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Factory fire underlines high human cost of low prices

By Adam Geller

Associated Press

Published: Saturday, Dec. 1 2012 8:26 p.m. MST

This Wednesday, Nov. 28, 2012 file photo shows a Disney brand sweater decorated with characters from the movie "Cars" among the equipment in a burned out garment factory on the outskirts of Dhaha, Bangladesh. A week after a blaze at the factory killed 112 workers, a glaring question remains unanswered: How, exactly, did brands worth fortunes end up in such a place? Retailers like Wal-Mart and Sears, whose merchandise was found in the embers, are loathe to explain. But piecing together their limited answers with records and the insight of industry experts reveals a complex and ever-morphing supply chain, in which Tazreen Fashions Ltd. was but a single, completely interchangeable link.

Ashraful Alam Tito, Associated Press

In the charred bones of the Tazreen Fashions Ltd. factory, the labels and logos — sewn and printed in scarlet and royal blue — beckon from the ashes. Even in ruins, there's no missing that these T-shirts and jeans were intended for U.S. stores and shopping carts, designed as bargains too good to pass up, or stocking stuffers just in time for the holidays and in just the right size.

But a week after the blaze outside Bangladesh's capital killed 112 workers, a glaring question remains unanswered: How, exactly, did brands worth fortunes end up in such a place? And what does the odyssey that brings them to market across thousands of miles say about the everyday economics most consumers take for granted?

Retailers and marketers whose clothes were found in the embers, including Wal-Mart, Sears and Disney, are carefully vague in explaining why that was the case. But piecing together the information they provide with records and the insight of apparel and sourcing experts reveals a complex and ever-morphing supply chain, in which Tazreen was just an interchangeable link.

It is a chain whose combination of ultra-low labor costs, maximum flexibility and delegated authority offers undeniable advantages. But it is also comes with considerable risk.

"A lot of people go into the store and see 'Made in China' or Bangladesh or India or whatever and it's almost like this magical thing, that somebody said I want to make some shirts and it shows up the next day," says Vinod Rangarajan, who advises apparel companies on product development and sourcing for consultant Kurt Salmon. "But it is a lot more involved than people would imagine."

In fact, there is no single answer to how and why so many branded garments from Tazreen found their way to U.S. consumers, because that is precisely the advantage of the global supply chain: It never has to be one size fits all.

Some big retailers buy clothes directly from scores of such factories, searching for the production capacity to meet the demands of the coming season's fast fashions. Others work through supply chain managers, independent suppliers or in-country agents. Still other so-called "vertical manufacturers" produce much of their product line in-house, but turn to a factory like Tazreen to handle specialty items that fall outside their line of expertise.

"There are lots of companies who exist between brands and factories and their job is really to just take technical specifications on an order and turn around and make sure that there is a poly-bagged, perfectly folded item that comes with a SKU (stock-keeping unit) number and a price tag," said Kevin O'Brien, a partner in Ethix Ventures Inc., a Massachusetts distributor of "ethically sourced" apparel.

That explains why paperwork found in the shell of the burned out factory and its parent bare the names of clothing companies all but unknown to consumers. They include businesses like NTD Apparel Inc., based in Montreal, which sells T-shirts and other goods printed with licensed characters like Hello Kitty and Angry Birds to J.C. Penney, Urban Outfitters and other merchants. It was identified as the recipient of a 2011 auditor's report deeming Tazreen a "high risk." Or M.J. Soffe LLC of Fayetteville, N.C., which makes items including cheerleaders' outfits and fleece tops, and was identified by an order book photographed inside the factory. Both companies were also named in shipping records, compiled by trade platform Panjiva, showing they received orders from Tazreen or its parent.

NTD executives did not return phone calls or take questions. In an email from the president, Michael Eliesen, the company said it was not working with Tazreen at the time of the fire. NTD said it hires auditors to ensure factories who make its clothes comply with local health and safety laws. "Any violation is dealt with according to the sensitivity of the issue and in consultation with our audit partners," NTD said, without explaining how it had dealt with hazards found at the fated plant.

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