Large RMG factories stand by sub-contracting units

Many large ready-made garment (RMG) exporters are now providing cash support to their sub-contracting factories to upgrade the units to compliant ones. They have embarked on the task in the face of strict monitoring of sub-contracting activities by the foreign buyers, industry insiders said.
They said most of the sub-contracting RMG factories had failed to upgrade working conditions at their units mainly due to liquidity crisis and dearth of collaterals, against which they can take financial assistance from the banks. It has left the sector's big players in trouble making timely shipments.
"Our local buyers have come forward to upgrade working conditions at our factories as we could not do it due to liquidity crisis," Bashir Ahmed, proprietor of the sub-contracting factory Santonu Fashions told the FE Saturday.
The factory owner added his local buyers had also ensured him of sufficient work volume for at least fifteen days every month, and had also increased cutting and making (CM) price slightly. "Now we are more comfortable in ensuring a decent working condition for our workers," he said.
"We could not manage the required capital from banks due to dearth of collateral and were passing through tough times as no exporter wants to work with non-compliant factories after the Tazreen Fashions fire and Rana Plaza collapse incidents. The latest move by the big players in the sector has relieved us from an uncertainty in business," he added.
According to Mr Ahmed, the large parent companies are also extending technical assistance to sub-contracting factories in acquiring certifications from different agencies to be declared compliant.
Managing Director of Envoy Group Abdus Salam Murshedy said some small and medium-sized factories on which they partially depended for timely shipment were to some extent lacking compliance standards. But due to their financial and technical assistance, the factories had now become compliant ones.  
"Neither the small factories could be upgraded to compliant ones due to their small capital base, nor could the big exporters ignore the sub-contracting units. In such a situation, big players in the RMG sector came forward to fund their local partners to upgrade working conditions," he added.
Hailing the latest move of the large factories, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president, Atiqul Islam, said if the exporters and sub-contractors shared their woes, then the country would see a big leap in the compliance issue as well as export activity within a short span of time.
"It is our pleasure to see that big players are coming forward to the upgrade working conditions of their local partners. I do highly appreciate the move," he added.
Meanwhile, the sub-contracting factories --- both members and non-members of BGMEA --- have long been facing the dearth of work as big garment makers, who take work orders directly, are either turning away from the third parties, or are opting for the compliant ones in the face of strict monitoring of safety measures by the buyers.
But the big exporters could not manage required numbers of compliant factories for their timely shipment, forcing many of them to come up with financial and technical assistance to upgrade their old partners to compliant ones.
According to local and international laws, to become compliant, a factory has to acquire certificates on structural design of the building with soil test report, fire safety, group insurance, inter-bond approval both from government and non-government agencies. But most of the sub-contracting factories do not have such certifications, except the trade licence.
The sub-contracting factories randomly engage child labour in production, and other 'safety devices' like fire safety, exit facilities and workers' timely payments are rarely maintained; but after the Tazreen fire and Rana Plaza collapse incidents buyers have become cautious in working with such factories. This has forced the large exporters and factory owners to upgrade the smaller units to compliant ones.