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Bangladesh increasingly risky for clothing makers

Workers’ deaths pressuring firms

A tank-top from Bangladesh for sale in an H&M store. Labor conditions in the nation’s garment industry have long been grim due to corruption and a desperation for jobs.

David Goldman/Associated Press Files

A tank-top from Bangladesh for sale in an H&M store. Labor conditions in the nation’s garment industry have long been grim due to corruption and a desperation for jobs.

NEW YORK — Bangladesh offers the global garment industry something unique: millions of workers who quickly churn out huge amounts of well-made underwear, jeans, and T-shirts for the lowest wages in the world.

But since a building collapse April 24 killed at least 1,100 garment workers in one of the deadliest industrial tragedies in history, the country has gone from one of the industry’s greatest assets to one of its biggest liabilities.

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“The risk factors have jumped off the charts,’’ said Julie Hughes, president of the US Association of Importers of Textiles and Apparel. ‘‘This is worse than what anyone had imagined.’’

Working conditions in Bangladesh’s garment industry have long been grim, a result of government corruption, desperation for jobs, and industry indifference. But the scale of this tragedy has raised alarm among executives and customers.

The Facebook pages of Joe Fresh, Mango, and Benetton, a few of the brands whose clothing or production documents were found in the rubble of the collapsed building, are peppered with angry comments from shoppers. Some warn they are going to shop elsewhere.

Retailers are also facing street protests. In the United States, university chapters of United Students Against Sweatshops are helping to stage demonstrations against Gap in more than a dozen cities. The group plans to target other retailers it believes are not committed to stricter standards for Bangladeshi factories.

The rising death toll may force Western brands to make a choice: Stay and work to improve conditions. Or leave and face higher costs, similar or worse worker conditions in other low-wage countries, and criticism for abandoning a poor nation where per-capita income is just $1,940 per year.

Most retailers have vowed to stay and work for change. Walmart and the Swedish retailer H&M, the top two producers of clothing in Bangladesh, have said they have no plans to leave. Other big chains such as The Children’s Place, Mango, J.C. Penney, Gap, Benetton, and Sears have said the same.

‘‘Today’s economy is global, and it is not a question of if a company like H&M should be present in developing countries,’’ said Anna Eriksson, a spokeswoman. ‘‘It is a question of how we do it.’’

But for some, the risk of being in Bangladesh has become too great. Walt Disney Co. said it is stopping production of its branded goods in Bangladesh.

‘‘These are complicated global issues, and there is no one-size-fits-all solution,’’ Bob Chapek, president of Disney Consumer Products, said in a statement.

Industry experts predict others will quietly reduce their dependence on the country.

‘‘Almost everybody is going to cut back on what they are sourcing from Bangladesh,’’ Hughes said. ‘‘Not today, but by a year from now our imports are going to fall. The question is how much.’’

But it is not easy for retailers to simply leave Bangladesh.

There is no shortage of cheap labor or garment factories around the world. But it takes months or years to establish relationships to turn out large volumes of garments on time.

Even if retailers move to other low-cost countries, they face threats to their reputations.

Of the major garment-manufacturing countries, Bangladesh’s working conditions pose the highest risk to brands, according to Maplecroft, a risk analysis firm in Bath, England. But Bangladesh ranks somewhat better than many other low-cost countries on other labor issues, such as child labor and forced labor.

According to Maplecroft’s Labor Rights and Protection Index, which measures the overall risk of association with violations of labor rights, Bangladesh is the 17th-riskiest country — less risky than such garment-producing leaders as China, Pakistan, Indonesia, and India.

Another reason it is hard for retailers to leave is that Bangladesh is one of the few places that has enough workers, manufacturing capacity, and experience to provide what retailers demand: high volume, low prices, good quality, and predictable service.

The garment industry in Bangladesh is the third-biggest exporter of clothes in the world, after China and Italy. There are 5,000 factories in the country and 3.6 million garment workers. And the country’s political situation has been relatively stable.

Its garment workers command the lowest wages — by far — in the world. The average is the equivalent of 24 cents an hour, compared with 45 cents in Cambodia, 52 cents in Pakistan, 53 cents in Vietnam, and $1.26 in China, according to the Worker Rights Consortium, an advocacy group.

On Sunday, a Bangladesh cabinet minister said the government plans to raise the minimum wage for garment workers. A new wage board will issue recommendations within three months.

Between 15 and 25 percent of the wholesale cost of a garment is for labor. Unlike raw material costs, which can vary, labor is the only major cost that retailers can control.

Since 2005, at least 1,800 workers have been killed in the Bangladeshi garment industry in factory fires and building collapses, according to research by the advocacy group International Labor Rights Forum.

The retail industry has not released estimates on how much it would cost to upgrade Bangladeshi factories to Western standards. But the Worker Rights Consortium puts the cost at $1.5 billion to $3 billion. If the money was spent over five years, it would be 1.5 to 3 percent of the $95 billion expected to be spent on clothes manufacturing over that time. Put another way, it’s 10 cents added onto the cost of a T-shirt.

There are limits to what companies can do to improve conditions, though, said Matthew Amengual, a professor at the MIT Sloan School of Management who studies labor regulation and enforcement in developing countries.

‘‘Companies have a very important role to play, but they can’t do it just by auditing their supply chain,’’ he said.

Experts said if big retailers and the Bangladesh government do not work together to improve standards and enforce them, more production will gradually move out of the country.

‘‘There are huge risks to stay if there isn’t any progress,’’ said the Rev. David Schilling, of the Interfaith Center on Corporate Responsibility, a coalition of shareholders that pushes companies to be more socially responsible.

Following the November fire, Walmart, the world’s largest retailer, toughened its policies with suppliers. In January, it said that it would cut ties with any factory that failed an inspection, instead of first issuing a warning.

Last month, Walmart said it will tie some of the compensation of some executives, including CEO Mike Duke, to the success of its compliance program.

Forty garment buyers, including Walmart, H&M, and J.C. Penney, met with labor rights groups on April 29 in Germany to discuss how the industry could improve safety conditions in Bangladesh.

The labor groups are setting Wednesday as the deadline for brands to sign up to a legally binding plan that would require retailers to pay for needed safety improvements and allow independent inspections of the clothing factories in Bangladesh.

Only two companies — PVH, the parent company of such brands as Calvin Klein and Tommy Hilfiger, and Tchibo, a German retailer — have signed up to the plan. Gap was close to signing last fall but then backed out and announced its own plan that included hiring an independent fire-safety expert to inspect factories.

Adding to the pressure on retailers, Avaaz, a human rights group with 21 million members worldwide, has garnered more than 900,000 signatures on a petition pushing Gap and H&M to commit to the proposal.

‘‘We would rather see companies stay in Bangladesh to compel and fund the renovations that are necessary to turn these deathtraps into safe buildings,’’ said Scott Nova, executive director at the Worker Rights Consortium.

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