Bangladesh and the Problem of Ethical Sourcing
The New York Times reported that as of May 14, Sweden-based H&M, Netherlands-based C&A and several other apparel retailers had signed a plan designed to enforce safer working conditions in Bangladeshi factories. Walmart rejected that plan, but announced its own factory-safety plan days later. Meanwhile, in March, Disney ceased all production in Bangladesh and revealed plans to move out of Pakistan, Belarus, Ecuador and Venezuela (countries the company deemed "highest risk") by 2014. These are small shifts, of course—the CNN Money article "Disney Pulls Out of Bangladesh Factories" noted that Bangladesh accounts for just one percent of all Disney's sourcing—but they're shifts nonetheless.
And bigger ones could be on the way as companies look to circumvent convoluted overseas supply chains altogether.
In a move likely unrelated to the Tazreen Fashions fire, Walmart announced in January it would boost sourcing of U.S. products by $50 billion over the next 10 years. General Electric plans to invest $1 billion through 2014 to "completely revitalize its U.S. appliances business and create more than 1,500 U.S. jobs," according to the company's website. And while U.S. manufacturing growth hit a seven-month low in May, the AlixPartners Manufacturing-Sourcing Outlook projected the U.S. to "achieve cost parity with China" by 2015 and ranked U.S. manufacturing attractiveness on par with that of Mexico.
What could all this mean for the U.S.-overseas manufacturing dynamic? Ultimately, not much—at least in the short run. If safety standards and working conditions overseas improve as a result of the tragedies in Bangladesh and elsewhere, that's a good thing. But it will take more than a few companies—even if they are giants like Walmart and Disney—tweaking their sourcing policies to affect significant change in global supply chains. And most of that comes down to simple economics.
"The major disadvantage is cost," said Kristy Tantillo, marketing manager for Indianapolis-based EMT, a promotional products supplier that sources about a third of its product line within the U.S. "The cost factor can be overcome when making automated products, but any product that requires a large amount of manual labor cannot be produced in the U.S. at a price that is competitive with offshore manufacturing."