Friday, May 10, 2013
In First Interview Since Bangladesh Factory Collapse, Benetton CEO Confirms Company's Tie To Tragedy
In his first interview since the deadly collapse of a garment factory complex in
chief executive officer of Benetton told The Huffington Post that his company
had purchased small quantities of shirts from a manufacturer that operated
inside the plant. Bangladesh
Chief executive Biagio Chiarolanza said Benetton bought the shirts from a company called New Wave Style, which operated one of the several garment factories inside the
building. The collapse of the
building in an industrial suburb of Rana Plaza Dhaka last
month took the lives of more than 800 people.
“The New Wave company, at the time of the tragic disaster, was not one of our suppliers, but one of our direct Indian suppliers had subcontracted two orders,” said Chiarolanza, speaking via phone from
, where Benetton is based. Italy
One of Benetton’s suppliers in India had issues fulfilling orders, and offered the option to relocate a portion of its work to several manufacturers located in Bangladesh, according to a Benetton executive who spoke on condition he not be named. New Wave was one of those manufacturers.
Benetton decided to stop production with New Wave one month before the deadly collapse occurred, due to the manufacturer's inability to meet “strict” quality and efficiency standards, Chiarolanza said.
Chiarolanza, a 20-year Benetton veteran who became CEO in 2010 after spending seven years as head of operations, said his company plans to continue to use factories in
manufacture its wares, asserting that the welfare of workers in poor countries
is best served by providing jobs. Bangladesh
"It's not the solution to go outside from
or to think in the future we can leave ," said Chiarolanza.
"I spent some period of my life in this part of the world, and I believe
-- I really believe -- Benetton and other international brands can help these
countries improve their condition. But we need a safe and happy working
environment and we need to have better conditions." Bangladesh
He emphasized that Benetton’s orders from New Wave were relatively small, totaling around 200,000 shirts, and were issued in December 2012 and January 2013. Chiarolanza's account confirmed .
The shirts were made inside the
Rana Plaza building, shipped to the supplier in and then
distributed through Benetton’s "entire distribution network,"
Chiarolanza said, though he didn't disclose the locations of retail outlets
where the clothing eventually landed on shelves. India
His explanation came as an attempt to in the face of confusion and considerable criticism from labor groups, who have accused the brand of profiting at the expense of low-wage workers in poor countries. For a company that has marketed itself with the slogan “United Colors of Benetton” -- a seeming nod to multiculturalism -- the association of its brand with unsafe sweatshops has been particularly uncomfortable.
In its first statement following the collapse, the company claimed that "none of the companies involved are suppliers to Benetton Group or any of its brands." On April 29, as photos from the Associated Press revealed Benetton labels amid the rubble, Benetton acknowledged it had placed a "one-time order" from a manufacturer in the building. The following day, the company said one of its suppliers had "occasionally subcontracted" orders from a shirt-maker at
. Rana Plaza
Benetton blamed the confusion on the complexity of its supply chain. The company operates in 120 countries across the globe and works with 700 manufacturers, and suppliers often subcontract work when necessary. It took time to go through all the records and come across the orders made from the
factory, the company claimed. Rana Plaza
Chiarolanza's account effectively enhances the image of an enterprise so huge that no one could possibly keep tabs on all of the hands that touch its product -- some of them operating in unsafe conditions beyond the scrutiny of regulators.
According to the Benetton executive, the company commissioned an assessment of New Wave prior to placing its order. That assessment included checks on the manufacturer's ability to meet quality standards and fulfill the order on time, and it looked at issues related to working conditions and safety. Benetton requires that all of its manufacturers sign a code of conduct addressing myriad issues of concern, from child labor to discrimination in hiring and firing practices, he said.
However, the Benetton executive added that the company never conducted a so-called social audit of New Wave -- essentially, a deeper look at the manufacturer's labor conditions and workplace safety -- because Benetton had worked with the supplier for a very short period of time.
disaster has renewed the focus of labor groups on the process of social audits,
with critics portraying the measures as little more than public relations
devices: Companies effectively check off a box that such audits have been
conducted without mounting genuine probes aimed at turning up trouble. Rana Plaza
Spanish apparel retailer Mango, which had planned to buy samples from one of the contractors at Rana Plaza, confirmed in a statement to The Huffington Post that it had not conducted a social audit either, because it did not yet have a "commercial relationship" with the factory. The company noted that it wouldn't have been able to identify the building's structural problems regardless.
Benetton claims it didn't know the factory building was constructed without appropriate safety permits. According to the company, documentation provided by local government agencies showed no signs of foul play or incorrect building permits there. All the information given to Benetton was completely "in line," the company said.
Chiarolanza said the tragedy has prompted Benetton to add "additional items" to its assessment process: Going forward assessments will more intently examine the structural integrity of the buildings where its products are made.
Between 2 and 4 percent of Benetton’s products are made in factories in
according to the company. Benetton directly manages about half of this
production, while relying on outside suppliers -- mostly in Bangladesh -- for
the rest. China
Among the reasons Chiarolanza cited for opting to remain in
need to maintain operations in multiple regions, giving Benetton the capability
to quickly produce and deliver products to retail outlets worldwide. Bangladesh
Other countries, such as
Laos and , offer
very cheap labor, Chiarolanza said. But Egypt Bangladesh
presents the best place to make T-shirts and other simple items that are
shipped off to large Asian markets nearby, such as . China
where we have a direct company-owned factory, we can produce more or less at
the same cost," Chiarolanza said. "It's better to divide the
production in some countries and factories, so we're nearer to, for example,
Asian markets, so we can deliver directly." Tunisia
Benetton is in talks with the International Labour Organization, which brings together producers, trade unions and NGOs in an attempt to get all stakeholders on board with change in the apparel manufacturing industry, including in
"I can assure everyone that Benetton has always paid special attention to
the workers condition, and the environment in which they operate. I believe our
long-standing commitment to social issues speaks for itself," said
But labor activists remain skeptical of Benetton's commitment to aiding the workers of
Scott Nova, executive director of the Worker Rights Consortium, an independent
organization that monitors labor rights, demanded more than promises. Bangladesh
"If Benetton is serious about preventing future accidents, they will sign a binding, enforceable agreement that requires them to pay for the repairs and renovations needed to make their factories safe," said Nova. "They have made no such commitment and given their track record of public dissembling since the collapse, people can be forgiven for not taking them at their word."
Benetton affirmed its stance on wages in
a low wage is better than no wage at all. Chiarolanza argued the wages provide
an opportunity for advancement, particularly for women, since the vast majority
of workers in garment factories are female. Nova, though, doesn't accept the
status quo in the poverty-stricken nation. Bangladesh
"The wages in
are an act of cruelty," he said. "Women cannot support their families
on $40 a month. Yes, unemployment is worse, but that is no justification for
paying sub-poverty wages that are half of the wages in the next lowest-cost
First posted in The Huffington Post, May
Kim Bhasin is a Senior Retail Reporter at The Huffington Post. He previously worked at Business Insider. Kim.Bhasin@huffingtonpost.com