly complex set of issues going to the very heart of business in our globalized economy.
 
Suppliers and retailers must confront and tease out a supply chain policy that balances answers to questions such as: How do you do “the right thing” for all the people you touch? What is the fairest and most responsible way to pay for the needed improvements; should it come out of profits (is that “fair” to shareholders to whom companies also have an ethical, moral and legal obligation)? Can the companies find efficiencies in operation or technological advances that will help absorb some or all of the related costs?
 
There is great reputational risk in each of these directions. And yet some companies have gone boldly forward with progressive supply chain programs integrated into their business model. 

Examples abound:
 
Patagonia has centered its brand on its supply chain code commitments and built an upscale consumer base around it.  Wal-mart has escalated its inspection of every Bangladesh factory producing goods for its supply chain and has launched its Women In Factories empowerment program in factories in India, Bangladesh, China and Center America. Last year’s work place controversy at its major supplier in China, Foxconn, certainly got Apple’s attention. The supplier then agreed to slash overtime, improve safety, hire new workers and upgrade dormitories.
 
That is more than the tip of this massive iceberg but much remains to be done.  The current dispute over whether to join the international agreement on improving working conditions – championed by the labor organizations IndustriALL – or proceed unilaterally, misses a key point: What we are now witnessing is a newly-energized “race to the top” in a critical aspect of the globalized economy.

Most of the key players in this globalization dilemma are being heard: The workers, lamenting the tragic loss of life, their working conditions and pay; factory owners, with claims of being pinched economically by buyers for the apparel brands; suppliers and marketers of the apparel; organized labor; and a variety of highly concerned civil society/NGO organizations.
 
Many retailers, too, have had voice, mainly as members of the National Retail Federation which opposed the IndustriALL fire-and-building safety agreement for Bangladesh.
 
But what do American consumers, the “ultimate deciders”, think about this crucial issue – now?
 
In studies conducted in major retail stores in 2005, a majority of surveyed consumers said they would be willing to pay extra for products made under good working conditions rather than sweatshops.

But the study noted, “…there is no clear evidence that enough consumers would actually behave in this fashion and pay a high enough premium, to make  social product labeling profitable for firms.” (“Is There Consumer Demand for Improved Labor Standards? Evidence From Field Experiments in Social Product  Labeling” – Michael J. Hiscox and Nicholas F.B. Smyth, Department of Government, Harvard University)

Where is the current consumer opinion research?  

John Paluszek is the executive producer of “Business In Society,” a series of video programs interviewing experts on corporate social responsibility issues, and senior counsel, Ketchum, a leading global public relations counseling firm. He can be contacted at Johnp.bis@gmail.com.


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