Accountability is elusive in garment supply chain

JIM YARDLEY / New York Times News Service

PARETS DEL VALLÈS, Spain - From a sleek gray distribution center near Barcelona, global fashion brand Mango ships 60 million garments in a year. Automated conveyor belts whir through the building like subway lines, sorting and organizing blouses, sweaters and other items to be shipped around the world. Human hands barely touch the clothes.

Five thousand miles away in Bangladesh, the Phantom Tac factory in the industrial suburb of Savar was a hive of human hands. Hundreds of men and women hunched over sewing machines to produce garments in an assembly line system unchanged for years. Speed was also essential, but that just meant people had to work faster.

Last spring, as it pushed forward with global expansion plans, Mango turned to Phantom Tac to produce a sample order of polo shirts and other items. Then, on April 24, the Rana Plaza factory complex collapsed, killing more than 1,100 people in the deadliest disaster in garment industry history, and destroying Phantom Tac and other operations in the building.

Now, eight months later, the question is what responsibility Mango and other brands should bear toward the victims of Rana Plaza, a disaster that exposed the murkiness and lack of accountability in the global supply chain for clothes. Under intense international pressure, four brands agreed last week to help finance a landmark $40 million compensation fund for the victims.

But many other brands, including Mango, have so far refused to contribute to the fund. Mango argues that it is not responsible because it had not “formalized a commercial relationship” with Phantom Tac. Company officials say that Mango was still conducting quality inspections and factory audits of Phantom Tac and that the factory had not started producing samples for an order of 25,000 items.

But in interviews conducted over several months, supervisors and other employees from Phantom Tac said work to make samples for Mango had already begun when Rana Plaza collapsed. Fabric was being marked and cut, and some workers say some sample shirts were already being stitched.

“There was an urgency among the bosses,” said Mohammed Mosharuf Hossain, 28, who worked in a cutting section. “The managers told us to finish the Mango products urgently. They said if we could finish this work quickly, we might get more orders from Mango.”

For global brands and retailers, Rana Plaza has forced a reckoning over how to reconcile the mismatched pieces in their supply chains. Technology and investment are transforming the upper end of the industry, enabling Mango and other brands to increase sales, manage global inventories with pinpoint precision and introduce clothes faster than ever - all as consumers expect to see new things every time they visit a store.

But these brands depend on factories in developing countries like Bangladesh, where wages are very low and the pressure to work faster and cheaper has spawned familiar problems: unsafe buildings, substandard work conditions and repeated wage and labor violations. Consumers know little about these factories, even as global brands promise that their clothes are made in safe environments.

Phantom Tac could be regarded as an unlikely attempt to prove that a Bangladeshi factory could be socially responsible and make a profit. It was partly owned by a Spaniard, David Mayor, who had won orders from several Spanish brands. He had teamed with a Vatican missionary in rural Bangladesh to offer a training program for female workers. And he had experimented with creating a website to allow consumers in the West to connect virtually with the workers sewing their clothes.

But the pressures on Phantom Tac to meet deadlines and make money made those social goals difficult to achieve. Employees said the factory was busy but had suffered setbacks: Inditex, the global clothing giant that owns Zara and Lefties, had canceled orders a year earlier after the factory failed a social compliance audit. And several employees said other problems had arisen after underage workers were discovered working as helpers.

Now, Mayor has disappeared. He did not respond to email requests for interviews, and his family in Spain declined to reveal his whereabouts. His Bangladeshi business partner, Aminul Islam, is in jail in connection with the collapse.

Factories like Phantom Tac in Bangladesh and the Mango operations in Spain are part of the same supply chains but might as well be from different worlds.

In Spain, visitors to Mango’s design center, a short drive from the distribution warehouse, are greeted in the lobby by an installation from Spanish artist Jaume Plensa. A Picasso hangs in the office of Mango’s chairman, Isak Andic. Employees eat in a light-filled cafeteria or can relax in an upstairs area filled with ferns called “the greenhouse.”

These state-of-the-art facilities are just the beginning: Mango already operates other distribution centers in China, Hong Kong and Turkey, and it has broken ground for a massive complex in Spain. Last year, Mango produced a total of 110 million garments and accessories; within a decade, company officials hope, the company will produce 300 million garments and roughly quintuple annual sales to 10 billion euros, or about $14 billion.

This growth strategy comes after Mango responded to the global recession by slashing prices, expanding offerings and opening stores in countries like China and Russia. This increased sales but has placed a premium on efficiency, cost and speed. In the past, Mango sent new items to stores every four to six weeks; now it is every 15 days. Technology has enabled Mango’s distribution center in Spain to track global sales, down to a single item in a single store, and then ship boxes of refill orders within eight hours.

“The new facility will be faster, bigger and more efficient,” said Jordi Torra Marin, a project manager.

In Bangladesh, the business environment presents a sharp contrast. Phantom Tac was on the fifth floor of Rana Plaza, which was named after the family of the building’s owner, Sohel Rana.

Rana, in jail awaiting charges in the collapse, was a local political strongman, with close ties to elected officials in Savar and a reputation for criminal activities. Workers inside Rana Plaza say that when Rana needed people to stage a political march or a protest, he demanded that factory bosses release some workers from each factory to participate.

Rana also extracted profits: He controlled food services that served snacks to workers during overtime. Several workers complained about the foul taste of the food. Rana also claimed the leftover remnants of fabric produced by each factory and sold them into the lucrative local recycling market. And, workers say, he took any garments that did not meet quality standards and sold them in local markets.

“He was so powerful,” said Mohammad Liton, 25, a quality controller at Phantom Tac. “He had his own gang. They used to operate businesses.”

David Mayor was a buyer when he met Aminul Islam, who was operating a different factory in the center of Dhaka, the national capital. They started Phantom Tac together, which seemed like a good fit, since Mayor had connections with foreign brands, especially those in Spain. Soon, Mayor was bringing in orders, workers said, or leading foreign buyers on tours of the factory.

Mayor also had a social agenda. In 2007, Mayor joined with Brother Massimo Cattaneo, a Roman Catholic missionary, and financed a training program for young girls from rural Bangladesh. He eventually hired about a dozen of the graduates into his own factory.

He also wanted to give consumers a better understanding of how their clothes were made. Ashley Wheaton, who had worked for a nonprofit group in Dhaka, was hired to develop a website where consumers could type in a code taken from the sales tag of an item and then learn about the Bangladeshi women who made the garment they had bought. As an experiment, Mayor opened a shop in Dhaka where the clothes were marked with the codes.

“He had this idea about what he wanted to accomplish,” Wheaton said. “He really did want to change the way things are done. But he was pragmatic. He knew it had to make money and be sustainable.”

But money became a problem. Wheaton left after about seven months, as the factory began tightening expenses. Eventually, Mayor also stopped funding the training program, which Massimo has kept afloat through church money and donations.

Workers at Phantom Tac said deadline pressures were relentless. Margins were so tight that several workers say midlevel managers used two sets of accounting ledgers to hide excessive overtime or other wage violations. Workers also said a problem with child labor arose in 2012 after a buyer discovered several teenagers working as helpers, the lowest-level position in the factory.

By January 2013, Phantom Tac had corrected the child labor issue and was trying to win new business, including from Mango. Mango had sent buyers to the factory as well as inspectors to conduct an audit of working conditions, workers say.

“We all knew about Mango’s audit team,” said Hossain, the man from the cutting section. “There was an announcement on the loudspeaker. They told everyone to work properly. They wanted to impress them.”

It worked. Labor activists searching the rubble of Rana Plaza found order forms from Mango to Phantom Tac for adult polo shirts and some children’s items. By April, but before the collapse, the fabric for the Mango order had already arrived, several employees say. Work was underway on samples to be sent to Mango for approval. One worker, Mohammed Sohel, said some sample shirts had already been sent for quality testing by Mango, only for Phantom Tac to be told of a flaw in the collar.

In a recent interview at Mango’s design center in Spain, Jose Gomez, vice president of international business development, cited Mango’s involvement in a major consortium of brands that have agreed to help finance safety upgrades to Bangladeshi factories as evidence of the company’s commitment to improve conditions.

But on the separate issue of compensation for victims, Gomez denied that Mango had started production at Phantom Tac because, he said, the company’s auditing process was not complete.

Asked if he was certain no work was underway, Gomez said, “What I understand is what I told you.”

Eva Kreisler, a coordinator for the anti-sweatshop group Clean Clothes Campaign in Spain, said that Mango’s explanation was unconvincing and that the company had a moral obligation to help the victims of Rana Plaza.

Another Spanish retailer, El Corte Inglés, is one of four brands that have agreed to contribute to the $40 million fund. Officials say other brands must come forward if full funding is to be achieved.

“Definitely, they should contribute to the fund,” Kreisler said of Mango. “It is quite shameful that they still won’t contribute to bring justice to the workers.”

On the day before Rana Plaza collapsed, cracks appeared in the third floor of the building. It was temporarily closed, and an engineer, upon inspecting the cracks, said the building should remain closed. But Islam, the co-owner of Phantom Tac, called a longtime factory supervisor and implored him and others to return to work, citing pressing deadlines.

Islam even went to the building himself and made his ritual evening prayers.

“He called me,” said Mohammad Minhaj Uddin Nannu, the longtime supervisor. “He said, ‘Why are you all scared? You shouldn’t be. I’m here.’”

The next morning, Rana Plaza collapsed, before Islam arrived at his office.