Garment supplier Echo Sourcing has been building its business in Bangladesh since 2005 and is confident of continued growth in a country that has been rocked by a number of safety issues. The company is, however, keen to broaden its horizons and is eyeing potential new markets such as Ethiopia. Mark Bannister, head of sustainability and projects, talks to just-style.
Echo Sourcing was set up 18 years ago in the UK as a sourcing house producing goods for one value fashion retailer. After buying from various factories for a number of years, Echo set up its own operation in Gazipur, Bangladesh, which went into production in 2008 under the name of Echotex.
The factory, which houses an effluent treatment plant, produces more than 2m pieces of jersey product a month, employing 7,000 people.
In addition to the effluent treatment plant, Echotex has a range of social initiatives in place, including free cooked lunches for workers, staff bonuses based on performance and attendance, which adds up to almost a quarter of the basic salary of each employee, as well as family and health support.
And the reason why Echo can pay its staff more, Bannister says is due to its commitment to the workforce, savings made through efficient practices and support from its buyers.
"Also, we are not the cheapest and if we're not the cheapest, you can afford to pay a little bit more," he adds. "Retailers know we're not the cheapest and we lose business because we're not the cheapest, but we also gain business because we do things right."
But this is not without its challenges, Bannister emphasises. "In Bangladesh, it's very difficult. There is a set minimum wage for a grade of worker. If you deviate too much from that minimum wage, you are likely to cause quite significant disruption in your area."
In addition, poor communication channels between factory managers, supervisors and workers "leads to the majority of the unrest". More specifically, he says, this includes the local politics, combined with the general lack of rule of law, and the fact "almost anyone can set up a union".
And this is something Echo is working towards by trying to connect more with its employees. This, he says, is going to be "key to survival in Bangladesh".
"If you want to run a factory without any issues or unrest, you need to be really close to your workers. If you can't do that and you don't do that regularly, you're going to end up in trouble."
Bannister says Echo has noticed a shift in the attitude of its workers from being desperate for work in order to provide for their families, to now wanting a better job. "We have to take what we offer our workers to a different level, and it's all in the workforce because it's only going to get harder and harder as a country develops and workers get more and more socially advanced. We have to advance what we offer them in return for them to want to work at our factory," he explains.
Bangladesh keeps on growing
Concerns over factory safety and the resulting adverse publicity appears to be deterring some US buyers from sourcing in Bangladesh, with shipments dropping 3.7% in volume terms in the first six months of 2014. In contrast, EU figures for the first three months of the year point to a massive 35% hike in imports from Bangladesh.
"For us, Bangladesh is going to remain very strong," Bannister tells just-style. "It's growing still. Everyone is of the assumption that Bangladesh is going downhill, but actually it's growing significantly."
And with that, Echotex is also growing and almost running at full capacity.
"Bangladesh has got lots of positives because it's a very very established industry. It provides very good product still at a relatively low cost, which is good for what most high street retailers want," he tells just-style.
But as to whether the company would build another factory in Bangladesh, Bannister remains unsure. He points to the political issues within the Bangladeshi textile and garment industry, such as poor management by the government around issues such as wage increases.
Opportunities in Ethiopia
At the same time new countries are emerging, Bannister notes. One country Echo is looking into "significantly" is Ethiopia where the company has done "quite a bit of research".
"It's a massive opportunity, but it's hugely underdeveloped in comparison to Bangladesh," he says.
According to Bannister, it would take ten years to establish operations in Ethiopia like it has in Bangladesh. But, he says, "retailers are going there and they're trying to encourage us to go there. It's probably something we would consider".
He adds: "It has amazing potential if it can be done properly."
Although Ethiopia is developing itself as an alternative garment sourcing destination, Bannister says the country "will start to win business from Bangladesh, but it won't replace Bangladesh".
Collaboration
Mark Bannister, head of sustainability and projects at Echo Sourcing
Bannister believes collaboration within the textile and garment industry as a whole is "massively important". Echo's European clients include value fashion retailers New Look and Primark, department store operator Debenhams, and Swedish giant H&M.
"They [retailers] see us as a strategic partner and they're all growing, and without working in collaboration with us, they can't grow."
He points to the Accord on Fire and Safety in Bangladesh as a good example of collaboration within the sector. More than 170 brands and retailers have signed the legally- binding five-year agreement, which aims to improve worker and factory safety in the country's ready-made garment industry.
"The Accord is an interesting one because none of that would have actually happened on its own. The government wouldn't have done anything if it wasn't for people stepping in. And all of these brands essentially set up their own government to deal with it."
When asked whether enough is being done to improve the perception of Bangladesh's garment industry, Bannister notes: "The problem is there is definitely not enough being done to talk about the positives of Bangladesh, and it is not the retailers' role to do that because they'll put themselves in a very difficult position if they start to talk about the positives of Bangladesh.
"They [retailers] know in reality that Bangladesh in many cases is a good place to work, and some of the factories they work with, including ours, we like to think is one of best factories in the world," he adds.
But more importantly he tells just-style: "It's the Bangladeshi garment industry's responsibility to promote the good in Bangladesh."
Bannister also believes the perception of Bangladesh as a garment sourcing location will never really change, but "the good factories could do more to promote themselves".
"It's not all negative," he stresses. "Yes the negative does instigate change, but you also need to promote some of the positives too, otherwise you really start to grind down the ones that are trying."
Transparency
"People manufacturing and supplying from Bangladesh have a massive role to play in rebuilding the trust in the industry, and a key driver in getting this together is rebuilding trust through transparency," Bannister tells just-style.
The company is one of the pioneering partners of an online platform called Supply-Link, which enables brands and retailers to view and manage the factories they source from. It also helps suppliers like Echo manage and improve performance in working conditions, environmental impacts and operational efficiency by inputing key ethical and environmental data into the system.
"If a retailer can look into your business in this detail then it gives a certain level of trust that isn't in existence at the moment, and has been lost even more so after the last 14-15 months," he says.
Supply-Link, Bannister claims, could "completely change the way factory assessments are done". Companies can input audits, projects and reports into the system as well as use it for networking. If firms like Echo have a real-time feed of data, clients and the public can see on a regular basis how factories are performing and compare this against competitors, he explains.
Ninety Percent
In addition to this, Echo Sourcing is set to launch its own sustainable clothing brand by the end of the year called Ninety Percent.
The garments, which will initially include printed men's and women's jersey products, will be sold directly to the end consumer. The idea, Bannister says, is that 90% of the brand's net profit will be given away: 80% to a cause of the consumer's choice and 10% back to the workers that make the garments.